Real Estate Investing: Choosing your Strategy

You have made the decision to invest in real estate, but you are not sure how you will do it. Answer these 6 questions before choosing your strategy and read along for some advice from experienced multi-family `investor, Trey Stone. 


6 Questions to Ask Yourself When Choosing to Invest in Real Estate

If you are thinking about investing in real estate, you need to spend some time evaluating your resources and goals.

  1. Do you have enough money to invest?
  2. Do you have time to spend on real estate investments?
  3. Does your health permit this?
  4. How does geography play a role? Do you plan to invest where you live?
  5. Do you have good credit?
  6. Do you have any experience?

The answers to these questions will prepare you for the next steps. Lead investors will want to know more about you and how you see yourself in their deals. Think critically and decide what you truly want- not just what you think you want. Be honest with yourself when answering these questions.

If you choose a strategy and there is a disconnect between how you see yourself and how you see the investment, you risk wasting time going down the wrong path. It is often hard to see the mistake until you realize you are not getting the results you want. Therefore, this step is crucial. The proper preparation will save you wasted time later.

“Time, money, credit, and experience all have a major impact on the right solution for real estate investing”- Trey Stone


Common Mistakes Inexperienced Investors Make According to Trey Stone

As an investor, you will need to make many decisions about your investments.

You will need to decide whether you’ll be active or if, based on your resources, you’ll be a passive investor. If you want to be active, you will have more responsibility coordinating with other investors as well as any onsite coordination for the property. Inexperienced investors can underestimate the time it takes to be an active investor. If you are investing in real estate while maintaining a full-time job, sometimes it’s best to consider a passive role.

You will also need to decide which deals to go after and which ones to pass. Inexperienced investors often jump on every deal that comes along rather than vetting them thoroughly. Hasty decisions lead to poor real estate investments.

Lastly, you will need to analyze your credit and determine how much leverage you will put forward. Not using enough leverage or paying all cash can be damaging. Using too much leverage and not putting enough cash into an investment can also disqualify you from a potentially great deal. When making these decisions it’s best to partner with a seasoned investor who has a successful track record.

How Lead Investor, Trey Stone, Chooses a Partner

Trey Stone of Value Play L.L.C. takes a personal approach when connecting with a potential partner about deals. He looks beyond the balance sheet and individual qualifications to get to know a potential investor and their goals. Trey also brings them in to tour one or more of his properties. He encourages investors to meet the employees and other business partners. Sometimes this takes place over more than one meeting so you can see different property types and get the confidence of understanding what these deals look like in person.

Trey asks potential investors to bring their financials to these meetings but he also he assesses if the partnership is a good fit based on the answers to these questions:

  1. What are you trying to accomplish?
  2. How much money do you have? 
  3. What kind of deal are you looking for?
  4. What’s your risk tolerance?
  5. What’s your time frame?
  6. What are your goals?
  7. Are you an accredited investor or not? There are deals available for both.
  8. Are you more focused on cash flow or capital gain?
  9. Do you want to be an active investor or a passive investor? 


Once Trey gets to know you through all the above questions, he asks for a separate meeting to review all of the paperwork for the current deal. Investors like Trey want to know that you are going to review the deal diligently and carefully. Set yourself up for success for meetings with potential investors by considering your answers to the above questions and remember, “It’s an investment because you have to invest some money into it to see that success.” – Trey Stone

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