As we all know there is a seemingly endless variety of seminars and courses on various real estate strategies.  While in principle there is nothing wrong with this and it is important to understand how particular strategies work, I feel that most "would-be" investors are missing the bigger point.

Which is that any long-term investing business must utilize multiple strategies in order to remain profitable when market changes occur.

This means simply that it is not about what strategy we find interesting or what "sounds good" but rather it's about what's working now.  The plain fact of the matter is - if you don't understand the fundamental issues that make a strategy work or cause it to not work you will not remain profitable over the long haul.

Indeed I see many "experienced" investors who are struggling with this today.  In fact the survey indicated that 51 percent of those who responded have made no money at all, are struggling to make money or are losing money.

46 percent indicated that they had made some money in real estate, not enough to make a living but at least they were profitable on one or two deals.  Only 4.5 percent indicated that they have actually made a significant amount of money investing in real estate. This fits with my real experience in the marketplace. Very few people know enough about what they are doing to be able to identify the investment that "works" at any given point. 

The fact is most people are not profitable and will never be profitable because they are only following the herd, doing what everyone else is doing because everyone else is doing it. In the marketing world, they call this "social proof". This is a phenomenon that plays off of our natural desire to be part of the "in-crowd".

In other words people tend to do things when they see everyone else doing that particular thing. but when it comes to investing, following the herd can be a recipe for disaster. That's because by the time the herd is involved the real money is already gone.

 If you were buying stocks in 2000 you know exactly what I'm talking about.  If you bought after everyone else was getting in, prices were sky-high and left very little real profit. By the time the market began to melt-down in 2001-2002 the people who were buying before the herd got involved were laughing all the way to the bank as they sold off high-priced stocks to eager investors who thought they were getting in on the next big thing.

The same thing has been happening with real estate for the past three years. Prices have gotten too high, profits have been going lower and lower and yet the herd continues to buy based on strategies that simply will not work under those circumstances.

The result of this has been a huge number of investors who bought properties at peak of the market prices because they ignored market fundamentals. Now they are at a point where these properties will not cash flow and in many cases are losing value at a rate that will leave the investor owing more than the property is worth. 

If I can drive one point home it is the fact that if you run with the herd sooner or later you are  going to wind up getting trampled.

Can I tell you a secret?  The real truth is that the "herd" hasn't got a clue.  Many people out there dealing houses, claiming to be selling great investment opportunities would not know a good deal if it hit them in the behind.  Hardly a day goes by that I don't see a promotion for some supposedly great deal that hasn't got a chance of being profitable.  

95% of the survey responses indicated a desire for financial freedom, or to earn enough money to quit their job, etc. But a to attain financial freedom and make enough money to quit working for someone else, you have to make sure that you can make enough money working for yourself.

 In order to be profitable enough in an investing business you have to be flexible and adaptable to changing market conditions.  You can only do this if you understand the fundamentals of your market and their effect on the various investing strategies.

Those of you who are really new are probably thinking that this sounds rather complicated; but trust me, if you expect to survive and make a real living off of real estate investing, sooner or later you will either learn how to use the fundamentals to your benefit or you will not be able to survive a complete market cycle.  At that point you'll find yourself heading back to a job in order to generate enough cash to keep your struggling properties paid for.  About 10% of you are already experiencing this for yourselves.

I am telling you this because I have lived through it myself.  I understand very well the challenges and rewards that come with self employment and especially as it pertains to real estate investing.

Regardless of how easy most people want to make it sound, it is a great achievement to survive for more than three years in real estate investing. But it can be done and people do it every day.
I know a lot of investors who started out as property locators or bird dogs, who now own their own investing business. The profitable ones are those who have committed themselves to understanding the fundamentals.

At this point I have escaped the rat race so to speak. On Monday morning when most people are  trudging out to another long work week I am home drinking coffee and organizing my schedule.  But I'm only being honest with you when I tell you that I am here because I have learned to adapt to changing market circumstances. I have learned to deal with changing conditions and alter strategies when necessary to remain profitable and continue to grow.

This is why I continue to hammer home the point that if you don't understand the fundamentals and you don't get a good grasp on how they work and how they affect wholesaling, lease/options, subject-to, retailing or any other strategy, you simply will not know how to adapt to changing market conditions. 

If all you know how to do is wholesale a property you will find it rather slow going in 2007.  If all you know how to do is buy or sell on sandwich lease options you may have trouble figuring out why your deals aren't making money right now.

And for heaven's sake, if you're going to follow the herd and jump on the pre-foreclosure bandwagon you have my sympathy.  Pre-foreclosures may be in large supply and easy for the herd to target, but the fact is that a conversion rate of one deal out of 50 to 100 targeted leads is not my idea of a viable business model that will produce financial independence.  And there are certain fundamental issues specific to 98% of all foreclosures that make these even more difficult to profit from. But you sure wouldn't know that by reading most of the standard fodder written for Real Estate investors.

Mind you, there are foreclosures that make outstanding opportunities for investment. But foreclosures in and of themselves are only a source for leads, NOT a strategy. Foreclosures are not profitable just because they are foreclosures. It is the fundamentals of the deal that will determine whether any given foreclosure can make you any money as an investment.

There is no question that we are now in a deflating market.  The number of foreclosures is increasing. Retail selling prices are falling because inventory has been rising dramatically. Sellers - and especially investor sellers are being forced to cut their prices to move a property. Still other investors are lucky to sell at all. It is pretty easy to see that any strategy that requires a quick sale may be in for a bumpy ride for the forseeable future.

On the other hand there are market forces at work that will enable tremendous profits and help smart investors develop the income streams needed to quit jobs and achieve financial independence. In fact in just the past week, my coaching clients and I have identified an investing opportunity being overlooked by virtually everyone else. 

How would you like to buy one property and immediately have a positive cash flow that would give you a solid 30 to 40% return on investment, with the potential to hit 50 or 60% ?  Just this week I identified quite a few properties that have this kind of potential.  If you ever expect to become financially independent as a real estate investor, these are the kinds of results you are going to have to achieve. But the good news is there are a number of different ways to achieve those kinds of results in any given market.

I use the same exact "Buying Right" process that I have been trying to emphasize to you. I am finding new investing opportunities that are among the best I have seen in years.  But I found them only because I knew what I needed to look for.  When you know exactly what it is you need to look for is much easier to find it. (sounds like plain old common sense doesn't it?)

There is no such thing as a good time to invest or a bad time to invest IF you know how to choose the right strategy for the market conditions.  When you understand how the fundamentals will affect investing strategy then it is simply a matter of identifying those specific strategies that you know should work given the fundamentals at hand.  Each local market will have its own set of fundamentals to apply.  That's why Market Analysis is the key fundamental skill possessed by successful, financially independent real estate investors.

If you are really wanting to achieve the objective of quitting your job, working for yourself and becoming financially independent as a real estate investor, you must have a grasp of the fundamentals and then apply the appropriate investing strategy for that situation.

I know it doesn't sound "easy" and it doesn't sound "quick" and it may not even sound like fun, but achieving freedom with financial independence is not easy or quick. It does require a commitment and effort.  But I'm sure you know that once you get there, it sure is fun.

So don't get caught up in the trap of thinking that you need to focus on one specific strategy such as wholesaling, lease options or short sales.  If you want to do real estate investing "on the side" a one-strategy approach will be fine for part-time income.  But if you are looking for freedom and financial independence and the ability to quit your job you'll have to learn how to "Buy Right" based on the fundamentals that apply to each given opportunity.