Warren Buffets number one rule is pretty simple: Don’t lose money.
I have learned a very important lesson over the years that is quite similar to Buffet’s investing advice, just tailored a bit to real estate: Don’t buy losers.
My former partner and I unknowingly bought a ‘loser’ house in Wake Forest once. The Realtor that sold it to us did a very poor job valuing the house properly. Long story short, after many months of trying to sell the house (this was a flip property), we finally sold it at a $42,000 loss. Ouch.
On the other hand, buying winners can leave you in a great position. In a worst case scenario, a ‘winner’ will let you get out from under the property without losing your shirt in the process which is always a great fail safe. Ideally, you can freely get out from under the property while making profit.
The best advice I can share with anybody looking to invest in real estate is to take your time, do proper due diligence, and don’t buy a loser. In other words, don’t buy real estate for the sake of buying real estate. Only buy real estate as a successful, long term investment in an appreciating area.
