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Be wary of investment advice from people who play a different game than you

by xyonent
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Key Takeaways

As an experienced real estate investor, I have witnessed firsthand the complex dynamics of the real estate market and learned that most investors never achieve the financial freedom they seek because they don’t know what game they’re in.

The real estate market is a complex web of various investment styles, and there are many marketers, buyers’ agents, and so-called strategists and advisors who have the “ideal strategy” or “perfect property” that will suit you perfectly.

There is no one-size-fits-all real estate strategy, and if you want to build a successful long-term real estate portfolio, you need to invest for capital appreciation. Investing for cash flow will never build a portfolio large enough to bring you financial independence.

Real estate investing is not a sport where everyone is playing the same game. Accept that different market participants have different priorities and methods, and stop assuming that your approach is the only right one.

As an experienced real estate investor, I have witnessed first-hand the complex dynamics of the real estate market.

Over the years, I’ve come to understand that real estate investing is a complex subject, and despite the existence of podcasts, blogs, webinars, and so-called “advisors,” the reality is that most investors never achieve the financial freedom they seek.

We also found that different market participants are playing different games, each with their own goals, attitudes, time frames, risk profiles and incentives.

Investor 4

The problem is that most investors don’t understand what game they’re in.

They may have a vague idea about their game, but they don’t clearly define it.

And when you don’t know what game you’re playing, you run the risk of taking hints and advice from people playing a different game, which can lead to unintended risks and unexpected results.

Diverse lineup of real estate investment players

The reality is that the real estate market is a fascinating arena with multiple players, each with their own investment approach.

These players include first-time home buyers, novice investors, experienced investors, property developers, real estate agents, property marketers, “touts” and many more.

Each of these participants has their own goals, motivations, strategies and time frames, making the real estate market a complex web of different investment styles.

If you think about it, the type of real estate that would be a great investment for me, at my age and with a very solid and diversified real estate portfolio, would not be considered a great investment for someone at the beginning of their investment journey.

However, there are plenty of marketers, buyers’ agents, and so-called strategists and advisors out there who have the “ideal strategy” or “perfect property” that will suit you perfectly.

Understanding the different investment games

Let’s be clear: there is no one-size-fits-all real estate strategy or ideal investment that suits everyone.

Instead of treating real estate investing as a single game, you should look at it as a series of games, each with their own objectives and skills.

For example, a beginner investor who wants to build a large real estate portfolio over the long term and ultimately gain financial freedom and life options, needs to invest for capital appreciation, because otherwise he or she will not be able to build a real estate portfolio.

The problem is, many newbie investors play the wrong game and invest for cash flow. While cash flow is important and will help keep you in the game, buying the wrong kind of property can mean you’ll never build a portfolio large enough to achieve financial independence.

You can’t buy your next property with the cash flow from rent.

To get the next deposit, you need capital growth and asset growth.

Capital Growth

ATO Statistics 92% of investors never get beyond their first or second property, clearly showing that this is not enough to give you enough cash flow to live on.

What I am saying is that beginning investors have to adopt a different strategy than those who already own a significant real estate portfolio and are in the next stage of investing, where they start lowering their loan-to-value ratio.

These investors need to play a different game and may need to consider adding commercial real estate to their portfolios.

And investors approaching retirement must adopt a different strategy by investing not just in real estate but in other assets that generate cash flow.

To succeed in the ever-evolving real estate industry, you need to recognize this diversity and adapt your investment strategy accordingly.

However, many blogs, podcasts, and advisors lump everyone into the category of “investor” and inadvertently set themselves up for failure.

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