What characteristics make a great investment? We will talk about my best investment, what characteristics make a great investment, how you can replicate my success and how you should think about investing.
Is there no “one” path to investment success. You have to find out what works for you. You have to experiment, learn and even fail sometimes. I have had many jobs. I have made horrible investments. I have made fantastic investments. Investing is all about taking a risk that if you put in work today and make smart choices today, there will be a benefit tomorrow.
What been my best return on investment to date?
I have made a lot of different investments to reach financial independence. The largest portion of my investment portfolio is in the stock market, but I am slowly adding to my real estate holdings.
I purchased a residential lot in Ft. Worth, Texas about 5 years ago.
At the time I did not make much money. I would say about $30,000 a year. I was renting a small house. I lived in a great neighborhood, but I could not afford to buy a lot or house in that neighborhood, because many of the houses were being renovated or torn down and rebuilt as bigger homes. I did not have enough for a down payment or enough to qualify for a loan from the bank.
But I loved my city.
So I looked for other ways to buy into that city. I started looking at all the different areas and neighborhoods of the city.
I found so many different parts of the city that were less expensive. The east side was much cheaper than the west side. Was the neighborhood as nice? No. Was it next to the botanical garden? No. But it has many other desirable qualities.
Be on the lookout for opportunities, wherever they come from.
Value is often found from things that people overlook.
- Single family home lot
- The lot was 60 feet across. So it was long and skinny, but big enough for a structure
- Purchase price: $3000.00
- It had a few trees along the fence line
- Property taxes are 2.5% per year
- In an up and coming neighborhood
- Low cost
- 1 block over from the elementary school
- Near a hospital
- Clear vacant land so it was a blank canvas
- The city had already made lots of community improvements: new streets, new police/fire station. Torn down many old houses
- Neighborhood in transition
- Low average home value
- Land requires maintenance
- No knowledge of where to go next
Whenever I told new people that I had purchased this property they all told me that I made a mistake. That it was a ‘bad’ neighborhood. No one would want to live there. You have to deal with building a house. You do not want to deal with being a landlord.
No one was encouraging and positive about the investment.
You must ignore what other people are saying. People have a lot of fear. And they are going to try and give you their fear. They want you to be as scared as they are. They want you to think like they think. But they cannot live your life for you. You are not going to be happy living out some other person’s dreams. You need think and live for yourself. Take care of yourself and then worry about taking care of them.
The thing about fear is that it can be paralyzing. People get stuck in their fear and then they do not make forward progress. They get stuck and the fear grows.
You have need to listen and feel that fear and then move forward.
How much is the investment worth today?
I could probably get more if I cleaned up the property more or did some marketing for the investment.
That is a $27,000 increase. Just for purchasing and sitting on a piece of land. And paying taxes and maintence.
This type of investment is not radically different or new. People have been investing in real estate for generations. You can replicate my success. The vast majority of cities in America have neighborhoods and houses that need improvement. Where you can investment for very little and create something amazing.
But you need vision.
Most people can only see what is right in front of them. They fear the unknown. They do not want to take chances. But taking chances in how you start a family or a business or a new job. Risks are where the real money can be made.
But it must start with the vision. You have to be able to see what could be rather than what already is. What a new house could look like if you built it.
Most people just stay in their neighborhood and see the house surrounding them. They do not look for opportunities that other people have overlooked.
Why is real estate a great investment? It is one of the only assets that appreciates over time.
How to replicate this investment success:
- Look for undervalued opportunities
- Do not over leverage
- Take risks
- Develop your vision and execute
- Be patient
Before you make any investment do your research.
For real estate, crunch the numbers. Research different areas. Know the price per square foot. And what other properties around there have sold for.
Think about think the things that you bring to the table. Money, ideas, sweat equity, project management.
Change your mindset from a consumer to a producer.
You are someone that is not just a consumer in society you are not a producer of goods and services. The more you can produce the more value you have. The more homes you can build, the more rent you can collect. The more rooms you can design, the more client that will come wanting you to design their rooms. People want good value.
And they want human connection. You are the most important ingredient in your business.
Transition from being an employee, trading time for money to being an investor/producer.
Buying/creating assets that work for you. Work for you while you sleep. Work for you while you are creating other assets.
What do you think? What has been your best investment?
Leave a comment.
More important, go build wealth and make the biggest life impact possible.