7 Things You Can & Can’t Control In Real Estate (500th GL Real Estate Podcast Episode)
Happy 500th Episode! Special thanks to everyone in my Real Estate Insider family for tuning in and checking out my weekly podcast and video blog over the last 9 years! It has been a long, challenging but rewarding journey. It was an accident that I got involved in real estate in the first place (you can check out my bio if you’re interested in that back story). Today for my 500th podcast episode, we’re going to go through 7 things you can and cannot control in real estate. We’ll start by talking about 7 things you cannot control in real estate, which unfortunately but predictably are the real estate topics that you hear about most in the news. The media tends to focuses on these 7 areas you cannot control because they are more convenient to track and report about. Since the media tends to focus on these 7 things that you can’t control in real estate, most people in turn focus most of their attention on these 7 items–we’ll discuss why that is a mistake.
7 Things you CAN’T control in Real Estate:
- Interest rates
- Property Taxes
- Price of Insurance
- Price of Land
- Price of Building Materials
- Price of Labor
Despite the fact that the media focuses on many of these 7 topics you can’t control, people make decisions to buy and sell residential real estate based on life events much more so than based on macroeconomic factors.
For example, in the 1980s when mortgage interest rates were almost 20%, people still bought and sold houses because for the most part people make decisions to buy and sell homes based on life events like marriage, divorce, illness, death, new baby, new job or job loss rather than because of macroeconomic factors like inflation or interest rates.
My advice is not to fret or dwell on things you cannot control because that is a waste of time as well as a waste of emotional and psychological energy. It is much wiser to look at these 7 things you cannot control as constraints and focus your attention on areas where you can make an impact.
There are certain things in residential real estate that we have no control over and other things that we have complete and total control over—knowing the difference and then acting on that realization is one of the keys to real estate investing success. With that in mind, here are 7 things you can and should control in real estate:
7 Things You Can & Should Control in Real Estate
- The condition of your property
- The price you pay when you buy
- The people and real estate professionals you choose to work and do business with
- The amount of money you choose to pay professionals that you choose to do business with
- Guidelines you set for managing your real estate investments
- Tenants you choose to rent your property to
- Terms and contents of any contract you choose to sign
The condition of your property: Real estate affords owners much more control than they would have with most other assets, so use that control to your advantage by maintaining your property and making appropriate repairs and capital improvements as needed. This is especially important if you are a landlord trying to attract & retain the best tenants or you are a property owner trying to refinance and pull money out of a property that you own.
The price you pay when you buy: The person with the money decides the price in a real estate transaction (even in a so-called sellers market). You have 100% control over your money, so use it wisely and never overpay for property when you buy. Buyers control the price in a property sale. Another buyer may agree to pay more than you do, but the higher the price you pay as a buyer, the lower your return on investment (ROI) will be.
The people and real estate professionals you choose to do business with: Work with the very best people you can work with and be very careful about who you do business with. Unfortunately, as in any business, there are crooks and liars in the real estate business—avoid these people like the plague. Your reputation is your most important asset and it will be affected by the company that you keep.
The amount of money you choose to pay professionals that you choose to do business with: Always negotiate the best deal you can for services you pay for and remember that the person with the money ultimately decides the price paid.
Guidelines you set for managing your real estate investments: You need rules and regulations to reduce risk, maximize returns and effectively manage your real estate investments. I tell people all the time I can’t change my business processes and requirements for every person I do business with–you can’t scale any business that way.
Who you allow to rent your property: Screening tenants effectively is critical for landlords to maximize their return on investment (ROI).
Terms and contents of any contract you choose to sign: Each term and condition in a contract creates an obligation, the breach of which can give rise to a lawsuit, so pay close attention to the specifics in any contract before you sign (i.e. purchase/sale contracts, listing agreements, leases).
Let’s recap that 7 things you can and cannot control in real estate:
Can’t Control 7: (Interest rates, Inflation, Property Taxes, Price of Insurance, Price of Land, Price of Building Materials, Price of Labor)
Can & Should Control 7: (The condition of your property, The price you pay when you buy, The people and real estate professionals you choose to work and do business with, The amount of money you choose to pay professionals that you choose to do business with, Guidelines you set for managing your real estate investments, Tenants you choose to rent your property to, Terms and contents of any contract you choose to sign)
Thanks again to everyone in my Real Estate Insider family for listening to my podcast and video blog for the last 9 years!