One of the strategies commercial Kenyan Real Estate
investors like to employ is hiring consultants or market research companies to
analyze a specific market a commercial real estate investor wants to pursue.
To a beginning investor, the overall strategy seems
logical and well-intended. Who better to
know a market than the analysts who spend their days and nights collecting,
analyzing and reporting on such data?
I’ll tell you:
YOU—the commercial real estate investor.
There is no substitute for doing your own research. There is no substitute for keeping your own
counsel. There is no substitute for
doing your own homework.
Why?
Because it’s YOUR MONEY that will ultimately be
spent. It’s YOUR bank account that will
ultimately reflect the success or failure of a commercial real estate endeavor.
Too many well-meaning beginning real estate investors
think they don’t have what it takes to do the homework required on a
market. Too many well-meaning investors
yield their analysis people who supposedly know more about the subject than
they do.
This is a costly strategic mistake.
I have nothing against market research people or
consultants. I have no axe to grind with
them. They are extremely competent,
thorough people who provide a valuable service.
My issue is with HOW they are used by the commercial real
estate investor.
The challenge is when an investor trusts their
judgment--more than his or her own. Many
times an investor will be in awe of their command of the information,
specifically statistics.
The reason I say this is because I have seen many a real
estate investor unwittingly fall victim to this process. It’s very easy to find yourself yielding to a
“professional’s” opinion based upon research which you have paid handsomely
for.
Don’t. It is a
mistake that will cost you later on.
Look at it this way:
Let’s say you want to invest in the stock market and you use the
services of a stock broker to recommend a buy.
Do you really believe that the stock broker’s goal is for
you to make a wise and carefully thought out purchase? Do you really believe their recommendation
has been thoroughly researched and analyzed?
Forgetting the self-serving aspects of the commission he makes selling
you a stock, would you really want to trust him with your investment portfolio?
My guess is probably not.
So what the proper way to use these market research
professional? There three common ways
which these professionals are valuable to the commercial real estate investor:
1. One is as a way to flush out new ideas and do
homework and research “heavy lifting” which need done that the investor doesn’t
have time to accomplish on his or her
own. The investor know exactly the
information he is after.
2. The second strategy is as a way to confirm
the findings which the investor already believes are accurate. In other words, the investor is looking for a
second opinion before he commits more resources to the project.
3. The third strategy is very interesting: Some investor will use professional resources
to poke holes in their strategy. To find
the fatal flaw. To find “the fly in the
ointment”. The investor will never admit
this to the professionals, yet he wants to know all the reasons the deal won’t
work.
You’ll notice one thing in common with these three
strategies: The investor will always do
his own research. It’s a critical aspect
of success—one that should never be delegated.
Please visit www.kenyan-real-estate.com for
more hints.
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