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Reality Examiner: What type of real estate investor are you?

Afraid, stressed, looking for a quick profit?

Roi Maudi, CEO of VALORE, shares the types of investors that exist in the industry without sparing criticism. Do you identify yourself through words?

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• Apartments

• Apartments for investment

Roi Meudi, guest column

Monday, 11 October 2021, 09:20 Updated: 09:24

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Awareness and vigilance in the investment world are many important qualities, especially when it comes to the real estate industry. It does not matter at the end of the day whether it is an investment in Israel or abroad - the first steps in the process will testify to the future And there is no more valuable than that. So what type of real estate investor are you?

Over the years, I have held hundreds of meetings with different investors, in a wide age range, with diverse desires, different financial status and more.

Over time, I have noticed that just as on TV screens as viewers we feel the familiar feeling over and over again when we are shown the same cross-section of tapecasts season after season (especially when it comes to reality shows) so it is with real estate investors who are divided into several types. Four main ones.

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Seeing only the good and the shiny is nice, but there are other things to look at in an investment (Photo: ShutterStock)

The yield

An investor who is only interested in return.

At one of the meetings, an investor who started his career in the investment world came to me, we sat down and while sipping coffee he sent me "I have $ 100,000 to invest and I am looking for deals that make at least 30% return per year. These small deals do not interest me."

I put down the cup of coffee, then asked him, "Are you ready for the scenario that your return will be cut by at least half?"

He looked at me with an angry face and said "Obviously not! Why am I investing?".

I asked him if he understands that a 30% return per year goes hand in hand with a very high risk.

"What do you mean?"

He looked confused.

And I continued: "There are risk scenarios like erosion of return, call for additional capital, partial loss of the fund or full loss of the fund."

Something had changed in his eyes.

We continued the conversation and then he realized:

• That there is a direct link between high return and risk

• That return is not the only parameter because of which one goes for a deal

• He understood what he was really looking for and what risks he was capable of containing

• He realized that in a world of high returns, the reality is different from the business plan

• The potential for return is also the potential for loss.

  And those who do not know how to lose, should look for another scenario.

30 percent return?

It can happen, but you can also lose quite a bit (Photo: Reuven Castro)

Stressed

This is an investor looking for immediacy. Take for example a young investor, in her 20s, with whom I met recently. She asked to meet urgently and noted "as soon as possible, I will adjust myself to when you can even if it is in the evening".

At our meeting, she told me that she has been looking for an investment for several months and she is very confused, but she can not let the money lie in the account anymore so she "must invest it within a week". As she says the last sentence, she puts out printed pages with a number of transactions so that I can "diagnose" them and tell her where it is best for her to invest. I smiled at her. "You're only been examining the options for a few months, and you're already ready to make a decision on half a leg, on money you worked for very hard, just because you're stressed and frustrated?" She looked at me, and she seemed to be beginning to think logically. "How long are you interested in making your investments?" I asked. She replied without hesitation "All life, what do you mean?"I explained to her that if she was going to invest in the next 40 years, why sleep for several months?

Here she has already fully understood.

She told me with a smile that she had read a lot of articles online, and the story she told herself in her head was the result of social and personal pressures.

"Suppose you make a good financial investment," I told her, "but one that does not suit you and your goals, what do you think will be your experience?", She nodded.

"No hurry. So what do we do now?"

I made it clear to her that there is another way to do until the wise decision is made and when the discretion is to do things in a hurry, so will the goals.

The apprehension

There are types of investors who do not want to take risks. and what does that mean? That he likes to hear promises to make a decision. Like for example the same couple I met, where the husband was closed about wanting to invest, while his wife was hesitant. She did not object to the investment, but felt a lack of understanding of the "rules of the game." Every time she asked me a question, her husband jumped up and answered her emphatically. I looked at him, and asked him "Do you understand that as soon as you produce a pink picture, and tell your wife what she wants to hear so that she will agree to the investment, you dig yourself a pit?"

He did not understand. "Once one of the risks materializes and there is a delay in the project, you will not only be hurt financially, your relationship will also be hurt," I told him. Something in his eyes changed. The husband realized that he had convinced himself and did not fully understand the scenarios and risks just because he wanted to make a decision and feel good about it.

"Do you understand that there is also a chance of delay and loss of money when investing?", I asked her.

Her body language, gave me the answer.

I made it clear to them that right now, it is better for them to learn more about the field and understand the opportunities and risks involved in investing - and understand what is right for them.

"Isn't it in your best interest to encourage us to invest?"

The woman wondered.

And I smiled.

We have since gone through a common path, but in this world it is better for the beginning to be balanced.

Make discretionary decisions, you do not want the relationship to be harmed (Photo: ShutterStock)

The diligent

The investor who always learns but never makes a decision.

The next “meeting” spans nearly a year of repeated meetings with a diligent investor, who has devoted hours and days to learning all about everything. In the first meeting we talked about a specific deal - in which he asked great questions, got answers, said thank you and we agreed to keep in touch. After a few months, we met - this time regarding a new deal. "Wait," I stop him, "how is the first investment we talked about going?" "Oh," he filters, "in the end I decided not to go into it."

We continue to look at the new deal, and I'm really impressed with his analytical skills - the man of investment.

We agree that this is a good deal, and say goodbye.

The third time he approached me, it turns out again that he wanted to consider a third deal, and he did not execute the second deal either.

This time I insisted on understanding why.

"You checked everything, a good business plan, a good entrepreneur, good conditions, everything looked great, you met with me and I approved all your tests from my side, why did you not make the deal?"

He looked down and mumbled "I don't know."

Here I decided to be direct and reflect to him the reality, where every few months, he asks me to meet as a good to analyze a deal, and in the end does not execute it.

"Are you interested in investing at all or are you just enjoying a process of guided imagery as if you are investing?".

what happened here?

• He got into a whirlwind of over-learning, and fell in love with the very preoccupation and forgot that without making a decision to invest all that preoccupation is worth nothing.

• He realized that fear is driving him, an irrational fear because he understands exactly what he is doing and yet, fear leads him instead of leading himself.

To show him the irrationality of his behavior, I asked him about previous transactions.

"I'm in touch with the developers. These deals are successful and work before the plans," he told me enthusiastically.

"Do you understand that you were able to invest in these two deals with a quiet heart and you chose not to," I told him, and continued "How much money have you lost so far?"

He admitted quite a bit.

A month later I received a message that the "ringing slap" he had received at the meeting was exactly what he needed and that he had entered into a deal, signed and transferred money and that he would update me later.

And what has happened since then?

He changed his attitude and instead of fear driving him he just behaved logically and with less apprehension.

And what about you?

Roi Meudi (Photo: Yachz)

Does the very fact that you understand what type of climb you will guarantee for you the right investment in all cases?

Will an investment after a thorough investigation in 100% of cases yield the result you expected?

These questions are answered in is doomed, but understanding at the entrance to the world of real estate investing should be done approach to long-range thinking and staying with a watchful eye really wanted her today relating to the particular investment may change and therefore whenever there is a definite need to be alert to traffic.

So what do you Say? Do you identify yourself between the lines?

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