I wanted to take a moment today, and talk about the five biggest considerations when evaluating, whether you should invest on your own as an investor, or if you should invest in a fund. I get this question all the time and I love it. It's one of my favorite questions. Not because the answer changes every time. It's pretty much the same thing, but because it shows that people are being educated and they're being interested in real estate more and more. So I'm always rooting for people to be involved. I think it makes the market stronger. It makes it more interesting and it's more opportunities for everyone. So I've narrowed it down to my top five considerations, things that I think that people significantly underestimate or significantly don't have an understanding of while they're making this decision.
So the number one, first consideration is: How much experience do you have? Very simple. Right? I think that there was a misconception at a certain point in the market with a book called “Rich Dad, Poor Dad”. I love that book. I think it's fantastic. It's gotten many people into Real Estate and it's really shifted the mindset between people where they are able to envision and understand a process beyond what they were taught in school. So I think it's very, very important for those reasons. However, there's also this interesting thing where it's like the leap before you look right. And so that's, that's gotten a lot of people in trouble. I think that's something in real estate today. That's very common on the lower end of the spectrum, the entry level. And that's something I want you to, bring up and to consider today, investing on your own without the experience is extremely high risk, extremely high risk.
As a matter of fact, I would change the word from investing to speculation. Okay? Because speculative investments are things that are not nailed down. The thing is, there's a lot of guesswork and assumptions that may, or may not be rooted in important facts and market data and that's what we want to stay away from. That's the number one killer of deals. So if you're not a seasoned professional, the question is, are you investing by the numbers? Are you investing in opportunities at that level? Or are you just kind of diving in and hoping you're gonna figure it out, which I highly don't recommend. However, if you do have significant experience and you've been around the invest model and you understand the investments, then it might be a good opportunity for you. You might want to consider investing on your own. There is a lot of upside to it.
However, there's going to be some other balancing factors. Even if you don’t have the experience, then I fully recommend considering a fund. There's a little cheat code you can do if you invest in a fund and that is called learning while you are already investing. Learn at the same time, you're investing with the pros, see what they do, see how they do it, and then you can decide if that is for you, do you want to jump in, do you want to be involved and handle that, manage that day to day, top to bottom; if yes, then make that decision, but you can start investing with someone else who already has that bearing and has that foundation.
Number two is: How much time do you have? I think this is the absolute number one most underappreciated and underrated question when talking about Investments in Real Estate in general, there is no such thing as a passive Real Estate Investment. There's absolutely none. There are only two types, those that are properly managed and those that are not properly managed. And most people, if they don't understand that concept, are falling into the bad category, the one you don't want to be part of. So, when you understand the time commitment that goes into a real asset, something that's scalable, something that takes multiple people, and a full team to run, then you really understand the time commitment if you do have that time and you are able to allocate that time towards investment, that's when you have a really, a much more fun and a bigger question on your hands, which is opportunity cost. Do you want to invest in that property? If the answer's yes. Then you go in with eyes wide open and that's really, really important.
The other question though, on the time side is what else could you be doing with your time, right? Whether you're thinking about family, your career or towards the company you work for to be making more on your top line so that you also have more and more money to invest. So that's one thing to consider. There's no right or wrong answer, only you can know that. So if you do have the time you do have the experience and you want to move forward with personal investment. Then, yes, absolutely. It's a great opportunity, but I would consider the opportunity costs at the same time.
A master in Investment, Marketing, and Capital Raising.
Nic has honed his focus on the Real Estate and debt markets with Saint Investment Group and pursues large-scale Distressed Asset purchases with his partners and syndications.