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Money People Deal. Stefan Aarnio
Читать онлайн.Название Money People Deal
Год выпуска 0
isbn 9781948484275
Автор произведения Stefan Aarnio
Жанр Недвижимость
Издательство Ingram
Action Step: Write down three elements that you must be in control of when investing in a real estate deal. Also write down three elements you are comfortable leaving outside of your control.
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Chapter 6
Insider Trading and
Why You Need to Do It
I
n stocks, insider trading is illegal. In real estate, insider trading is es-sential.
In any market, there are insiders and there are outsiders. When corporate executives on Wall Street buy or sell stocks in their own companies with “insider knowledge,” they go to jail. When a real estate investor gets first chance to purchase a property privately without public knowledge, he can get rich.
Markets like Wall Street are set up like casinos, and TV stations like Canada’s BNN (Business News Network) are funded by stockbrokers to create excitement and encourage trading. Stockbrokers get paid when trades happen, so they want their audience on BNN to get emotional and make as many trades as possible. BNN will run stories that pump up the emotions of the audience just to make money; the information is not provided to make actual sound investment decisions.
When emotions go up, intelligence goes down; in a casino, the house always wins. And when it comes to stocks, you are not the house.
In my opinion, the stock market is not designed for the average investor
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to win. Rather, it’s a game played by insiders and institutional investors. For the average retail investor, there is very little control in stocks—unless you’re an insider.
I prefer to control my investments, control the management, and control the outcome of my returns. I also prefer to make purchases as an insider with access to the necessary information to make profitable decisions.
Information is king in the market, and those who control the information control the market.
In real estate you become an insider by
1) Belonging to a large network of other investors
2) Maintaining a large network of lawyers
3) Posting private advertisements for deals
4) Offering referral programs
5) Working with a large network of Realtors®
6) Speaking in front of groups of investors or the public
7) Creating content, blogs, and videos for consumption
8) Working with a network of property managers
9) Working with a network of private lenders
10) Becoming the biggest, most visible person in the market
The truth is that becoming an insider is quite simple in real estate. The best deals always come to those who are 1) most visible, 2) most connected, and, 3) most in control of the information in the market.
When a real estate deal hits the local market with a Realtor®, the deal has already been cherry-picked by at least eight sets of eyes. The fewer sets of eyeballs that see the deal before hitting the market, the higher the chances are to profit.
In high school it’s easier to date the bookworm girl who is cloistered in the library than it is to date the prom queen. The prom queen has so many more sets of eyeballs on her, so her value is pumped way up and overinflated. There is a lineup of guys dying to get a chance to talk to her because she is visible and well marketed. Avoid the prom queen at all costs and go for the bookworm. With some lipstick and high heels, she can easily be the prom queen, but with much less competition and at a
Insider Trading and Why You Need to Do It
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much lower cost.
This analogy applies directly to real estate. By the time a house hits the retail market, multiple Realtors® have looked at it, at least one broker, a few secretaries, a handful of assistants, everyone in the seller’s immediate circle, all of the Realtor’s® best clients, all of the broker’s best clients, their contractors, and then all the other retail buyers who get to it first.
By the time the property gets to you, everyone has explored any easy chances for profit, and you are usually too late to the party. Plus, you now have to pay the price that the seller wanted, plus the commissions of two Realtors® and two brokers. Negotiating becomes muddled because the Realtors® always have their own interests above their clients, and sometimes the brokers can complicate negotiations as well.
When all of these “professionals” get involved, prices begin to rise, and favorable terms disappear. All options for good terms or no-money-down deals go out the window because the Realtors® will kill any chances of a “creative deal.” They want to get paid their commissions immediately and do not care about the price or terms of the deal: they just want the transaction to happen regardless of whether the buyer or seller gets a favorable deal.
However, when you become an insider, or partner with an insider, you get first access to deals before anyone else gets a chance to look.
The best deals I have done have come from
1) Other investors who could not close on private deals
2) Private ads I have placed
3) My networks and relationships
Being active in the market, participating in local investor groups, having an online presence, private advertising, and public speaking have created an insider position for me in my market. Being visible and sending a clear message that I am “always looking for deals” has attracted excellent opportunities that are well under market value, under appraised value, 100 percent vendor financed, or no money down. The average person believes these deals do not exist or are not possible in their local market. The truth is that these deals are available everywhere, but you need to
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become an insider or partner with an insider to take advantage of them.
The best deals are made and are not advertised on the market because they never ever make it to market. This rule applies to any market: the best girls to date are not advertised on eHarmony®, PlentyOfFish, or at the local bar. To find real value in life and in the market, we must gain insider access, become well connected and visible, and control the information around us.
The best deals are reserved for insiders; everyone else can pay full price.
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Chapter 7
Buy Time and Talent
I
t always amazes me to see the thought patterns of novice and interme-diate real estate investors. In Winnipeg (my home market) properties
are relatively cheap compared to the rest of Canada. Properties are even considered “affordable” when compared to other markets in Canada. Winnipeg scores very well on the national affordability index.
But