Shifting Your Investing Paradigms to Ensure a Financially Certain Future

wl_bmtn_Paradigm_Roa244E74

By Richard Dolan

Before the internet, before the rise of real estate investment gurus and books on “How to invest”, a real estate investor simply had to “Just do it“, to borrow from Nike. In other words, being a real estate investor twenty years ago looked very different.

Things have changed since then. They’ve evolved and become more complicated. Finding real estate deals, investing in them, borrowing for them, being taxed on exit or capital gains, who you can rent to and how – the entire landscape of real estate investing has shifted. A paradigm shift of sorts has occurred. Paradigm by its very definition means a worldview underlying the theories and methodology of a particular subject.

From my perspective as an accomplished real estate investor, here in Canada and internationally in addition to having raised capital in real estate, the rise of the Four Paradigms is upon us all.

The Finance Paradigm

The old finance paradigm for a real estate investor included being able to hold dozens of mortgages in their name personally. The new finance paradigm evolved from lending rule changes from the Canadian Revenue Agency based on their views of how profits and earnings generated by real estate transactions are taxed. Some would argue the new paradigm started with the 2008 financial fiasco and global credit crisis. Canada was the only G8 country that did not experience a financial melt-down while the other countries bailed out large corporations, banks and even themselves. The Canadian Government mandated legislation that would not only raise the bar for all Canadians seeking mortgages and loans from the banks, but give rise to the Tier 2, Tier 3 and private lending worlds, placing them on par with traditional lenders.

The Finance Paradigm shift for real estate investors is this: borrowing more may have become tougher but it is still possible. You just need a strategic finance expert coupled with a developed skill set to seek, find and secure private capital.

Avoid getting bogged down with these deal ready documents.

Sales Paradigm

The old sales paradigm for real estate investing required an investor, a realtor and lawyer to get a deal done. With a small circle of folks transacting, salesmanship was not a required skill set. Although real estate sells itself, more or less, the real estate investor has evolved as a result of the finance paradigm. The new sales paradigm has shifted from selling the deal to selling yourself. The skillset of communication, articulating the investment value of an opportunity to a lender or investor, and packaging the presentation conducive to today’s market and not yesterdays is vital. When it comes to looking for a deal to buy into, today’s real estate investor is calling five investors to joint venture for every one call to a realtor.

The Sales Paradigm shift for real estate investors is this: today’s real estate investor is more consultative in their conversations, client-centered in their approach to investors, and is relationship-focused versus transaction-oriented.

Marketing Paradigm

In the early 90’s I worked in a brokerage firm that sold stocks, bonds, and other financial derivatives. By the year 2000, that same firm was known as a wealth management company offering personal financial planning coupled with insurance, estate and tax strategies. The industries’ marketing language shifted to align with the needs of their clients and the changing tides of their industry. The same is happening in the real estate investment world.

The new marketing paradigm has produced a need for an elevated conversation about real estate investing. The real estate investment market is getting both younger and more diverse. People aren’t seeking returns on investment; rather they are looking for a return to simple. People seek growth and preservation of their capital in addition to yield and income. This is an era of large transactions birthed from life’s biggest transitions. Real estate investors want to be equipped, not sold and educated, not empowered. Just as stockbrokers of the 80’s became financial planners in the 90’s and today are regarded as wealth advisors, they still market the same thing. These sorts of strategies are being used by several wealth management jacksonville fl companies, as well as across the nation.

The Marketing Paradigm shift for real estate investors is this: focus on the experience-focused words, terms, and images when selling real estate investments. Joint venture partners and investors believe the numbers because they trust in you but only if you paint the picture of the life they get to live because of the way you invest together.

Entrepreneurship Paradigm

Real estate investing was something that Uncle John just did. I never noticed a process, a system at play, or a team behind him. “Today, to be a successful real estate investor, you have to treat it like a business,” says Patrick Francey, our CEO and a successful real estate investor for nearly two decades. To embrace this shift you’ve got to take on an entrepreneurial mindset, whilst developing the critical business owner skill set. Skills such as leadership, communication, innovation, financial planning, research, market risk analysis and planning to name a few.

I know, I know. You just thought you’d read a book, attend a program, ask for help when needed, and invest in real estate to live happily ever after. This is still a practical, manageable and doable model for success. However, if you need money, and require capital and funding to get to your financial-Nirvana, you’ll need to be more and it begins with shifting personally and professionally with the entrepreneurship paradigm of today. Sometimes, you may even have to get your own financial advisor (like the ones available at Avior Wealth Management, for example) to help you brief on the entire process.

The Entrepreneurship Paradigm shift for real estate investors is this: buy properties as an investor or create a portfolio by building a business. Develop your business acumen, entrepreneurial skill sets and give rise to the best Plan B you could ever imagine.

Richard Dolan is the President of REIN and the resident expert on Performance for real estate investors and professionals. Addicted to producing results, Richard is an expert on raising funds, building brand and strategy with one aim: to produce competitive immunity. Reach Richard at Richard@reincanada.com.

{{cta(‘d1c08f98-196d-4a41-ad53-4e55f81797f6’)}}

Keep up to date with the latest REIN news and events! Subscribe now:

Stay Connected

All Access

Twitter Feed