The Gut Test of Investing

By Reto Steiner

I received a magazine about three weeks ago published by the Urban Land Institute titled “Emerging Trends in Real Estate® United States and Canada, 2016”. It is one page shy of 100 pages, it is glossy, it is filled with hundreds of colourful graphs, tables and data that would please any economist that was willing to sift through the material and make some sense of it.

I have tried countless times to go through the material and see whether it would actually help us make good, sound business decisions going forward.

There is a lot of data, along with a few very qualified opinions, but in the end there is nothing that would help the average REIN Member make the day to day decisions in building or improving their real estate portfolio. If anything, it would have you running in the opposite direction, convinced that real estate is not for you.

So we are clear, I am not throwing the Urban Land under the bus here. They have done an admirable job of collecting, collating, graphing, and summarizing a mountain of data. The task that we all face is interpreting that “mountain of data”. Today’s society is buried in data and, regardless of what form it is in, there are conflicting views on almost every aspect of it.

In one of my presentations to REIN Members, I cautioned everyone about analysis paralysis. Easier said than done, if you don’t have a clue where, when, and how you are going to buy your first, second or even your biggest real investment.

The first step in real estate investing is to not overthink it. Yes, it is a big first step, but you have made these kinds of choices in your past. You dated, you made educational choices, you dared yourself to ski down a slope or jump out of a plane. Each one either felt right in the pit of your stomach or it did not. You were not going to marry the first person you dated but you had a pretty good idea if you would be willing to go on a second date.

In that presentation I put together a simple check list that would lead to simple comparable scores for a variety of property choices. Now take that information and those scores and visit the property as many times as you want and ask yourself, “Does it feel right?”

All the data, graphs, brochures, news, and “trends” aren’t going to be more accurate than what your gut tells you. Trends will help you save some money here and there, but commercial real estate investing is not a get-rich-quick scheme. It is for the patient investor who is willing to weather the business cycles, have a long term view on that investment, treat their tenants like business partners, and leave the trend setting for another chapter of their book.

Reto Steiner has a Masters degree in Architecture, an MBA and a BSC in Construction Engineering. His education combined with over 30 years in the development industry has insured that INDevelopments Corp. has been a thriving commercial developer for over ten years, which his is the Principal and Co-Founder of. Reach Reto at reto@indevelopments.com

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