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by atw

What’s wrong with the question “is now a good time to buy?”

I was speaking with an investor/client a few days ago and during our conversation this investor asked me the following questions.
Is now the right time to buy?
Is Texas a good place to buy?
What other places are good buys right now?

Now to the average investor these questions may seem normal and even appropriate considering the market conditions we are in. To me however these questions were a huge RED FLAG as to this investors investing ability. Why? You may be asking. Well let me go into some more detail as to what the problem is with the is now a good time to buy mentality.
To me when I hear this line of questions it alerts me to the fact that I’m dealing with either a novice investor or an investor who lacks financial sophistication. To illustrate my point let me answer the three questions the investor asked me.

Is now the right time to buy?
The answer to this is different for all of us.  I feel however that the components of the investors question was geared more as how is the market doing in relation to should I be investing there. To me this question is faulty from the start. The truth is I feel no matter the market conditions I can and have found great deals. Therefore I should always be investing (as long as they are good deals) in 2008 at the bottom of the drop I followed the drop all the way down by doing deals. Those deals are still positive cash flowing and have equity in them. Therefore to me they were smart purchases even though they were at a time that the market was in free fall.

Is Texas a good place to buy?
Let me answer this question with a story from my investing past. In 2007 we were looking to expand in too two different markets. We looked at buffalo NY and we looked at Corpus Christi TX. Whenever we are set to go into a new market we do extensive research on the area’s economics and population migration numbers. After doing this it was clear to us that Buffalo was the superior market. Homes could be purchased for next to nothing and could produce a huge positive cash flow. So we went to Buffalo to see the market for ourselves and to see if we could put a team in place. When we got there it became evident to us that there was not a team in place to handle our investments let alone our investors.  Being very disappointed I came back to San Antonio and drove the three hours to Corpus Christi. We were able to put a team in place there and as you can guess that is where we did deals. The point of the story is. There are very real differences in markets and you need to know them. But you need to remember that the number one thing you need in a market is a good team. You can have the best numbers on paper and they mean nothing unless there is a team in place to bring them to reality. Therefore when someone asks me where they should invest I always shoot back at them with. “Not where but with who are you investing?” THAT’S THE QUESTION!

What other places should I buy?
At this point in the article you are getting the point and could most likely answer this question for the investor who asked it. So instead of answering this one I will ask the most important question of this article. Why do investors undervalue education and overvalue area?
To me this is the number one enemy of investors. The ability to think that an area will bring their investment through as opposed to the knowledge base of knowing what to do in any circumstance. Or the ability to know how to hire a team that has that base. I want to make this very clear. I will invest anywhere no matter the market conditions as long as the base fundamentals are there for me to be successful. I would highly suggest if you do not live by this motto yourself that you start. As this motto alone will be the difference between good investments and bad ones.

Brian Payton

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