We’re witnessing a point in time where we’re “going to see the wealthy get wealthier, at the expense of the average person who doesn’t recognize a buyer’s market” (p.43). That is according to R. Donahue Peebles the author and multi-millionaire real estate investor, developer, entrepreneur and author of The Peebles Path to Real Estate Wealth.
Peebles can make such bold and strong statements because he made tons of money in the last down market – buying properties nobody else wanted, and either redeveloping them or just holding on until the market strength returned. He understands the fundamentals of real estate investing. Fundamentals like:
- Market indicators of strength, stability and future expansion potential,
- The indicators that really matter (job growth, income stability or growth, growing industries),
- What area features attract people, and will continue to attract people (like beautiful areas with waterfront or mountain views, good school systems, strong tourism and good quality of life),
- And, that you make your money on the way into a dealand to do that you need to understand what a property is valued at and how you can create more value.
He also understands that real estate, purchased in areas with good fundamentals, will always go back up. He said specifically “they say that what goes up must come down. In real estate, what goes down generally comes back up. It’s just a matter of timing, and that depends on picking the right geographical locations based on the underlying fundamentals of a given region, a given city, and a given neighborhood. Just make sure you do your homework first(p. 117).”
The key we’ve discovered, and Peebles reinforces, is buying in an area that people are going to always want to live in. And then, buy the property under market value and for it’s cash flow. It’s a pretty darn near guaranteed formula for success. However – you have to understand how to value a property to be able to buy it under market.
Valuation is so important to successful real estate investing that I actually sat down one weekend a few years ago and read the entire Appraisal of Real Estate textbook from the Appraisal Institute of Canada. It was a large, dry and painful exercise, but I knew that understanding the key concepts of valuating property was essential to my career, at the time, and to my passion as a real estate investor.
Peebles really understood this because he worked as an appraiser for years! He understood everything about residential and commercial property valuations. He emphasized the need to understand how to value properties, explaining that if you have no idea how to value a property you’ll always be relying on someone else. And, how will you know if that other person is right or wrong?! Plus,an understanding of value enables you to act quickly on opportunities and gives you the ability to know how and when you can create value.
In essence, Peebles’ book is all about understanding what is happening in today’s market and why. He walks you through the credit crunch and how it’s different than previous recessions and housing crashes. He shows you how this confidence crisis is creating the perfect market for opportunity seekers, and how you can find the deals and take advantage of them. If you are feeling a little shaken by today’s market (especially if you live in the U.S. – because the book is focused only on the American situation) then I would highly recommend you pick up this book. It will give you a confidence boost to overcome the doom and gloom media messages and it’s very informative and useful.
I’ll leave you with my favourite quote from the book:
“If getting rich were as easy as follow the leader, then we’d have a whole society of rich people… When everyone else is buying that’s the worst time to buy, and when fewer people are buying and lots of people are trying to sell, that’s the best time to buy(p.92).”
Published April 10th, 2009
Peebles, R. Donahue.The Peebles Path to Real Estate Wealth. John Wiley & Sons, Inc., 2008.