What Kind of Duplex Investor Are You?

business groupWhile it’s not a company requirement, I’ve been reading the book The Millionaire Real Estate Investor by Keller Williams Realty’s co-founder, Gary Keller.

The other day, something really jumped out at me. The book states that there are four different kinds of real estate investors.

They first are the Observers.

I’ve met a lot of these.

Observers love the idea of investing in real estate. They spend countless hours educating themselves by reading books, attending lectures and surfing the Internet, learning all they can about the practice.

They do understand all the benefits of buying and owning investment real estate. But they never buy anything.

Speculators are the next investor profile. They are almost fearless; loving the thrill of taking extreme risks with the hopes and dreams of high rewards. Keller believes Speculators buy on something’s potential selling price rather than its actual worth.

We’ve seen Speculators in a number of arenas. Think the Dot.com boom and bust. And, more recently, the real estate boom of five years ago when investors purchased a property solely on its potential resale value rather than the data on an investment property analysis worksheet.

Every now and then, Speculators win big. But more often, they crash spectacularly.

The third investor profile should be familiar. It’s the Collector. This person is a real estate investor who buys property based on its emotional value rather than its value as an investment.

Think Beanie Babies. Baseball cards. Special issue Barbies.

Think low risk. Low return.

Collector investors buy a property that moves them simply because it may go up in value. Someday. And if it does, then it could be a good investment.

Investors differentiate themselves significantly from other groups.

They take action.

They buy a duplex based on its actual investment value. They tend to be linnear and have narrowly defined their criteria a property must meet in order to maximize return and minimize risk.

When they find one that meets their standards, they buy it.

And then they repeat.

Which kind of duplex investor are you?