Believe it or not, investing - whether it’s in real estate or the stock market - is for everyone. It’s just a matter of knowing what type of investor you are and what level of risk you’re comfortable in taking so that you can make investing decisions that don’t leave you in a constant state of worry or feeling as if they aren’t making the impact you had hoped they would. The same can be applied to a real estate investor. Research compiled by the Psychonomics Society illustrates that an investor can be classified into a number of different types which are determined by various factors including initial personal or familial wealth, age, profession, education, and comfort with risk.
Identifying what type of investor you are isn’t just for those who are playing the stock market - a real estate investor would also do well to be introspective and figure out their “type,” especially if they are planning to passively invest in funds rather than dive in and become fix-and-flippers or developers.
Below we’ll discuss a few different investor types and how real estate investing with Walnut Street Finance could fit into their game plan.
A cautious investor is typically very conservative and loathes to lose even a small amount of money. They tend to avoid high-risk scenarios and prefer to do their own intensive research into investment opportunities rather than leaving it in the hands of others.
These types of investors might be described as the opposite of cautious investors. They tend to follow their gut and are enticed by “hot tips” or investing in trendy funds. They’re eager to get in on the ground floor of a great new deal, but can also be hesitant to cut their losses and move on should things begin to head south. They tend to believe that everything will work out alright in the end.
If you want to impress a technical investor, woo them with spreadsheets loaded with hard facts and numbers. These investors pay close attention to the markets and may have a tendency to seem almost obsessed with how their investments - and the markets overall - are doing. Because they’re constantly watching and paying attention to movements and fluctuations, they’re also likely to spot trends early on and make the appropriate adjustments.
Busy investors are a combination of technical investors and emotional investors. They love investing and the rush that it gives them, and seem to be checking and double checking their funds several times per day. If they hear a snippet of gossip or a whisper of a trend, they’ll act on it immediately, buying and selling as necessary to try and stay ahead of the curve.
This type of investor could be considered closest to the emotional investor but a bit of cautious thrown in. They’ll be careful when making the initial investment, but once it’s done, it’s done, and they may even let it completely slip from their mind for a while as they aren’t constantly checking in on their finances. They’re also more apt to leave their financial affairs in the hands of professionals, trusting that they’ll keep their best interest in mind and do whatever’s right.
Finally, informed investors seem to be a combination of all the other investor types. They keep an ear to the ground listening to trends and tips, while also trusting professionals and implementing their advice when it makes sense. They do their due diligence to ensure that they aren’t caught out, but aren’t obsessively concerned with every minor fluctuation in the market.
While reading through these investor types, it’s entirely possible that you’ve identified yourself in one or more of them. Luckily, investing with Walnut Street Finance as a real estate investor fits in well with any one of these personality types. A real estate investor that falls more toward the cautious end of the spectrum can rest assured that we do mountains of due diligence on each proposal before lending to borrowers. We also make it a point to be transparent and open with our investors, so they never have to wonder what their funds are doing or how things are going on our end (and their monthly return checks speak for themselves!).
For investors that are fine with a more hands-off method, we’re perfect for that too. Since we do so much due diligence and legwork on the front end of our deals, our investors can easily kick back and relax as they wait for their check. If they fall into the “Casual” investor type and tend to forget about their investments, that will make their steady return check a welcome bonus each and every month.
For more information on investing with Walnut Street Finance, check out our Executive Summary and get in touch with us today.