The biggest mistake investors make as they branch out

by David Kitai on 05 Aug 2020

Daniel St-Jean has pretty much seen it all in the real estate investment industry. The co-founder of the REITE Club has been a professional investor for over a decade and an entrepreneur for more than three. In all that time he’s seen investors make one core mistake over any other: they don’t bring the right specialists onto their teams.

St-Jean will be speaking at the upcoming Canadian Real Estate Wealth Investor Forum about why investors so often make this mistake. He’ll talk about some of the key strategies for building a diversified, robust real estate portfolio by assembling the right team of experts. He’ll explain, too, why real estate investing is like baseball.

“My favourite realtor here in the Niagara region is Sara Theroux,” St-Jean says. “For anything and everything residential in the Niagara region, I call her. But if I have something in Oakville, I’m not calling her. As much as I would like to give her the business, I’m calling someone in Oakville…In real estate investing you need to look at the end goal and then find the exact person to achieve that goal for you.”

St-Jean says this might seem common-sense, but he’s seen a number of investors go with someone they already know and like over branching out to find a new expert, meaning that as they enter a new market or real estate sector, both they and their estate agent, lawyer, broker, or home inspector are out of their depth.

This mistake is an especially high risk for investors beginning to branch out and diversify their portfolios. Many investors, St-Jean says, will turn to their first realtor, who delivered huge for them on residential investments in their home town, as they start to invest in commercial properties one town over. They do it, he says, out of a sense of loyalty, comfort, and ease. Starting a new relationship can be tough for an investor, but without it they can be left with poor advice for their new investment.

That’s not just limited to realtors, too. St-Jean says that investors should specialize in the lawyers and brokers they use for each and every investment, as well.

“They're making decisions with their heart, instead of making decisions with their head,” St-Jean says. “They're going with feelings instead of going with facts.”

It’s easy to be ruled by emotion when investing, St-Jean says. Big purchases and big deals can be shaped by more of our emotions than we often think. Loss aversion bias can keep us from seeing life-changing opportunities when something carries risk. Fear of the unknown can keep us from branching out into the next boom market. Comfort with a friendly home inspector can see us investing in a money pit.

“You’ve got to force yourself to put your emotions aside,” St-Jean says. “You have to look at the desired outcome and achieve it based on a rational equation of facts and stats.”

At the Canadian Real Estate Investor Forum on August 13th, St-Jean will be speaking about how investors can make their decisions rationally, how they can avoid picking the wrong specialists, and how, exactly, real estate investing is like baseball.

To hear from Daniel St-Jean and other thought leaders in the real estate investment space, register for the Canadian Real Estate Wealth Investor Forum here.

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