Ruthless Execution In An Uncertain Market for Real Estate Investors
It is getting so that I don’t even want to read what is going on in our economy or our housing market. Story after story seems to only want to reinforce the risks in our economy and the latest trends (all presented as negatives) in the housing market. I would provide appropriate links, but there are so many of them; I wouldn’t know where to start. And, if you are worth half your salt as a real estate investor, you are all ready paying close attention.
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The problem for many investors who are paying attention is that all of this information may have encouraged them to only focus on the negatives, as reported by often-times uninformed or otherwise dubious reporters/writers. The most recent example being the reporter who claimed that gold was not backed by anything and therefore a poor investment, yet the US dollar was a better risk because it was backed by the US Government.
Getting back to those of you who are frozen in place and wondering what to do.
I believe it comes down to execution of your business plan. Disciplined, RUTHLESS execution!
Before I venture into a few insights into what RUTHLESS EXECUTION looks like, you need to answer this simple question:
Have you or anyone you know ever been able to predict with absolute certainty what our economy or housing market will look like in the next 3, 6, 12 months?
If your answer is yes, you shouldn’t be hanging out on this site, you should be making billions advising others how to profitably navigate our current economy.
However, since I am fairly confident that your answer to that question was NO, then I have to ask why are you sitting around, most likely doing nothing, waiting for events you have no control over and can’t predict to happen — especially given the fact that no one can be certain that the worst will occur. Meanwhile, some of the best real estate investment opportunities in this generation are staring you in the face?
The secret in these uncertain times is to manage your risk, and guess what that requires? You got it…
Lets look at what ruthless execution means in the context of our uncertain market.
1. It means that the old adage, YOU PROFIT WHEN YOU BUY is more important today then at anytime I have ever been investing. You can’t count on anything to deliver your profit once you have purchased your deal and that is why you have to lock in your profit by making conservative offers right from the start.
2. It means that you are going to get beat out of a lot of deals because other investors are willing to take greater risks, and of course many of these investors don’t last long. You don’t want to overpay for your deals. Remember in today’s market, some of your best deals will be the ones you DON’T do!
3. It means that if you are only using one method of marketing to find deals, finance them or renovate them, you are putting your entire business at risk. Keep this in mind: the number one (one marketing approach, one lender, one contractor) in any business is a very dangerous model, one that could put you out of business in a minute.
4. It means that your renovation timeframes must be supported by your budget. In today’s market you don’t have the luxury of being able to take your time on a renovation. In fact, I believe this is one of the most critical aspects of ruthless execution. You have got to maintain a sense of urgency about every part of a renovation, supported by available funds and ensure that your entire team – from contractors to realtors – have that same sense of urgency.
5. It means that you may not always shoot for the highest sales price or highest rent. In fact, your plan should seriously consider just the opposite. Getting your deal sold or rented quickly due to your pricing strategy being lower then your competition. Just in case things do start to turn really ugly, you can lock in your profits through a quick sale or lease-up, and then determine your next move instead of sitting on a deal whose profits disappear as you chase the market to the bottom.
6. It means that you are going to have to overcome your concerns regarding what might happen, identify the risks, develop a plan to mitigate those risks,and then, you got it… execute!
If you are unwilling to do anything less then this, be realistic with yourself. Perhaps real estate investing is not for you!
Best of luck as you execute your business plan… RUTHLESSLY!