Posted 5 months ago

Stop Investing and Start Goal-Setting

I recently had an investor ask me my thoughts on a Dollar General in his target investment area.  We had previously discussed waiting until I had done a complete risk analysis on his portfolio.  But like a moth to a flame, here was the investor looking at the next shiny object without thinking through his investment objectives.

My first thought and what I asked him was, "well what are you trying to accomplish with this purchase"?

The answer was a bit convoluted and mostly focused around the returns, but the answer mostly meant that there was no answer.  This is not a unique situation and we see this a lot with investors.  Here was an accomplished investor with a 9-property portfolio simply purchasing the property because it was there and for sale.

Whenever we begin the acquisition process, we always start with the question of what we are trying to accomplish.  And in order to understand what we want to accomplish, we need to understand what our goals are, both long and short term.  It sounds logical, but so many times I see investors buy property simply because it's there or because of some perceived value ("It's a good deal!").  This can get investors into trouble when they suddenly realize that their portfolio is not balanced or in the right position to meet those goals.

So stop(!) investing and start goal-setting.  Think first whether or not this property fits into your portfolio and your goals.  Have a professional do a risk analysis and see if you are on the right track.  Then pull the trigger...