Real estate investing is a complex business with countless ways to earn a living. Professionals vary in strategy, location and expertise — some have a long term, low risk approach based on positive cash flow, while others want big bucks now, and some unfortunately, will sell out their grandma for a nickel. No matter what kind of company you run, you should stand for something — this is very important if you expect to be successful in real estate investing for a very long time.
So, what do you stand for?
We have been in this industry long enough to experience ups and downs, a market boom and bust, changes in target markets, even changes in our own strategy. We have fine tuned our strategy, focused on target markets, built teams and systems and have it completely dialed in. So we ask ourselves, “What do we stand for?”
To answer this we started by defining what we do and our what our goals are. We buy discounted properties that cash flow, improve operations and value, profit from rents and/or sale of the property. But this is not what we stand for – not even close. So what are our goals? How do we do what we do? What is the result? What is our investment philosophy? What are the most important things that lead to our success? How will we continue to succeed long into the future? What are the fundamentals that we live by?
Now we are getting closer to answering the question. Here is what we came up with; this is what we stand for.
- Minimize risk and maximize annualized return – This is our goal. We first understand and minimize the risk. This includes making sure worst case scenarios are not so bad. We focus on maximizing annualized return instead of your one time return. A 10% return is great. A 5% return in one month is twice the annualized return as 15% in 6 months. That’s a big difference.
- Control our success – We do not speculate, as the market is out of our control. Appreciation is an extra bonus. The numbers must make sense on any investment.
- Stick to our criteria – We stick to our criteria of properties with 50-70% LTV, strong cash flow and a decent area.
- Strong and multiple exit strategies – We only do deals with tremendous equity and tremendous cash flow, which results in strong multiple exit strategies. This gives us the ability to minimize risk and maximize annualized return.
- Make informed business decisions – We do not make decisions based on hype, emotion, excitement or by following what everyone else is doing. We justify our decisions with thorough due diligence, thus making the best informed business decisions.
We feel these 5 items are the foundation of our business and they will allow us to be successful in any market for as long as we are actively investing. So, if I had to say what we stand for in a few sentences it is this, “We stand for investing done the right way. We control our success, stick to our criteria, ensure strong multiple exit strategies and make the best informed decisions to achieve our goals of minimizing risk and maximizing annualized return.” If you are a beginner or expert, you should go through this exercise as well. Doing so could establish the foundation of a long and successful real estate investing career.
Please share with all of us, what do you stand for?