06/21/15: The Secret to Finding a Great Deal – Your Personal Investment Philosophy

We’ve been told, ‘There are no problem properties…only problem ownerships.”

Jim Carrey put it a different way in the movie, The Grinch…“One’s man toxic waste dump is another man’s potpourri!”

The WHY is perhaps obvious.

Certain types of properties and the demographics they attract require a specific temperament, skill set, risk tolerance and expectation.  Mismatching a property and investor usually results in a very unhappy investor…and a “problem” property.

Funny thing is…when the unhappy investor finally throws in the towel…usually at a direct or indirect loss…some other (typically more experienced) investor comes along and scoops up the “good deal” and makes money!

So we think it’s pretty clear that investors…just like properties…are all different.  And not all investors and properties are meant for each other.

To stay out of trouble, it’s critical to get in touch with YOUR inner investor…and figure out what kind of an investor YOU are.

While there’s no substitute for real world experience, you can compress time frames by thinking carefully about who you are, what you want, what you’re willing to do…and what you’re NOT…in order to get it; and by watching what other investors are experiencing…

Then you put it all together in your mental blender…and puree it into your very own initial personal investment philosophy.

In the studio blending their voices into this episode of The Real Estate Guys™ radio show:

  • A smooth blend of talent, wisdom, knowledge and experience…your host, Robert Helms
  • His discombobulated co-host, Russell Gray
  • A man who blends 7 decades of experience into a frappe of fatherly wisdom, The Godfather of Real Estate, Bob Helms

We think your personal investment philosophy is the magic potion which inoculates you from bad deals.

It’s like rolling up to the gate at the airport with your carry-on bag.  You drop into the “box” to see if it fits.  If it does, you proceed.  If it doesn’t, you don’t.

Your “bag” is the deal you’re looking at.  The “box” is your personal investment philosophy.  The bag needs to fit in the box or it’s a no go. Make sense?

To develop your PIP, you need to ask yourself a series of questions.  We detail them in this broadcast…but for now, they go something like this:

  • What is my PRIMARY objective for the investment…spendable cash flow today…or long term equity growth?
  • How much risk am I willing to take?  Am I more conservative or aggressive?
  • What types of properties am I most comfortable with or interested in?
  • How much turnover am I willing to deal with in my portfolio?  That is, am I “flipping” for short term capital gains…or am I holding long term for income and equity growth?
  • What kind of markets (geographic and demographic) am I most comfortable with?  Can I handle the stress of dealing with low-end markets…(lots of problems, but potentially more income)…or would I be happier in upscale areas?
  • How hands on do I want to be?  Will I manage everything myself or would I rather pay my team to do all the work?
  • Where in the world am I willing to go?  Do I want all my investments near me or am I willing to travel?  If so, how far and how often?

Of course, these are not binary questions.  There are LOTS of nuances…and your answers will probably be somewhere in between two extremes.

But you’ll likely find that you tend to gravitate towards one extreme or the other…and that’s okay.

You’ll also find that your PIP will evolve as you and the marketplace change.  That’s okay, too.  In fact, if your PIP isn’t evolving, then you either aren’t investing or your aren’t learning.

We think revisiting your PIP is something you should do at least once a year.  Because the more clear you are about what you want and what you’re willing to do to get it, the less likely you are to find yourself entangled in a deal you don’t like.

So listen in as we guide you through the process of getting in touch with your inner investor…

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