“Are you ready?”
Regardless of the industry, when it comes to investing, due diligence is vital. The more specific one is about their goal, the more they can refine their knowledge to accomplish it. A jack of all trades is a master of none, before expanding, perfect one.
Identify your level
The first step to becoming successful in real estate is recognizing your level of significance. Whether it be as a supportive member of the team or the one who runs the show, the opportunity for growth is correlated to the value you add or create. If you lack the experience to initiate and lead a development but have the financial capability to invest, your value will derive from your capital contribution, usually known as an LP (Limited Partner). If you don’t have the capital but know how to manage or construct a project, your value results from your performance, usually known as a GP (General Partner). While there are many other structures and means of establishing equity, identifying what you bring to the table serves as the initial basis of purpose.
Standby
As an LP, the early bird gets the worm. Investors who understand the fundamentals and metrics of real estate will always have the upper hand because they are prepared. A successful investor recognizes that great deals do not appear every day, but when they present themselves, its time to perform. Balancing working capital and reserved capital is challenging, however by having a steady stream of information and credible partners, investors can prepare and anticipate their engagement efficiently. As a GP, the second mouse gets the cheese. Performance partners must search and initiate new deals constantly. By monitoring the markets and prior developments they are able to assess where others made mistakes in order to prevent detrimental outcomes. This can vary from overvalued property acquisitions to controversial development proposals meeting heavy opposition. When experienced GP’s bring a deal to the table, they have already analyzed every component of the development to ensure the success of a lucrative venture.
It’s time
Trying to ‘time the market’ in most cases is wishful thinking. Having the ability to acquire exceptional properties at a feasible valuation and developing them during a stable period is an intricate game of chess. Some developers are limited in their capabilities to grow sustainably, whether it be the need to complete an active project to proceed to the next one or insufficient infrastructure to adequately expand. We spoke to a prominent local developer, KOSL Building, who noted that they continue to be busier than ever. Having a substantial investment base, he mentioned that “We have been buying properties both on and off market for years. Several of our sites that were intended to be built as spec houses have gone custom, providing our investors with great returns in a timely manner.” Having been established in various communities for nearly four decades, KOSL is known for purchasing premium properties swiftly. “Our partners understand that although we are constantly working on new sites, we turn down about 70% of properties we are offered. We never compromise on location or quality, which is why our LP’s know that if we bring them a new deal, it’s time to move on it.”
Be ready
When creating a plan to purchase real estate, it’s critical to understand the balance between patience and action. Many people strategize ways to seize opportunities, however few initiate those plans when the time arrives. Although, you miss 100% of the shots you don’t take, make sure you know how to aim.
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