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Updated 6 months ago, 05/14/2024
RE Investing Skills and Assessment
As investors it is good to know and understand the skill sets one currently has and either develop or get help with those one doesn't have.
What skill sets and experiences have you drawn from? When you look at different real estate opportunities, what in your mind makes a good deal? What differentiates you from another investor? We are all different due to life experiences, skills we have learned, and our individual strengths and weaknesses.
Success is often built on doing what we are good at. Do you know what you bring to the table and how to use it?
There are some that can walk into a house and right away determine how to fix it in such a way as to create, light,space and potentially add value. Another might walk in and see how color changes, sidewalk appeal or a host of other minor changes make a property attractive. Some are skilled negotiators able to take most anything and turn a profit.
For commerical real estate investment and to perhaps a lesser degree SFR investment, there are four primary required skill sets in my opinion:
1. The Hunter the deal finder
This is the networker, constantly out in the market, talking to the brokers and all the other players in the market. Hunting searching for deals. Optimistic energetic relentless on the lookout for deals. Risk tolerant.
2. The Brain or the Mind
This is the analyst the underwriter the numbers guy. Risk adverse. Slow methodical precise detached from the outcome.
3. The Operator or the Hammer
This is the person that actually runs the physical asset - property and asset management, project management - takes care of the day to day gritty details of operating rental property. In some ways the most important member of the team. Practical risk adverse grounded.
4. The Capital or the Money
The persons with connections to capital and money. Energetic optimistic People person.
it’s hard for one person to embody all these skills and that’s why at least for MF investment putting together them team is critical to success.
great post!
Arn
Quote from @Arn Cenedella:
For commerical real estate investment and to perhaps a lesser degree SFR investment, there are four primary required skill sets in my opinion:
1. The Hunter the deal finder
This is the networker, constantly out in the market, talking to the brokers and all the other players in the market. Hunting searching for deals. Optimistic energetic relentless on the lookout for deals. Risk tolerant.
2. The Brain or the Mind
This is the analyst the underwriter the numbers guy. Risk adverse. Slow methodical precise detached from the outcome.
3. The Operator or the Hammer
This is the person that actually runs the physical asset - property and asset management, project management - takes care of the day to day gritty details of operating rental property. In some ways the most important member of the team. Practical risk adverse grounded.
4. The Capital or the Money
The persons with connections to capital and money. Energetic optimistic People person.
it’s hard for one person to embody all these skills and that’s why at least for MF investment putting together them team is critical to success.
great post!
Arn
This is another aspect of real estate. Deals come in many sizes and flavors. Small lots with or without a small house to large tracts of land with large structures or multiple structures. Also besides residential there is commercial and industrial lands and a host of zoning issues.
Each aspect and real estate type has maybe similar, but largely different skill set requirements.
Like you said, one needs to be able to find deals, know that they have found a deal, have the skills to develop leads and lead sources, be able to negotiate the deal when found, communicate well with others.
Often deals start out as opportunities. Analytical skills and research skills aid greatly in determining costs, value add opportunities, negotiation points. Often in smaller deals one needs to be able to determine approximate costs, likely issues, and determine and approximate value quickly while larger projects can be taken more slowly.
There is an element of creativity as well. A number of investors can look at a property and come up with many different values depending on their vision of what the property will be.
Thanks for the input. I hope this can help many investors and be a way of sharing important skills that contribute to success.
Yes, there are lots of ways to invest and profit from REI.
No matter the asset type and class, the skills I listed above are required.
I like you mention of creativity.
The quantitative aspects of REI get plenty of discussion but there is a qualitative aspect too. Intrinsic quality, instinct, seeing possibilities all are critical to success.
Creativity, I believe is an important aspect in REI especially when the market is tight. Seeing possibilities that others perhaps don't see, creative planning of property use and creative ways to turn a property, all these can make or break a deal.
Another aspect is patience. For myself slowly building an REI portfolio has worked best. There has been less risk and very good returns that continue to build. One certainly quickly build a fortune in RE, but it does require creative financing, greater risk and work.
I am a fan of the slow and steady systematic step by step path to investing success.
Many of the gurus say Go Big or Go Home.
I say if you are a beginner skier - do you go to the top of the mountain and jump off a cliff going down a black double diamond slope? I don’t think that course of action is prudent.