Rethinking Investment Wisdom: Due Diligence

Traditional investment advice often falls short, leaving investors vulnerable to sweet talkers and shaky deals. As a former federal agent and seasoned real estate investor, I've developed a due diligence framework that has guided thousands of investors to safer, more secure transactions. The core principle is simple yet revolutionary: don't invest in the deal, don't invest in the person—invest in the information.

The Flawed Foundations of Traditional Investment Strategies

Investing in the Deal: The common mantra is to find a good deal, but deals don't default—people do. A deal might look great on paper, but without the right people to execute it, it's nothing more than a set of numbers and projections.Investing in the Person:Many say to invest in someone you "know, like, and trust." However, people change, especially when money and power are at play. They may drip honey when they want your money, but that sweetness can quickly sour once they have it.

The Information-First Approach: A Due Diligence Framework

Invest in the Information: My due diligence framework, honed from years of federal investigation and real estate experience, is built on a foundation of verification. It’s simple: "Don't trust, verify." Here's how it works:

1. Verification Over Trust:
   • Trust is not a currency in the investment world. Always verify the information you're given, regardless of the source.
   • Use independent third-party services to check facts, figures, and credentials.
2. Comprehensive Background Checks:
   • Conduct thorough background checks on all individuals involved in the transaction, not just the primary parties.
   • Look into their past dealings, legal history, and reputation in the industry.
3. Financial Due Diligence:
   • Scrutinize financial statements and projections with a critical eye.
   • Confirm that all numbers are backed by verifiable data and realistic assumptions.
4. Legal Verification:
   • Ensure that all legal documents are in order and that claims of ownership and rights are legitimate.
   • Have all contracts reviewed by a legal professional who is not directly involved in the deal.
5. Market Analysis:
   • Understand the market dynamics that will impact the deal.
   • Verify that the investment aligns with current and projected market conditions.
6. Risk Assessment:
   • Identify potential risks and how they are being mitigated.
   • Ensure that there is a solid plan in place for worst-case scenarios.

The Reality of Professional Support

While title companies and attorneys are crucial, they can miss things. They are often overworked and may not have the specialized knowledge needed to catch every red flag especially for private lenders conducting creative real estate transactions. That's why my framework emphasizes investor involvement and verification at every step. It’s your money - no one cares about it as much as you.

Conclusion: Empowerment Through Information

The due diligence framework I've developed empowers investors to make informed decisions based on verified information. By shifting the focus from the people and the deal to the hard data and evidence, investors can protect themselves from the pitfalls of misplaced trust and appealing narratives. In the investment world, the most reliable strategy is to invest in the information—because when you have the right information, you have the power to make the right decisions.