All Forum Posts by: Albert Okagbue

In my eyes, this is really simple:

How much money do YOU need so that you never have to worry about money again?

(Amount of money you SPEND per year divided by sustainable rate of return = your retirement number) i.e. you spend $50,000 per year @ 4% safe withdrawal rate = 50,000/0.04 = $2M <- Financial Freedom.

The goal isn't to beat some other investor, it's to reach a point that you have monetary security and the freedom to do what you truly want with life.  Also, as a finance professional, I can assure you that higher return is not necessarily better.  We live in a fairly efficient market and return = risk.  If someone is making 20% on a highly toxic asset and is bragging about it, that person is an idiot.  In my opinion, consistent rates of return > 10% on most unlevered products is usually not truly sustainable.

Best of luck.

Like others have already said, you can't really compare your returns to that of others in different markets. As with most things in business, you need to figure out what you need to make per deal according to your situation and the pace of which you want to grow your business and make sure that it makes sense now and in the future.

With that being said, it is good to know what others are shooting for in your market. For instance, when it comes to flipping houses, I know roughly the profit margin that other investors are trying to make in my area. This helps me because I am able to guesstimate what they may be willing to offer for a property, given that they are looking at the same comps (which they should be) and their renovation costs are roughly the same. If my numbers work with a slightly higher offer, then I will put in a slightly higher offer, but only if it make sense. Of course if you have an idea of what others are shooting for, but their numbers are all over the place, then you just need to go with whatever number makes sense to you.

Don't ever try and make numbers work. Be reasonable and realistic about your numbers and have some contingencies in place. 

I have my own criteria (and then sharpen the pencil with education and networking).

The wealthiest people I've ever known are very secretive about their money. You have a few hot shots out there but most I've met are entrepreneurial types with a mean independent streak. 

You'll always have the wannabees down at the REIA & Chamber bragging about their "awesome" returns on a beach rental, but the best are usually low-key and are true real estate professionals.

My overall opinion on this: You'll never be able to gauge your returns against others due to the nature of real-estate. It's somewhat of a "black box"