Real Estate Journal
The Future of the Real Estate Investor’s Business or Company By Rebecca McLean, Executive Director, National REIA
W
hat is the real estate
investing business or company of the future? It’s an old question for every industry. In corporate America, this question inspired Gurus such as Peter F. Drucker to write about the Concept of the Corporation and Tom Peters to go In Search of Excellence. In the beginning of our industry it inspired William Nickerson to write How I Turned $1,000 into Three Million in Real Estate – In My Spare Time and Al Lowery to write How You Can Become Financially Independent By Investing In Real Estate. It also continues to be a new questionone that reflects the new market for sellers, buyers, rehabbers, private lenders, wholesalers, etc. and the fundamental re-design of the operating system inside our investing businesses. In the Real Estate Journal, we look at the question of what takes a real estate investor into the future-
and what future-focused investors do-from a number of perspectives. Each month we have articles on strategies, economic forecasts, and success stories. We also host RealEstateInvestingToday. com which keeps you up to the minute on industry-related news & information. As trends and legislation continue to change our
Some investors are prepared for future success because they are designed for innovation. Check out our previous Member Spotlight stories, where they pushed themselves to go beyond the old “That’s the way we’ve always done it” thinking. Looking across the landscape of the new economy, we see a fundamental shift in what an investor must do to capture the future: We must attract the best people from contractors and admins to investor oriented realtors, inspectors, private lenders and others and create a “social glue” that holds those people together on industry, we offer the National a team where the whole is greater REIA University with classes than the sum of its parts. that keep you informed with the Progressive companies compete necessary skills to capitalize on by having a team that they can these changes. Most importantly rely on to provide resources and Uniting Investors, our online solutions that others cannot community of investors, answers especially with such speed, they your questions on all things investing to help you find your path to future success. continued on page 19
Deeper Due Diligence ...continued from page 3
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Real Estate Journal · Spring 2017
about them. Do not ignore such information! If you are evaluating someone on the references and testimonials they offer, contact the people giving those references and testimonials and ask, “What was the most difficult or challenging thing about working or dealing with, or being a lender to, joint venture partner with, or co-investor with _____________?” These suggestions are designed to help you do a deeper level of due diligence regarding the individuals with whom you may be entering into a business venture rather than into the deal itself or the potential exit strategies. Why? Because deals are made between people, and good deals are made between people who both want good things for each other. If there is a fundamental problem with the people in the deal, it doesn’t matter how good the deal is, or how successful the business venture is, or how much equity is in the house, or what interest rate is being paid, or how many points are on the table, or how big the cash flow is. Something will go wrong with the deal if there is something wrong with the people involved.
4. Map Out Your Future Expectations All parties to the deal must sit down and map out in writing their future expectations as to how the deal or enterprise will look, evolve and transpire. On a 90-day loan of $10,000, that will be a brief statement of a sentence or two. If several people are coming together with a great business idea that is a viable opportunity for the next several years, a far more detailed written set of expectations and goals needs to be articulated by everyone in the deal. Mapping out your goals and plans needs to be more detailed than just saying, “Have fun while doing good and making money.” Every business endeavor should be designed to make money and be profitable, but that alone is an insufficient reason to engage in a business transaction. There will always be more attractive, shinyobject ways of making money that may distract one or more people involved in the business opportunity. Instead, I recommend that you think it through with much longer-term vision. What
is it about this opportunity that will keep each person attached to it and doing what they need to do even when the profits aren’t as high as they thought they’d be and the work is twice as challenging as they expected? These conversations and thoughts will help you make the right decisions about business opportunities. Far more often than not, they will probably cause you to say “no” to an opportunity or at least seriously revamp the idea. If this can help you avoid one problematic situation that could cost you tens or even hundreds of thousands of dollars in legal fees and years of your life unwinding the mess, then this information will have been of great benefit to you. Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio 4 times via litigation. Read more of his viewpoints at Watsoninvested.com.
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