Circle Of Competence Issue #21
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This week I had the distinct pleasure to speak with a seasoned commercial real estate broker and investor, Jim Scofield from Raleigh, NC. He was gracious enough to allow me to share a few nuggets I took from our conversation and share them below. Enjoy!
1. As an investor or businessman in general, DWYSYWD - do what you say you will do! Following through with promises is such an important part of building a positive reputation that will precede you in more areas than business.
2. Time kills all deals. Investing requires great patience, but when an opportunity presents itself, move swiftly. Time kills all deals.
3. Take the 'value investing' approach when investing in real estate, which means investing consistently through all the cycles, up and down. You can never time the market peaks and valleys exactly, but if you invest consistently through the cycles, you’ll get some good deals in slower markets, and you’ll pay more in hotter markets. But over the long haul, which investing is all about, you’ll achieve a profitable “weighted value” for your portfolio. Consider and evaluate all the opportunities available to you, and invest in the one that will yield the highest risk-adjusted return. Continue to deploy capital conservatively in all markets (with reason). Over time you will build up a portfolio of properties at different rates of return, but it will average out to a satisfactory rate of return as long as you do not over leverage.
4. Real estate is all about relationships so get in touch and stay connected with those who hold the keys (brokers, owners, etc.)
5. Leverage is a key aspect of real estate returns but use it with prudence so that when markets cycle and times get tough, you can hold onto possession of the asset.
6. Do your due diligence on the people you are doing business with. As my father-in-law would say, any deal or contract is only as good as the person behind it.
7. Persistence is key. Don't take no for an answer and keep knocking on doors. Follow up, follow up, follow-up. Today’s “no” will eventually turn into a “yes” at a future point of time due to changing circumstances. The deals will follow.