How To Create A Winning Investment Strategy

Jun 9, 2016

Many real estate investors think a good investment strategy has to do with determining the best way to make a profit through commercial real estate investment.

That’s a big mistake, and here’s why: a winning investment strategy isn’t only about what the best way is to make a profit with an income property. It also includes how you plan to execute your winning strategy.

In order to be successful in nearly every endeavor, it’s not enough to have an idea of how you plan on making money, or whatever your goal may be. You also need to have a systematic method you plan on using in order to succeed.

That’s because it won’t help if you manage to cut a great deal because you “lucked” out. You need to be able to take those same tools and techniques and replicate your success – otherwise, you’ll end up with little to show for your efforts.

So What’s The Best Way To Create A Winning Investment Strategy?

put together a team of experts as an investment strategy

It’s simple: put together a team of people who are experts… and then let them do their jobs. What do I mean by that? Well, it’s simple. Many investors try to “save” money by doing everything themselves. They decide to fix things in their new multi-family properties because they’re handy, and why not save some money?

Or they decide to find new tenants because they’re convinced that only they know how to find “the ones.” The truth is that as an investor, you need to realize that your time is money. The time that you spend directly supervising a renovation or sitting in on tenant interviews, or “checking up” on things, is a time that you take away from other more profitable activities.

So yes, if you paint the lobby yourself, maybe you’ve saved an additional $300, but how long did it take you to do it?

If it took you six hours, then you just found yourself a job working for fifty bucks an hour. Which might not be so bad, if you close your eyes to the fact that during those six hours, you could have been working on a deal with a possible $50,000 in profit. Keep in mind that even though in the beginning you might need to take on more tasks, if you’ve already done at least a deal or two – or many more – then it’s probably high time for you to re-examine your processes to find out what can be delegated to others.

At the same time, you’ll want to have a system for each stage involved in acquiring a new property, and you’ll want to make sure that each member of your team knows how to follow that strategy. So for each of the 6 stages of investing in commercial real estate:

  1. Find
  2. Evaluate
  3. Acquire
  4. Fix
  5. Market
  6. Sell

…you will need a written checklist or execution plan on how to complete each step.

make a checklist as an investment strategy

The easiest way to do this is to simply record everything that you do during a deal. Write down each activity that you did, from beginning to end, and then review the list to see if there are any obvious things that you did but didn’t record. You can also take your list and ask a mentor or a colleague for their advice.

Once you’ve done the above steps, you’ll want to use your checklists on an actual deal to see if they work as written. So on your next deal, work through each step using the checklists, editing as you go along.

Not only will you have created and documented your investment strategy, but you can also take that strategy and train a team of people who will take care of most aspects of your investments while you spend your valuable time on adding to your portfolio of properties.

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