6 Things I Love About A Good Investor
Everyone knows that architecture, design, construction and the economy are interdependent. Knowledge accumulated by a good investor can act as a thermometer of what is on the horizon. There are 6 things about investors that I appreciate the most. Here they are:
They have a vision to revitalize communities
Good investors don’t just look at a property. They are focused on the neighborhood and community. Many communities have spent a lot time, volunteered residents and businesses for planning, hired architects and engineers to come up with a community development plan. A wise investor will search that out. They’ll spend time with the development team to get input. They will incorporate relevant parts of the plan into their rehab project. And often times, there are grants and tax incentives for doing so.
I love investors who look at the urban areas not only to make money, but to protect the most vulnerable residents in the community. They find ways to contribute to opportunities for economic improvements for the people.
Recently I read a community development plan that included a need to incorporate at home work spaces for renters and home owners.
This is a growing trend, and my mind went into full gear coming up with design ideas for a 4-unit apartment building that would allow the residents to work at home and have a communal office space. The time communities spend on developing these plans are well worth looking at. They know the people who live there better. They know the history of the community and have a better idea of how to attract new people to live there.
They know how to follow the market
Real estate investing is fluid. It’s always on the move. If you’ve ever been involved, you’ve heard investors talk about a “hot market” in Ohio or Kansas City. But a few years later, the market moves on. The “hot market” is now slowing down. The market could be saturated. There might be more vacant properties than renters. There are many reasons why investors in one area might decide to move on.
Investors are great sources of information about the vibe of a community. They’ve done a lot of homework before choosing to invest in a city or town. Once they have the information they need about the area, their design choices are pretty cut and dry. The fewer adjustments they have to make the better.
So a good real estate investor will plan well before construction begins and sometimes have a design standard, like a template, that they operate by. They’ll pick the same type of flooring in most properties, choose the same color of paint, stick to properties that require similar upgrades. The point is, a good investor is decisive and quick and will not be emotionally involved with a property. They’re looking for profit, plain and simple.
They develop a focus or niche
As I mentioned above, most investors will hone in on a niche. They may be in to single family homes in the lower income rental group. Maybe they like rental properties near colleges. Maybe they prefer apartment buildings or commercial office buildings.
Good investors will focus on one investment strategy at a time, learn it well, perfect it, then move up to a more sophisticated investment. They will focus on becoming an “expert” in one investment strategy before moving on to the next one.
Growing a strong knowledge base one strategy at a time gives them confidence in risk taking. They don’t necessarily start with single family homes before they move up to an apartment building. In fact, taking time to learn single family flips or rentals can actually hinder an investor who wants to invest in apartment buildings. But they focus on one at a time.
They maintain high ethical standards
This goes right to what I think is the most important quality of any professional – reputation. That doesn’t mean they won’t make mistakes along the way. But they strive to learn and maintain high standards and become known for those standards by everyone they deal with.
Someone who prioritizes this goal is a forward thinker. A visionary. They don’t just see what affects them in the moment. They’re looking 5, 10, 20 years down the road into the success they hope to achieve then.
One way to do this is by embracing the same ethical standards that a normal realtor is bound by. They will be so much better off in the long run building a reputation of fairness than seeing what they can get away with.
They have experience dealing with construction
Experienced investors who prioritize high ethical standards and have experience on several projects can be fun to work with. They’ve learned a few things from the remodels they’ve done in the past and already have some knowledge under their belt that will help them make quick decisions.
The more properties they have in their portfolio, the more they’ve learned what they should spend their money on to make the most profit on the sell.
After rehabbing several older homes, for example, they have a better idea of how much contingency funds they should set aside for any surprises that may be uncovered along the way. A good investor wants to do a good quality job as quickly as possible.
They don’t fall in love with a property
This is important. Homeowners tend to get stressed about some of the design for their home and can be prone to making changes in the middle of construction. Investors don’t do that. Good investors have enough previous knowledge of what sells and how much profit they can make that they are quick at making decisions. They are not locked in to a design so if the design of a kitchen has to change, for example, then it has to change.
Their priority is making the most money on the sell as they can while still producing a quality product. Some investors are known for estimating how much a rehab will cost to a partner investor just to do as cheap a rehab as they can get away with. Talk about making yourself a target for a lawsuit! I’ve seen some of these properties. They’re shocking in their poor quality to say the least and they take forever to sell.