BUSINESS BYDESIGN IS ADEMAND FOR CLARITY
Self-Survey Exercise:
Have you detailed or arranged your real estate busi- ness affairs to align with your personality, your goals, and your purpose for doing it? It may be a life purpose, or a variation such as a financial means to an end. For some, they might realize they don’t have a plan yet. Do you have defined investment goals? Investing is a plan; the type of investing is a strategy. If that distinction isn’t clear, then begin with that. (Answer the questions in the sidebar to get started.) The questions are not complicated. I would caution one to be reflective when answering them, take time and give each appropriate consideration. It’s easy to answer favorably with the lure of opportunity. Consider not only the upside but the downside of each, and then answer. Answering these questions helps your business de- sign reveal itself. Design is how. A business plan is what. In this context, you have already determined “the what,” that you’d like to pursue real estate investing in some way. It should be put to the test to verify you have what it takes, by first asking how it will look. The how helps you understand the systems and checklists that you will need, and you’ll experience how they work. If you are going to utilize your time and money for real estate investing, going through the exercise of asking how it will look will serve as an aid to inform the what. If your plan is to buy and hold one new rental each year, and you’ve determined people skills isn’t a strength of yours, you’ll have to match up how you can still achieve the goal — perhaps it will be an outside company to manage for you — then the budget must reflect that. Business design of the how creates a standardized sys- tem to complete individual tasks so you achieve a desired outcome. Standards are the hallmark of consistency and the means to become efficient, repeatable, economical, and profitable. Checklists work even if people change. Business design is the creation of systems that lead to the path to scale. Start small. Standardize. Repeat. • What do you think on this matter? Tell us. Write to us. We really want to know. Go to RealtyMatters.online and post a note. For the Resource Link, go to: ThinkRealty.com/xyz For Column Notes, Resource Links and Language Translation for this Column, go to: RealtyMatters.Online/Column/July-2020 Source: https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax- returns-line-item-estimates BrianWojcik is a housing industry advocate who transitioned into real estate, both as an investor and property manager, after more than two decades of experience in engineering, sales, executive management, and operational/business process reengineering consulting. He resides in Howard County, MD, where he volunteers to teach a “Tenant Success” program he created for Bridges to Housing Stability, and where he created Landlord411 to assist rental housing providers. His expertise of the independently owned rental-housingmarket has been sought after for local and state level legislation/policy development. Mr. Wojcik has been published in national publications about legislative issues, affordable housingmatters, and rental housing advocacy. He holds a Bachelor of Science degree in Manufacturing Management fromClarkson University and a Master of Science degree in Real Estate fromThe Johns Hopkins University. He is founder of diyRealty.co.
Will the opportunities and rewards available in real estate investing be an ideal vehicle to help you achieve your financial objectives? Is real estate investing aligned with the financial goals, and financial risk tolerance that you have? Are your talents and strengths well- suited for real estate investing? Real estate investing requires people skills, technology use, analysis, physical labor, and some construction/handyman skills. Success is multifactorial. Do you have the skill to see the big picture — the cause and effect — to prioritize fluid circumstances? How strong is your emotional wherewithal? Do you have what it takes to chase rent and deal with stories and explanations from renters on why they shouldn’t have to pay for the damage they caused?
Do you like to create, or do you like to iterate?
Do you have the financial resources to carry rent for months if rent is not paid?
Will you be able to endure the emotional challenge of evicting a renter and his/her family if they cannot manage to pay rent on time? Are there processes or available aid that can assist areas that may not match up, or help you compensate in evaluated areas that may not be a good fit? If so, is it a good fit after the fact?
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