covers several different criteria. Property profile, is it an A, B, or C class proper- ty? (Warzone to Pride of own- ership). What about the time horizon? Real estate isn’t a very liquid asset, how long are you comfortable hav- ing your invest- ment money in a project? Property type? Single family, multifam- ily, commerical? An important component to
HOW to do it. When you put yourself in the same space as successful en- trepreneurs and real estate investors, you have a greater chance to become just like them. Proximity is indeed power. When you’re around people who have been there and done it, they can give you business strategies and knowledge making the risk ahead more manageable. NO. 3 EXPERIENCE Yep, you gotta just do it! I think we all know this one. After you’ve done something once, it becomes easier to do it again because we are more familiar with the process. You gain knowledge through direct participation in deals. If you are purchasing buy and hold property on your tenth property do you think you will be as nervous as the first one? Of course not! So in all honesty, it took me a year to buy my first out-of-state invest- ment property, but once I under- stood and experienced the process, I bought two more within the next year. Yes, experience is key. To sum it up, real estate investors need simple systems and guides to protect us from ourselves. Be assured that our risk tolerance will change as we learn, and grow our portfolio. Will you be perfect? No. Will you do better? Yes! Just think the difference this makes over a life- time can amount to millions! •
figuring out your investment philoso- phy is deciding in advance how you’re going to diversify your investments. I allocate a specific percentage of my portfolio to low-, moderate- and high-risk deals. As my investment experience has increased and I’ve entered different phases of my life, these percentages have shifted. This way when feeling too exposed in a particular area you don’t have to back out of investing altogether but instead rebalance your portfolio. Once you are clear on the informa- tion you have, the more certain you will feel about the investment. NO. 2 RESOURCES Do you have the right team? Yes, you’ve heard it several times, real estate is a team sport. A lot of times people are trying to figure out HOW to do something, when in reality you might just need to find the right WHO, because the right WHO already knows
thought of a loss will keep us out of the game. It’s no wonder that for some it takes blood, sweat and tears to take any kind of risk at all. Here’s the thing, risk tolerance is influenced by three things: informa- tion, resources, and experience. It might seem overly simplistic, but all that’s really required is a simple system to neutralize the harmful effects of our brains' faulty wiring. A different way to respond to taking risks. Let’s explore these three: NO. 1 INFORMATION Do the numbers work? And does it meet your investment criteria? It’s more than just making the num- bers work, but it is also about what investment is right for you. Make sure you run numbers on the perspective property and taking all income and expenses into consideration. Then you need to ask yourself if it meets your personal investment philosophy. This
Deborah Razo, Founder of theWom- en’s Real Estate Network (WREN), a community where women in real estate excel and empower each other. We share
experiences, resources and tools to help one another grow both personally and professionally. Contact Deborah at drazo@wreninspires.com or learn more at WRENinspires.com.
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