Risk with negative impacts is a threat, whereas a risk with a positive impact is an opportunity.
When you’re moving your way through distressed real estate, it’s hard to determine what will be a positive asset in your portfolio. We watch shows where house flipping seems most appealing, and others that renovate hotels from quaint to 5-star. Here are 3 questions to ask yourself when creating your own opportunities and making calculated risks.
Do I ACTUALLY care about this?
There’s something to be said about being passionate about what you do. I want to tell you firsthand that there will be stand-out deals. You’ll care about the property and really see the potential. Listen to that initial instinct. If you are more interested in business fronts, look at those properties. It’s the same with Airbnbs and hotels. Go where you’re drawn. The rest will follow suit.
Have I considered this from all angles?
Your ego is your enemy. It will bite you in the butt every single time when it comes to real estate. You have to acknowledge that you may not have all the answers and there are two ways to handle this: find experts to consult so you get a better understanding, and then consult experts.
Beginner knowledge is not a replacement for consultants. However, it is an upper hand when you’re navigating things. It’s also a reality check on how much you need a team of contacts to get the best deal. The truth is, there might be a great deal that you want to capitalize on, but a contractor will let you know that renovation to city code could take up to a year… It doesn’t sound like such a great deal now, does it? Who knows, if you can swing that, maybe that deal is for you.
Either way, knowledge like that is a dealbreaker. It’s easier to save time and drop deals that will flop when you have good brains to lead you to the perfect deal. It’ll permanently save you in the long run.
What do I bring to the table consistently?
How do you control the deal? What are the skills that you possess that you would bet on over and over again? This is an excellent way to see how you can make opportunities. If you’re great at research, you know your due diligence will be out of the park, but maybe you need a sales-type to get fundraising going. When you recognize that, you instantly make up for what you lack. Strength in numbers!
Identify your strengths by looking back at what brings you joy. Then, when you find areas you aren’t as interested in, identify that aspect and find support in it. Odds are they’ll need your skill set! This is how some of the most successful teams are made: reconciling what you need support on with finding support in all areas.
Opportunities are out there.
When you take calculated risks, you’re bound to take a lot of the unnecessary losses out of the equation. It’s incredibly important to assess the situation, see how others can identify cracks you can’t see, and consistently hone your strengths in the process. These are how great deals and BIG portfolios are made.
For more thoughts on discovering what you want and finding opportunities, check out my podcast interview with Justin Maven on The Money Maven Project