Sample 1 - Blog #mistakesToAvoidSample 1 - Blog #mistakesToAvoidhttps://lololol.zohosites.com/thoughts/tag/mistakesToAvoidThu, 08 Aug 2024 02:20:09 -0700http://zoho.com/sites/<![CDATA[Guard Against These Five Impactful Mistakes as a New Real Estate Entrepreneur... ]]>https://lololol.zohosites.com/thoughts/post/Guard-Against-These-Five-Impactful-Mistakes-as-a-New-Real-Estate-Entrepreneur...

When building a real estate investment platform or any business for that matter, there are mistakes that are often made, and if avoided, can free up an organization for Scale, Speed and Efficiency:

Culture Fit: Hiring Quickly Without Guidelines Or Standards

You have your first deal. You need to raise capital, and you need to hire your team. You need to find your first employee, and quickly. But a too-quick hire can have costly implications. Culture and performance need to work together to elevate you and your team. You can’t have an employee who is a great fit for your culture if there is not the appropriate level of performance. But beware of the high performer who is a poison to your culture — this situation can rip the seams of your team apart. More time will be spent on political jockeying, and less time will be spent working at a high level if employees don’t enjoy their co-worker experience. And if the office is an environment your people dread, it can deal a big blow to your aspirations. 


Pro tip: When hiring, go beyond the interview, and conduct an audition where you actually have the person perform the tasks required of the position. 

Short-Term Thinking 

Not only is real estate a team game, but it is also a long game. You aren't day trading in front of a computer; deals can take months to procure and years to exit. There needs to be a long-term mentality and approach to all aspects of the business. It may be easy to take a quick deal at a cost to a counter party or vendor, but the reality is the short-term view could have long-term impacts. When segmented by asset class and geography, real estate is a surprisingly small world, and long-term reputation and relationships can be key to a successful career. The people and skill sets required for any one deal are vast: legal, accounting, architectural, engineering, political, suppliers, construction. The list goes on, and the web of different disciplines and people is what make real estate so endlessly fascinating. Are you sensing a trend? Relationships are incredibly important. 

"If you pay peanuts, you might just get monkeys" - Taking The Low-Cost Provider 

This is an easy trap: You receive three bids from three contractors, and they all appear to be the same on the surface, so there is a tendency to accept the lowest-cost option. Often, there is a reason for the variation in pricing, and you get what you pay for. When building your real estate investment business, take the time to dig a layer deeper, go below the surface and uncover the nuances so you understand why each provider is priced the way it is. There is often a good reason, and paying a little more upfront tends to save capital later in the investment. 

Short-Circuiting The Diligence Process

Some investors do this due to time constraints. Others do it because of capital constraints. And others do it because the seller doesn’t like an army of consultants going through their asset. A fatal blow could be dealt to an aspiring sponsor if their deal haemorrhages capital due to lack of thorough upfront diligence. Think of due diligence as a bank where time and resources are invested today to save time and money tomorrow. Bonus: it’s often in due diligence where you learn of an opportunity that at first look didn’t reveal itself — and it can pay off handsomely at a later date. 

Lacking Systems And Processes That Help Mitigate Risk

These processes might not be fully developed early in an investment career, but a focus of the early stage real estate entrepreneur should be to get them in place as quickly as possible. An example is a good due diligence checklist or a thorough punch list after work is completed by a contractor. These systems and processes can be obtained through experience, education and reaching out to peers or mentors in the industry who have systems and checklists in place. Constructing appropriate guardrails is not only vital to mitigating risk, but it also frees an organization up and allows it to gain speed, efficiency and scale. 
As you embark on your real estate investment journey, be sure to prepare yourself to avoid these common setbacks. 


source/credit: BJ Turner 

We aim to deliver much needed capital for SME’s and Property Developers.

Call Now ​+44 (0) 203 2909019

]]>Thu, 05 Mar 2020 10:04:22 -0800<![CDATA[Real Estate Costly Mistakes You Want To Avoid ]]>https://lololol.zohosites.com/thoughts/post/Real-Estate-Costly-Mistakes-You-Want-To-Avoid

Whilst like any other business, It’s far easier to lose money on rental property than to make money, no one sets out to lose money and having some guideposts about what you’re doing as well as mentor(s) or mastermind groups for advise and guidance really helps. 

On the surface, Real Estate Investing seems so easy. What’s not to like? 

Leverage , passive income ,  property appreciation,  tax benefits and more. 


Putting the attractiveness of Real Estate Property Investing aside, the reality of life as a landlord isn’t so rosy just like any business. Whilst it’s hard work, its benefits and rewards outweigh a lot of alternative investments if not all. 

It does however like most things worthwhile doing... 
  • Take time and 
  • Research and careful study to understand the business     
Some common pitfalls to avoid when getting into the rental property business. Yes, it is a Business. 
1. Looking for "somewhere you can see yourself living" instead of an Investment property 
  • Searching for a good profitable investment property is vastly different from choosing a home to live in. 
  • Finding the greatest, most beautiful house on the market or the most gorgeous vacant lot isn't the objective. You aren't looking for a house you would live in, you're looking for something that the average family would rent, appeals to the local market demand trends and ideally can fetch top rent for the lowest acquisition cost. 

2. Capital Appreciation pitfall - long-term value appreciation prediction 

One of the many advantages of real estate investing is that landlords can profit in multiple ways. 

  • From monthly rental income payments and 
  • In the appreciation of the underlying asset value - property capital growth 

Whilst the above is true, it’s a mistake to put too much weight on property appreciation. Yes, appreciation is an added benefit when a your investment property sold, however, in the meantime, the properties should be paying for themselves on a monthly basis from day one. The ultimate yardstick is your positive net cash flow and return on investment. 

We aim to deliver much needed capital for SME’s and Property Developers.

Call Now ​+44 (0) 203 2909019

3. Partnerships 

A business is no place for ambiguity. Clarity on the partnership and professional relationship as well as written agreements are paramount. The only investing partnerships that succeed are those that are very well defined with everyone’s roles and responsibilities strictly outlined. 

Business is after all a team sport as long as the rules of the game are clear and adhered to and there is a mechanism in place to resolve any differences. 

See this short video on why teams or partnerships fail and what to do about it -  The Five Dysfunctions of Teams 

4. Constantly raising the rent 

You may think that by continuously raising your rents, you’ll be able to make more money, even if it means more tenant turnover. But, in fact, the opposite is true. 


Think about all of the costs that go into vacancies, from fix-up repairs to updates, to marketing and more. All of these costs can easily outweigh any small gains in higher rent.


All that raising the rent on a current tenant does is force them to consider what else might be out there and make them more demanding. 


Keeping rent the same gives the tenant an incentive to stay and keeps them happy. 


The longer they stay, the lower maintenance they are, because they’ll be less likely to call you to fix something for fear that you’ll raise the rent. 
5. Tenant Profile or Criteria 
Emotion has no place in any business let alone, the rental business. 
It’s important to always think about the worst-case scenario: being forced to evict a tenant. Things happen, and sometimes a landlord has to take action. But can you? 
Clear ground rules or clarity for all involved is paramount. 
   

With all the above said, real estate investing isn’t rocket science. By going in eyes-open, seeking and paying for professional advisors as well as avoiding some of the more common pitfalls of novice landlords, your chances of success will increase exponentially. Remember, any business is a team sport! 

GIC Capital – Matching Capital With Opportunity  London +44 (0) 203 290 9019 

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