A real estate portfolio, at least as it pertains to residential redevelopers, serves as a conformation of past triumphs; they are essentially a collection of previous success stories. For as long as I can remember, investors have used their portfolios to boast about previous deals. It’s worth noting, however, that a properly crafted real estate portfolio is entirely capable of achieving so much more.
In the right hands, a great real estate investment portfolio can be used as leverage. It’s entirely possible for investors to use their respective portfolio to place the odds of whatever they are trying to accomplish in their favor. That’s right; closing deals, receiving funding and even building relationships can all be made easier through the use of a well-devised real estate portfolio.
No longer are real estate portfolios relegated to the trophy cases of residential redevelopers; they are now one of the most powerful tools in an investor’s arsenal. Not only can I assure you that a well-devised real estate portfolio will serve as an entirely new asset to your investing business, but with the addition of a little ingenuity and some due diligence, they can actually aid in everything you do from here on out.
What Can Your Real Estate Portfolio Do For You?
I maintain that those that learn how to leverage their real estate investment portfolio on their behalf will find it to be an invaluable tool. Let’s take a look some of the most important reasons investors may want to leverage their real estate portfolio:
Credibility
In working with motivated sellers, and even buyers for that matter, there is nothing more important to a residential redeveloper than their own credibility. If for nothing else, credibility is one of the only things that can differentiate a good investor from a great investor. Nothing else, at least that I am aware of, can boost the productivity of investors more efficiently and faster than the support of those they choose to do business with. Think about it; nobody in their right mind would choose to do business with a less credible company, especially with as much that is typically on the line in a standard real estate transaction. It’s safe to assume that credibility is, in fact, one of the most valuable assets at an investor’s disposal.
The importance of establishing a credible relationship with those you choose to do business with can’t be underestimated, which begs the question: How can a residential redeveloper build credibility with someone they essentially just met?
I maintain that the easiest way to build credibility with both buyers and sellers is through a well-devised real estate portfolio. In its truest form, a real estate portfolio is essentially a resume; it represents the culmination of all your hard work in one concise, easy to read folder. Done correctly, a real estate portfolio should put an investor’s best foot forward. A diligent curation of your career’s work, along with a supple amount of information, will go a long way in proving what you are capable of achieving.
You can’t expect someone you just met to take you for your word, as they should be expected to mind their own due diligence. You had better believe they will want to know your track record and how much experience — if any — you have in redeveloping real estate. That said, nothing is capable of delivering more answers than your real estate portfolio. The trust and credibility it can build between two parties is more than enough to at lest get the ball rolling on a deal. In fact, I’d argue that it’s difficult to close a deal without a real estate portfolio. In order to close on a deal you must found a relationship on trust, and the best way to build trust is to prove that you are capable of getting the job done.
As an investor, you are required to sell yourself as much as your business. The best residential redevelopers, for that matter, are more than aware that everyone they meet has the potential to contribute to their business in one way or another, not excluding those with access to funding. That said, investors need to be able to establish credibility with money lenders just as much — if not more so — as they would with buyers and sellers.
Not unlike residential redevelopers, money lenders are investors in their own right. They are looking for a return on their money without subjecting their initial investment to absurd amounts of risk. Not surprisingly, the more risk averse an investment opportunity is, the more inclined they are to offer their services.
It should go without saying, but similar to that of both buyers and sellers, real estate portfolios go a long way in establishing credibility with money lenders. If for nothing else, money lenders will put a lot more weight into a good real estate portfolio, as it is essentially their best way to gauge past performances. If they are confident in the work of a respective investor, they are much more likely to work with them in the near-term.
Learning Experience
I would be remised if I didn’t at least mention the pivotal role real estate portfolios played in the development of investors. While they have become synonymous with building credibility and putting work on display, their advantages don’t stop there.
Seeing as how a real estate portfolio represents one’s resume, it’s not out of the question to assume it highlights the features they want to put on display. Don’t hesitate to include an REIT portfolio to highlight your diversification strategy either. For all intents and purposes, a good real estate portfolio should make investors look great. However a great real estate investor should be able to deduce what they actually need to work on from their portfolio. While a good real estate portfolio won’t come out and identify any areas they are lacking in, good investors should be able to read between the lines.
I maintain that savvy residential redevelopers can learn a lot from their own portfolio. It is entirely possible to read the tea leaves and identify areas that need to be addressed. If you build a great real estate portfolio, you should have enough data to address issues you didn’t even know were relevant. Perhaps your closing windows could be trimmed down. Maybe you need to add more wholesale deals to your repertoire. Whatever the case may be, real estate portfolios have a way of identifying shortcomings you may not have even realized existed. The key, however, is to not only identify these areas of improvement, but rather address them. Only then will you truly be able to learn from your experience. Whether you realize it or not, understanding your shortcomings is equally as important — if not more so — than identifying your strengths.
The best investors are more than aware of the power their real estate portfolio holds. However, those that are new to the industry may be oblivious to the fact. That said, it’s time investors started using their real estate portfolios for more than a place to display their previous successes. With a little ingenuity and a lot of hard work, a good real estate portfolio can help you close deals faster and more efficiently than ever.
