Establishing Your Investory Identity with JD Monroe Part 2

December 15, 2021 melissa Real Estate Comments Off on Establishing Your Investory Identity with JD Monroe Part 2

Establishing Your Investory Identity with JD Monroe Part 2

We’re continuing last week’s conversation about establishing your investor identity. Many new investors find themselves stuck and unable to progress in their careers, and it’s because they don’t know what they want in the first place! Our very own JD Monroe shares the questions you should ask yourself to narrow down what you truly want and finally start making strides towards it. You might have made strong ideas by now, but what are the other factors to consider? Let’s find out!

The points below are from the eighteenth episode of the Real Estate JAM. If you want the full experience, tune in to the full episode on YouTube, Spotify, or Apple Podcasts!


 

Revisiting Last Week’s Conversation

Just to act as a little primer to the discussion, it’s good to remember JD’s purpose for the episode. He talks about avoiding the pitfalls of the “Shiny Object Syndrome”, where many newer investors seem to want the luxurious life that influencers portray on social media. While that IS achievable through real estate, it takes a lot of grinding – which not many people want to go through. In real estate, it’s essential to keep yourself grounded in reality and start driving towards what you really want. Hence, the questions tackled in this (and the previous) article are aimed to help you understand who you are as an investor.

Here are the questions we’ve dealt with so far:

  1. What type of asset class do you want to want to invest in?
  2. Do you prefer active or passive investing? What type of real estate investing are you considering?
  3. What market do you want to invest in?

The answers to these questions are already quite eye-opening and might have already inspired you to take action. But to do this list some justice and to avoid making more business mistakes, let’s go through the rest of the questions to see what else we might have missed.

A Deeper Dive Into Your Investor Mindset

  1. What type of real estate do you want to invest in?

Do you want to invest in commercial real estate? Residential? Large multifamily? Small multifamily? There are too many options out there! In JD’s experience, while attending meetups with fellow real estate investors, newer investors tend to change their minds whenever someone stands up in front to give their pitch. When someone talks about multifamily, everybody in the room wants to be a multifamily investor. When someone else goes in front to talk about mobile home parks, half of the room leans toward investing in mobile home parks. If another person comes along and talks about the wonder of storage facilities, you already know they’re going to be chasing after it!

This is where we could see the shiny object syndrome working its magic. Because we’re answering these questions, that dangerous magic trick shouldn’t fool you anymore. Write your answers to these questions down and let it be your anchor and compass. When an opportunity comes along, does it fit your criteria? (Note: Opinions CAN change, so never think that what you want now is a perpetual thing!)

  1. What does your ideal property look like?

Regardless of your choice among residential, commercial, multifamily, and all the other options, you have to know specifically what your ideal property looks like. Is it a three-bedroom, two-bath, 1500 square foot in an A-class neighborhood? You have to be that specific!

Take this example. JD talks about someone he knows that always avoided pools because it costs a lot of money to fix them. Even if pools are nice, you won’t get that much money and value out of fixing pools. But if you don’t fix the pool, you’re also going to get hurt. This person has pools crossed out of his mind when they have their ideal property in mind. Others avoid properties with foundation issues or if too many repairs would be required.

  1. What is the “After Repair Value” (ARV) target range?

Now that you know what properties you like, the next logical step is to understand the numbers. How much should these properties go for? What’s your budget going to be? After repairing, how much value are you going to get? That’s what the ARV could tell you.

  1. How much rehab are you going to do?

Some people, as mentioned earlier, avoid properties that need a lot of rehabs. They buy properties in decent shape at a discount, then just list it immediately on the MLS! Zero rehabs. Usually fewer profits, but also less work to be done! That’s their style, and you could do the same thing too – if that’s what you prefer.

You get the idea. Others would buy really distressed houses for extremely low prices then give them a completely new identity. Another option is to only go for properties requiring repairs that you know how to do. The theme is always the same – choose what you want!

  1. How will you fund your deals?

If you know how much money you’ll be making, maybe try to see first how you’d get the money to start moving the needle. Just like question 5, there are many options out there, from bank financing, private money, hard money, and many more creative financing solutions.

If you had a foreclosure in the past, then bank financing might not be the option for you. But again, there are other solutions, even if one is closed off to you. Your rich aunt Bethel who has $20 million, might love you so much that she’s willing to lend you some money as long as you pay her back. Just like how some of the guests in this show do it, you could copy them and tap into your network! Maybe some people in your life have extra money that they’re willing to grow through you.

 

With all these questions answered, you already have an image of who you are as an investor. As a bonus, as JD says, you could easily combine the answers into your elevator pitch!

 

Want to learn more? You can listen to the full episode on YouTube, Spotify, or Apple Podcasts!

 

Outline of the Episode:

  • [01:09] Establishing your investor identity – who are you as an investor? Point your car in the right direction, and start driving!
  • [03:37] What type of asset class do you want to invest in?
  • [04:26] Do you prefer active or passive investing?
  • [07:37] What type of real estate investing are you considering?
  • [08:26] What market do you want to invest in?
  • [11:25] What type of real estate do you want to invest in?
  • [13:25] What does your ideal property look like?
  • [15:34] What is the after-repair value (ARV) target range?
  • [16:56] How much rehab are you willing to do?
  • [18:07] How will you fund your deals?
  • [20:08] These nine questions can become your elevator pitch!

 

Resources:

 

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