Executing on an idea when you don’t have all the answers is scary. But then again, how CAN you have all the answers?
Sometimes, you just have to work with the answers you DO have. And a whole lot of question marks.
And with multiple variables, any of which could blow up and completely derail your operation – it’s like shooting in the dark at a moving target. In a situation like that, it seems like you’d be more likely to fail than succeed.
BUT… I’m learning that some variables can be answered. And if you can work with as many known quantities as possible, this will increase your probability of success.
There are ways.
One of the best things you can do is surround yourself with people who have more knowledge than you – the ones who have experience doing the very things you’re trying to do. They can point you to the best answers to your variables – or at least help you craft the best strategy.
And once you have that, you can venture further into the unknown.
Let me give you a real world example of how I used this idea pretty recently.
As you know, I’ve been involved with real estate investing for a while now. And I just picked up a 24 unit apartment complex.
But this wasn’t an overnight process. It took a great deal of time to learn as much as I could about investing and come up with a solid strategy and game plan.
When I first moved to Charleston, I started attending investor mastermind groups. We’d do a happy hour regularly, and a breakfast downtown every other week. And I would just meet people who were doing the same sort of thing that I was – and we’d bounce knowledge off of each other. People who have gone through it would give me all sorts of ideas, as well as a lot of stuff I had never even thought of. I’d always come away with a tremendous amount of good knowledge.
And one of the things I learned right away was the importance of a good property manager. A BAD property manager can kill your cash flow (or worse), but a GOOD property manager can optimize everything – reduce expenses, raise income, and keep the investment properly on track.
Everyone I talked to recommended a particular property manager, who they were very happy with. I ended up meeting him at one of the happy hours, and based on my conversation with him and the recommendations from everyone who had worked with him, I decided that when I needed a property manager, I would use him. I filed this information away, until I bought my apartment complex.
But I was still a little nervous. All this looked pretty good on paper. But what if I was wrong? What if expenses were high for a reason? What if the new property manager was unable to optimize this property? What if he actually made everything WORSE?
Well, I believe your decisions are only as good as the information you have to work with. So if you are learning from people with tons of experience and have the numbers to back it up, you can probably act with a fair amount of confidence.
The only question is – do you trust it?
I decided to, and here’s what happened:
The last owner of my property had expenses that averaged about $4,700 a month.
The new property manager I installed had brought that number down to $1,300!!!
In other words, he did exactly what everyone said he would do.
Well, what do you know – it actually worked.
So, for me, this property manager went from being a wildcard… to a known quantity.
Of course, it’s a little early to get too excited. We’re off to a good start, but I want to see a few more months of similar performance. I’m feeling pretty optimistic about it.
And once I see that’s the case, I can structure my next deal with this known quantity in mind. I can find a property that is performing poorly based on high expenses, and install this manager with confidence that he will optimize. Nice!