Disciplined Investing: Overcoming the Impulse to Buy
In this business, our lifeblood is the ability to find new and sound deals. You can analyze deals any which way and push rents and do other things to make any deal work. But in this business, we have to have a lot of discipline and patience to make sure to enter the right deals. For the JB2 Investments team, that patience and discipline are well worth avoiding the pain of being in a bad deal, especially if we have any investor money on the line. It is a true challenge that we endure daily.
The Importance of Patience and Discipline in Real Estate
We have intensity and passion for what we do. So, when we are forced to constantly hit the brakes, it can be a tough predicament, especially when you have groups around you that are seeming to make some of these deals work. Part of the predicament is wondering if you are missing anything or wondering if these groups are not being as conservative as we are.
But the truth is that we must be conservative if this market turns. If that happens, some of the more aggressive groups may find themselves in trouble. Though apartment investing is very recession-proof, it’s not completely immune. We will be there to pick up the pieces if some groups encounter issues. At the end of the day, we pride ourselves on under-promising and over-delivering, making it a must to be strict with our process.
How We Overcome the Impulse to Buy
Having a partner is very important. When one of us is a little more optimistic or maybe is missing something, the other partner is checking them. We have strict metrics we are looking to hit. We are conservative for future rent increases below the market averages though we usually perform better than the market average. Here and there, if the property is in an area we feel comfortable in, we may tweak things a little but never drastically. We are always quick to say no and slow to say yes.
Having balance in other parts of our lives gives us the clarity we need to stay the course. We tend to be contrarians and not do what others are doing. We look at things with very different lenses, like our longer-term approach. Ultimately, we have been independently successful from this business and do not need to do another deal. So that just gives us a little less pressure on having to do the next deal. Lastly, by being active in this market we have seen groups utterly fail by having too thin margins or not doing the proper due diligence.
Staying Motivated in the Real Estate Business
We do go through times of dry spells. Based on our experience in the flip business, we understand the frustration that comes with one of these dry spells. But inevitably, an agent we have maintained a positive relationship with for years will bring a gem and make it all worth it. It is vital to remember these instances and stay focused to keep us moving ahead. We continually see what to improve on our current assets. When we have certain wins, we make sure they are acknowledged and it helps promote motivation.
Focus on Growing the Business
Our main goal is always to grow the business. Ultimately, the main way to do that is by buying more deals. We believe even in this competitive market that we can stick to our strict underwriting requirements and make deals happen. All it takes is patience, perseverance, and cautious optimism (and experience that comes with time and dedication).