Ep. 592 | How to Know If a Real Estate Investment Is Right for You | #InvestHER

Before we jump into the U-Factor framework, here's why this matters. A lot of investors today are not short on opportunities. They're short on clarity. And here's what I mean by that. There are so many options right now. I have women come up to us all the time and say, is this a good time to buy a short-term rental? Should I passively invest in this development project, or should I be on the sidelines right now? There's a lot of opportunities, a lot of options. And if you don't have a clear way to evaluate these options, it can get overwhelming or we end up just jumping into an investment because we're tired of, you know, being on the sidelines or we just wanna make moves on our financial growth, et cetera. So the you factor and the framework I'm gonna share with you, the 5 areas today are all about creating a personal filter for yourself. It's a personal filter to assess not just is this the right deal or the right strategy, is this the right deal or strategy for me based on the season that I'm in? So let's get into the first one. It's all about time. Okay? Now, time is that one limited resource, right? It's the one thing. Everything else can be considered unlimited, but time is the one limited resource that we have. And there's two aspects of time I really wanna encourage you to think about. How involved do you wanna be in an investment? Whether it's actively or passively, and also how long do you want your money to be tied up for? We're gonna get into the financial aspect in a moment, but from a time perspective, it matters. How I would answer those questions in my 20s is different how I answer those questions now. And it also depends on how active or passive you are in terms of how much time do you have available to invest in an opportunity. So I want you to think about is typically in real estate there's two lanes. There's an active lane and there's a passive lane investments. If you jump into an active investment or buy your next active investment, it's going to require more of your time, right? The decisions, the oversight, the problem solving. If you invest passively with another operator, in a market with a particular asset class, it's going to require obviously less day-to-day, less of your time. But you're also giving up other, other aspects for, for that opportunity. It's all pros and there's all cons to every single choice we make. The key is what time do you have available? Okay, that's the first thing that I want you to think about and really get clear. I can speak very personally to this because I ended up, you know, really shifting my time availability over the years. So when I started investing 20 years ago, I was in my 20s. So the thought of going all in actively was 100%. The thought of even passively investing wasn't even a consideration. It was 0%. Now I'm in my 40s, right? I have children, I have other businesses I'm involved in. I can't go all in on, on active investing. So the question becomes, what percent does that look like and what percent do I want to look like? And what time do I have available and want to have available for my investments? Those are questions that you also need to ask yourself so you can make the right investment decision. So let's get into control. This is a big one in the world of, of real estate investing. Control is all about your level of involvement and decision-making. It's really those two, two areas in, in real estate. Do you want control and decision-making power, or are you comfortable relying on an operator to make those decisions. Again, there's no right and wrong. And obviously if you choose more active investing, like you go buy a rental property and, and, and manage it, et cetera, that's, that's one level of, of control. And then sometimes we end up going down the passive route or partnering with someone and they have more of the control. There's no right or wrong, there's no better approach, but it's really important to ask yourself what role do I want to play in this investment? And that will yield you information on how much control am I comfortable with? There are people listening right now, and I'm sure you're listening, and some of you're like, I would never give up control to another operator. I wanna be in full control of the opportunity, of the deal, of the decisions, everything. Okay? So that's one, one level of, of control. Other people who may not have the time or quite honestly the interest, but do wanna invest in real estate and, and make some moves from a, from a real estate perspective. It's like, you know what, I'm willing to give up some of that control and I'm going to partner with someone or work, work with someone on, on more of like a passive opportunity. Again, no right and wrong, but it's really important for you to be clear on what that looks like for you. So again, the, the two areas is what level of decision making do I want to have in my investments? And once you answer that question, you will know very clearly, right? And, and especially in the season that you're in, what will work for you. Okay? So that's control. The third one, and this is the one that everyone thinks about, but we're, you know, actually disregards the other ones I'll be, I'll be talking about, is financial needs. And this is a critical one, but I really wanted to start with time and control. And then the third one now is financial needs. And obviously the financial needs is evaluating What will this investment do for you? What do you need it to do for you? The beautiful part about real estate investments is that not all of them are created equal and not all of them have the same financial outputs, right? Some have cash flow, some are— they do not have cash flow day one. It might be more of a long, longer-term hold. Some have tax advantages, some do not have tax advantages. Some are about preserving your capital. Some are more about the upside opportunity. Some, there's liquidity in it. In a year, you can get your investment back. Others, your money is tied up for 5, 10 years. That all matters, that those financial kind of considerations matter. What return are you looking for? You know, from, from a, on a complete return on your investment on a yearly basis, what percent are you looking for is your goal so that you can meet that goal as you're investing in real estate. Again, it's not all created equal. You know, there's so many different markets, there's so many different asset classes, and there's so many different strategies. So you being clear on what you need from a financial perspective based on the season that you're in is critical before you can say, okay, this investment makes sense, this investment doesn't make sense. You've heard us say it before, real estate is a relationship business, and one of the most powerful ways to build those relationships is through meaningful conversations. That's one of the reasons we love podcasting. It's allowed us to connect with incredible women, build deeper relationships, and open doors to opportunities we never expected. But to keep the show running consistently at a high level, we don't do it alone. We have an amazing team behind us at Social Chameleon who handles all the behind the scenes work, the production, the content, and distribution so we can stay focused on serving you and growing our business. So if you've ever thought about starting your own podcast or taking it to the next level, they can help you do the same. With Social Chameleon, you press record and they handle the rest. Check them out at socialchameleon.us. That's socialchameleon.us. Now I want to move to diversification, and we hear this term a lot. Diversification. Diversification is all about your level of exposure. That's a really good way of thinking of it. So if I'm somebody who is, you know, concentrated, I have all my properties in this one community, this one asset class, and this one strategy, that's a lack of diversification. And there's nothing wrong with that per se. Typically people get expertise and you wanna see that for them as an operator, that they know the market, they know the asset class, but they're, they're, they're laser focused, right? Diversification typically means that there is a level of variety in, in your investments. So sometimes you'll have operators who have multifamily across the country in 6 different markets or in a few different markets. Again, no right or wrong, good or bad, but knowing where, where you want your own investments to be in terms of diversification is critical. For me, I am heavily involved in, heavily invested in real estate. So for, for me and my husband, an example of this is that We are diversified in different markets. That's one way to mitigate our risk. We're also invested in different asset classes, not a ton, but we are invested in, in a couple. So we have a, you know, a new build going on. We also are invested heavily in, in multifamily. So for us, that makes us feel like we're mitigating some risk. For you, as you get clarity on your time and your control, and obviously your financial needs. The next question is, you know, is if you are more of a, a, say for example, looking to passively invest, there's some passive investments that you can passively invest and it's very specific on the project, the market and, and the opportunity, which is, which is one path. There's other projects you can, you can actually invest in that are more diversified, say debt funds, and they're diversified in multiple operators' deals. Again, it's, gets back to what is going to work for you. Again, based on the 3 first 3 steps. And now as you're looking at your own investment investments and saying, how do I mitigate risk? What makes sense to me? This is a consideration. I can't, there's not a one size fits all here. And this is the right way. It's really about what's the right way for you and your family based on the season that you're in. I can't say that enough because that is the piece that so many investors miss. I wanna get to the fifth one, which is all about experience. Experience really helps you make better decisions, okay? And you know, as an investor, you know, we're all often considering different opportunities, different investments, et cetera. Like I, like I started out this podcast sharing, but experience is all about like, do you have the skills? Do you have the desire? Do you have the, the, do you have the experience, so to speak, to vet an opportunity in a particular market, uh, from an active perspective or a passive perspective? And to be really honest with yourself. Now, it doesn't mean if you don't have the experience, you can't mitigate that experience. That's why we've created InvestHer, right? That's why we have a community, a nationwide community of women that are across the country supporting each other in different markets. In different asset classes and different strategies. So you don't need to have all the experience by yourself, but it's something to consider to say, okay, based on my time, you know, based on the control I want, based on the financial goals and the diversification that I want in my own life and my own investments, what does my experience look like and where can I deploy that? Meaning, okay, I want to buy that next active rental property in a particular market. What is my experience that I can bring to the table? And then what are my gaps from a passive perspective? You may have experience in a lot of different areas professionally, but you might be lacking experience vetting an operator, right? Vetting the, the project itself. If you're going to passively invest with an operator, again, it doesn't mean you can't, you know, kind of mitigate those gaps. But it really matters that you are aware that there is a gap and you say, okay, I don't need to completely have experience in all of these areas before I invest, but what do I, what do I need to know? And then who can I— who and where can I get that information that is a trustworthy community that and obviously source that is the piece of experience that matters. I also want to say something very important when it comes to experience. I have seen over the many years that we have been working with women in the investor community, we see it all the time that women dismiss the experience they have in other profession— in their other professional world, in their personal life, that it could be applicable to real estate investing, whether it's on the active side or the passive side. So don't dismiss all the experience you bring to the table in general, because that matters, whether it's project management, whether it's, you know, analytical analysis of numbers, whatever it might be. Don't dismiss that. So many women, when they are becoming an investor and growing their investments, sometimes miss the fact that they have all these, all this experience that they actually can tap into as they're buying their next investment. Again, whether it's actively or passively. So while there might be a gap of, say, market or asset class or, you know, the, the actual investment itself, you can mitigate that. But don't forget that you do have other experience you can tap into to ensure that you are, you know, making the right decisions for, again, your life, your season, and what's going to matter to you and your family. So that's really critical. So again, just in summary, we went over the U-Factor framework: time, control, financial needs, diversification, and experience. And once you use this filter, right, this U-Factor framework, you'll be able to filter, is this investment the right fit for the season that I'm in based on the answers that I, and, and the, and the questions that I, I encourage you to ask yourself, okay? And that really comes down to strategic thinking. It's strategic thinking because it's not just doing what's in front of you to do. It's actually taking a step back and pausing. And that is, that is really important work, especially right now with everything happening in our world. We do need to take a pause. We need to, need to take a step back and say, okay, what is gonna make sense? For me in my life and move and then move forward with confidence. And that's exactly why we have InvestHerCon. It's coming up June 14th to the 16th in Scottsdale, Arizona. And this is a, a very powerful room where, where women take a step back. They're evaluating what they're building. They're asking better questions. They're saying, does this serve me right now in the season that I'm in? And you're gonna leave with two critical things. One is a support system and two is an action plan. Which really matters when we are taking a pause, doing the strategic thinking to say, what makes sense for me as I, you know, purchase my next investment and move into another opportunity. So I hope you can join us June 14th through the 16th. It's gonna be in beautiful Scottsdale, Arizona, and, uh, hope to meet you there and get connected to you and support you on your journey. And, you know, as, as we close out, The key here is to do something with what you got today. The key about the You Factor framework is that you ask these questions of yourself so you can get really honest and get really authentic with yourself before taking that next move and buying that next property. So thanks for listening. Thanks for being part of our community, and I really hope to see you in June at InvestorCon.

Thank you for listening. I hope you found today's conversation valuable. And don't forget to subscribe so you don't miss any future episodes. And share this with the women in your life that needs to hear it. I'll see you next week.