We get this question all the time and we think you’ll like our unique approach.
How do I get involved in real estate investing (REI)? We get this question all the time and our response is never “I have a deal for you.”
Setting up for success
At Blue Eyed Capital, we believe that real estate investing (REI) is more than just finding a good “deal.” It is an endeavor that requires careful thought, strategic planning, and a commitment to change. Before diving into property deals, we encourage you to ask yourself a series of probing questions that will help you identify your goals and align your investments with your values (we do this exercise with all our new investors). Here are some examples to begin asking yourself:
- What do you want to achieve from investing?
- Why are you investing? Is it to generate passive income, build long-term wealth, or achieve financial freedom?
- How much you can afford to invest? What is your risk tolerance?
- Consider what’s important to you in investing; do you want to invest in sustainable, eco-friendly properties that align with your environmental values? Or are you passionate about building strong communities?
- What are your 1, 3, 5 and 10 yr goals?
Without clear goals, it’s challenging to determine what investment approach will work best for your needs. Goals provide direction and focus, helping you define investment strategies that align with your desired outcomes. Whether you’re investing in real estate to generate passive income, build long-term wealth, or achieve financial freedom, defining your objectives upfront is crucial.
TIP: Remember, investing is a journey, not a destination. Continually reviewing and revising your investment strategy based on your changing circumstances can help you stay on track towards achieving your goals.
Creating a plan
With our foundation in place and target goals outlined our next step is creating a plan to get you there. As someone interested in real estate investment, and/or someone with experience in other investment types you have mostly likely heard the terms Income and Growth before. Let’s briefly discuss these investment strategies and how they work:
- Income Strategy: This approach involves purchasing properties that generate steady rental income. The focus is on generating cash flow, and the properties are typically located in stable, cash-flowing neighborhoods. This can be a great strategy for investors looking to generate passive income.
- Growth Strategy: A growth strategy primarily emphasizes appreciation in property value. Investors aim to purchase properties with the potential to increase in value and sell them for a profit later. This strategy is typically focused on up-and-coming neighborhoods with high growth potential.
- Blended Strategy: As the name suggests, a blended approach combines both income and growth strategies. This approach aims to generate both monthly rental income and long-term equity growth. Under this strategy you may look at investing in a Fund or looking at diversification within your real estate investments themselves.
FAQ: I am focused on a blended strategy at the moment and this is for two reasons: I need income to replace my W2 and I want growth to provided equity for future investments as my business grows. Personally my strategy changes
So at a high level we can begin to align our goals from earlier to these general strategies. Remember this is general, but this will help us more accurately target the right investment once we get there.
Getting to the detail
Not just yet. Commercial real estate investments present a world of possibilities, providing opportunities to make a positive impact while achieving financial success. To navigate this exciting realm, it’s essential to understand the different segments that categorize these investments based on their unique characteristics. We are leveling up the basic Income and Growth and layering unique characteristics like risk for example. These segments are defined as Core (and Core Plus), Value Add, and Opportunistic investment strategies.
- Core (and Core Plus): The Core strategy focuses on stable, income-generating properties in prime locations. These properties are like the heartbeat of a community, providing consistent returns and reliable cash flow. Core Plus investments share similar characteristics but may require some minor improvements or modifications that offer a blended income and growth strategy. Think of Core investments as the foundation of a sustainable and thriving investment portfolio. Risk Level: Low
- Value Add: Value Add investments align closely with our brand’s core values of growth and impact, presenting an opportunity to create positive change. This strategy involves acquiring properties that require improvements or renovations to enhance their overall value and appeal. By applying creative and sustainable solutions to these properties, we can make a significant impact on the community while increasing both rental income and property value. Examples include high performance HVAC, lighting and envelope enhancements. Risk Level: Medium
- Opportunistic: The Opportunistic strategy is all about seizing unique, often time-sensitive investment opportunities. This approach embraces a more adventurous mindset, where investors actively seek undervalued or distressed properties with great potential for transformation. By applying innovative ideas and sustainable practices, you can breathe new life into these neglected properties, revitalizing communities and achieving substantial returns. Opportunistic investments offer tremendous impact value but at much higher risk. Risk Level: High
The beauty of all of this: it is customizable. We think this is so important because it creates that personalization that we don’t believe you can get with other investment vehicles such as stocks or bonds.
TIP: Monitor and Adjust Your Strategy: Your investment strategy should be flexible and adaptable. Regularly review your portfolio to ensure that it’s continuing to align with your goals and values. Consider making adjustments to your strategy if you find that it’s not delivering the expected returns.
Let’s recap our process.
- First we define our goals and why’s to build a foundation on which to lay out our investment plans.
- Next we align our goals and values to an investment strategy.
As a real estate investor, you have the power to shape the world around you. Developing a personalized investment strategy is a key component of success in real estate investment. By taking the time to assess your financial situation, goals, values, and choosing the right investment approach, you can create a unique strategy that provides financial gains while aligning with your life’s potential. We believe strongly in sustainable and eco-friendly practices so our strategy is simply Profit for Purpose. Maybe you believe strongly in something different? Anything is possible when you plan.
Wait, wait. We forget step 3, Finding a Partner. Why, because investing at the scale of multifamily apartments takes a team. At Blue Eyed Capital, we care about our investors’ goals, and ensuring the right fit in our team and investments is crucial. We believe this phase is so critical to achieving success that we don’t let our investors skip it.
We are here to help you so please don’t hesitate to connect with us. In our next blog we’ll go dive into evaluating and selecting a partner.
Now you have some goal defining to do, get to it! UNLEASH LIFE’S POTENTIAL. BE IMPACTFUL!!!!
