Investing & Being of Service - Can we do Both Simultaneously?
Entrepreneurship vs. Capitalism
Does this happen to you too?
I sometimes see something or read about something and it makes total sense but I can’t really tell why. Then, another time, I see or experience or read something and I know something is wrong but I can’t really tell right away what is wrong?
As the year is still young, I reflect on how to take actions that will make it a great year and encourage our clients, folks in my network, and all around me to do the same.
Some concepts in the context of what we are doing and aiming to accomplish can appear like that situation we can’t quite put in words. One of the authors I follow on Medium, Umair, helped me a lot when writing the following passage. It really clarifies what we in our team are doing and what we are not:
Capitalism isn’t you setting up a little coffee shop. That’s entrepreneurship, commerce, business. Capitalism is a Starbucks in every Walmart funded by Goldman Sachs. Commerce and business and entrepreneurship are about, usually, a fair deal, social bonds, community, a feeling like family. Capitalism, the real thing on the other hand, is about the abusive and exploitative search for ever more profit at any cost. There is a world of difference between them.
So how then can investing in residential real estate and at the same time providing a service coexist?
It’s entrepreneurship. It’s the fair deal that we are aiming to find or negotiate. How does that look in reality and how can you do the same — on your own or with our help?
It starts with the social bond that should form between those who offer properties for sale and those, like us, who look for well-performing properties. There is a lot of similarity to families. We need to know how the unique members of the family tick. What gets one uncle excited to talk about a topic for hours while the cousin twice removed is totally into numbers and short, precise fact exchanges? We get to know them over time, explore what they like, and dislike, and then arrange our own behaviors accordingly.
That’s what we have done with our turnkey providers. They are the ones who find the properties in their service area that they think are a good buy to be renovated and then offered to investors like us.
Initially, the criteria are internal to the turnkey provider because they run their company according to certain rules they have established for themselves. As soon as they get to the point to think about: “who should we offer this property as an investment, now that we know what all needs to be done to make it into a modern, fully renovated investment property?”
They go, in their mind, through the list of “family members”, in that case, called existing clients, and reflect who would most likely be excited to look at this 4 bedrooms 2 baths house 5 minutes from downtown.
They don’t have to do a lot of selling if they know their clientele (family members) well. Only in rare cases do they really need to offer a property outside the family.
You might think they can’t expand their business if they work this way but they can. Guess what, the family members (clients) who have great experiences, like me, tell others in their network about it and bring new members to the family. It’s basically like having babies in the family and it keeps growing generation after generation. The only difference is that the generations follow in much shorter order than in real families. Sometimes they can come in waves, literally.
What does that have to do with service in investing simultaneously, you ask?
Well that family-like bond or social bond, as Umair calls it, goes further.
Now that we know that the turnkey provider has found the property, offered it to a client like me knowing that it fits into my way of investing, they complete the renovation and then officially turn ownership over to me.
That does not end the relationship but changes it. Now they become the steward that manages the property for us, which means they find a tenant and then collect rent, fix and maintain things, etc.
That’s where the service aspect comes in. They service the property. Together we serve the tenant. Yes, we have criteria to determine what a good tenant has to bring to the table. When we found a family for our property, we want them to join part of our family.
We want a social bond where they feel comfortable enough to tell us when something is not right. That’s not just something related to the property but also related to their life. Especially COVID has taught us that the strength of the social bond between us as investors, our turnkey family, and our tenant family is extremely important for all family members to be happy and successful. When the tenant family loses a job, has a hard time paying rent, needs help to apply for government programs, etc., etc., we are here to help — because that‘s what family members do for each other.
We develop a portfolio of well-performing investment properties where we have great relations with our turnkey providers as well as our tenants, and in return, we are treated well and never miss a rent payment.
Don’t say that’s impossible. Through all of 2020, we have had the joy to be a member in one of those families of Turnkey provider and tenants community and we all got along, adjusted and no rent payment was missed all year.
Let’s develop more of those social bonds and aim to be the best entrepreneurs and investors we can be. If you like to learn how just get in touch and let’s talk about it.