Five New Things: 12/13/2019
Here are a few takeaways from the past few weeks:
While Return on Investment is important, you should really be focused on the Return on Asset. In other words, if you strip away any leverage, how is your deal/business doing? Anything can be leveraged to make it profitable, but a great business is profitable on it's own.
The most successful investors in the world truly grasp the value of liquidity. Especially in a hot market like we're in right now, check in every few months and ask yourself, "If I had 2 weeks, what is the largest check I could write?"
Liquidity does not mean keeping your cash in a mattress under your bed nor in a 0.01% savings account at your bank. You can also increase liquidity by moving assets into equities or moving into short term real estate loans (instead of buying). It also doesn't mean that you need to sell all of your properties; you can increase liquidity while keep your real estate portfolio by aggressively paying down debt.
I've been looking for an easy-to-use, affordable, and accurate comp software, and so far I haven't found anything that fits all three. Previously, I've used my realtor as well as trial periods from propelio.com, but Propelio offers a bunch of other functionality that I don't use and it ends up being pretty expensive because of this ($99/mo). It also isn't practical to ask my realtor for comps on every one of the hundreds of properties that I look at on a weekly basis. This month, I found something different: ReiAutoComp. It was $97 for a lifetime membership and it's proven to be pretty useful and accurate. Let me know if you want a comp report from it and I'll get it to you (or a purchase referral, as we can both benefit from it).
As I wrap up two full renovation properties that I purchased back in July, I am reminded about the value of project completion time. I always make sure my deals make sense from a numbers perspective and account for conservative completion time in my underwriting. However, what I haven't been taking into account is how completion time limits the ability to scale. Even though I am doing three projects in parallel, I am stuck at this point until I refinance out of them, which has been limited by long projects, even though financially they make sense. This realization has changed my strategy a bit, to the point where I am looking for much lighter rehabs.
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