extreme ownership is the focus of this guide for passive real estate investors. First, it highlights the main idea behind the topic. It also outlines the risks and questions worth reviewing. As a result, you can approach the discussion with a clearer framework.
What to know about extreme ownership
Core ideas for extreme ownership
It was coined by former Navy Seal Officer Jocko Willink (made popular in his recent book, Extreme Ownership). It means that if anything goes wrong on a property, it’s the general partner’s fault. In addition, as the general partner, the PassiveInvesting.com team believes in an “extreme ownership mentality” when it comes to asset management.
If something goes wrong (we made an error or did not provide proper instructions to the team). We take ownership of it.
Risks and tradeoffs
An example of our process and how it’s been successful happened recently at our Willowbrook asset. During a property call, we were reviewing monthly expenses. In addition, noticed one resident building had a water bill four times higher versus the other buildings and no residents had reported an in-unit water leak.
We entered a task into Asana, our project management software, and created a game plan to identify what was occurring. The first step was to send out a professional plumber to scope drain lines. In addition, see if there was a major leak or break outside of the building. They found nothing wrong.
Questions to ask
Next, we had our on-site maintenance team walk all units to check toilet flappers, sinks, and hot water tanks. In addition, this amounted to a couple of small repairs. Finally, we had Greenville water investigate and analyze usage to see what they could uncover. The outcome? In addition, greenville water issued us a refund.
Moreover, now, this might not seem like a big deal in the grand scheme of things, but as Benjamin Franklin once said. “A small leak will sink a great ship.” We take this approach with every aspect, large or small, that could throw off our projections and eat into the overall profitability of our investment opportunities.
Practical next steps
By following what we call our asset management “people, process, and technology” approach. We were able to stay on top of every issue while keeping everyone in the loop about what’s going on to resolve it. In addition, the people component begins each week with an individual property call that includes on-site staff. The regional property manager, and our team to discuss physical performance (i.e.
renovations or required repairs), financial performance, and other key issues. In addition, before our weekly call, the property manager sends a Key Performance Indicator (KPI) report that includes statistics like occupancy, the number of tours. Prospective leads, new leases, declined leases and why they were declined, property reviews, maintenance requests, completed and upcoming resident events, and any market changes.
Core ideas for extreme ownership
The process component brings everyone together on a regular basis which keeps us up to
date on performance and enables us to be proactive.
Risks and tradeoffs
Moreover, throughout the week our management teams communicate over the phone and via email. If there are any deviations from the budget or property performance we can make real-time adjustments and avoid any month-end surprises. In addition, the technology component allows us to track our discussions and action items . By, as mentioned, using the collaborative cloud-based software, Asana.
This technology allows our Passive Investing team to enter tasks, follow-ups, and questions we need answered. In addition, it also allows other team members to make comments and collaborate on issues. With Asana we can track and store all activities in one place. Everyone is knowledgeable of what’s happened in the past, what’s being discussed, and what’s occurring at each property in real-time.
Questions to ask
We take asset management very seriously. It’s one of the most important activities we do to ensure our business plan is being met and (ideally) exceeded. Using the same stringent parameters of an American hero such as Jocko Willink puts us (and you) on the winning side every time.
Key takeaways for extreme ownership
- Start with the goal and timeline that fit your wider financial plan.
- Next, review the assumptions, risks, fees, and possible outcomes.
- Finally, compare the opportunity with other ways to use your capital.
Put extreme ownership in context
Every investment decision depends on the investor, the deal, and the market. Therefore, use the ideas above as a starting point for deeper due diligence. Review source documents, ask direct questions, and seek qualified advice when needed. For more guidance, explore our passive real estate investing education.
A clear review of extreme ownership
extreme ownership deserves a clear and practical review. These short checks can support a more informed decision.
- Start with a clear goal.
- Next, define the time horizon.
- Review each key assumption.
- Compare the likely outcomes.
- Test a less favorable case.
- Ask who controls each decision.
- Confirm the fees and incentives.
- Study the market and the deal.
- Check the supporting documents.
- Look for clear communication.
- Compare other choices.
- Keep the full plan in view.
- Write down the main risks.
- Review the source of returns.
- Check the exit assumptions.
- Understand the tax questions.
- Consider the need for liquidity.
- Match the choice to your goals.
- Ask direct follow-up questions.
- Confirm the reporting process.
- Review the operating plan.
- Check the team’s experience.
- Compare the best and worst cases.
- Keep expectations realistic.
- Use qualified advice when needed.
- Document the final decision.
- Review the decision over time.
- Watch for changing conditions.
- Stay focused on the long term.
- Finally, act with a clear reason.