investment protection during growth 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 investment protection during growth
One of the more common questions that I have been receiving lately from investors, is about how we are managing the growth that we have seen over the last several years.
I don’t fault them for asking the question as it totally makes sense. It is a question that should arise when you are investing 6-, 7-, and even 8-figures into our investment offerings.
Partners’ Decision Years Ago
Years ago, when we started PassiveInvesting.com, Danny, Brandon, and myself, sat down and laid out the plan for our strategic growth and how we would be able to make sure to grow our team to protect your investment.
As you already know, we collect an asset management fee from each asset that we acquire. Many of you probably have wondered what this fee pays for and why we charge the fee. This fee is on top of the property management fee which our third-party property management company pays to manage the on-site team including the manager, leasing agents, and maintenance team.
The consensus from the managing partners, was to always use the asset management fees to grow our internal team. The partners do not take home and put into our pockets this asset management fee.
What this means for investors
Paying for Additional Team Members
We knew that to continue to protect your investment as we grew that we would need to hire on additional team members. The best way for us to do this was to use the asset management fees that allow us to increase our PassiveInvesting.com, LLC revenues so we could hire additional people in a variety of strategic roles.
To date, we currently have 24 full-time team members that work directly for PassiveInvesting.com and have strategic roles to work together as a cohesive team to monitor and protect your investing dollars.
Business Experience at its Finest
In a recent article that I wrote about the seven red flags for passive real estate investing (click here to read the article), I mentioned how it is important to have someone on the team with a successful background in business. This is a prime example of that prior business experience on how to grow and scale that goes a long way.
My wife and I own 4 non-surgical, orthopedic medical clinics that we started from scratch back in 2011. We have 39 full time employees in this group spread across the state of South Carolina. We learn a lot of things about scaling and growing while building out this business.
Questions to ask before acting
We have successfully put together a solid team that allows that business to run on autopilot for the most part. We spend about 1-2 hours a month in a corporate director’s meeting and that’s it. The team that we put together runs the day-to-day operations.
Continued Growth Into 2022
Moving into 2022, we already know the additional people that we need to hire to continue to monitor and protect your investment to continue to find assets to offer to you for additional investments.
Key takeaways for investment protection during growth
- 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 investment protection during growth in context
Core ideas for investment protection during growth
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 investment protection during growth
investment protection during growth 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.
A practical review of Growth Minded: How We Protect Your Investment As We Expand
First, define the goal for this decision. Next, write down the result you expect. Then, identify the facts that support that result. Finally, note any facts that could change your view.
For example, compare the likely return with the main risks. In addition, check the timeline and the amount of control you will have. However, do not rely on one attractive number. Instead, review the assumptions behind every estimate.
Before you act, ask who will manage the work. Also, confirm how that team will report progress. If conditions change, decide how the plan can adapt. As a result, you can judge the opportunity with more confidence.
Moreover, compare this choice with realistic alternatives. For instance, consider liquidity, taxes, fees, and timing. Likewise, review the downside as closely as the upside. Therefore, your final decision can reflect both your goals and your limits.
In short, use a clear process. First, gather the facts. Next, test the plan. Then, ask direct questions. Finally, choose only when the answers support your strategy.