Now that my introduction is out of the way, it’s time to get down to business. And the first order of business is to define my goals so that I can track my progress and adjust as necessary.
By the time we settle down on the east coast, it will be mid-year, leaving only six months to accomplish any goals I lay out for 2008. Additionally, if you include all the tasks and time associated with acclimating to a new city, helping the fiancÃ©e with her business, planning a wedding, getting married, and taking a honeymoon, I won’t have the opportunity to devote full-time to my REI business in the second half of 2008.
That said, I will try to devote at least 25-30 hours per week on average to the business (which will likely translate to 50 hours some weeks and 10 hours other weeks), and I am defining some very realistic goals â€“ based on that amount of available time â€“ for the remainder of 2008:
- Buy My First Piece of Real Estate (Personal Residence)
- Create a Formal Business and Management Structure
While more a personal goal than a business goal, the benefits of buying a personal residence as my first piece of real estate will provide me a deal of knowledge about the tactical aspects of real estate acquisition. Proceeding through a first RE deal will help me understand the entire acquisition process — locating properties, negotiation, due diligence, the lending process, and the closing process.
This goal is all about setting up a formal structure that will provide both tax and legal benefits for my investing activities. As I expect that I will be building multiple businesses over the next couple years, ensuring that I get this part right the first time is very important; I plan to work with several accounting and legal professionals to ensure this goal is carried out correctly.
Specifically, this goal will include:
- Define my business structure
- Register my business structure
- Create a plan for accounting and management of the business
- Set up bank account(s), credit card(s), and other services as necessary
- Understand and plan for tax implications and expense accounting
I wouldn’t even consider buying my first investment property without completing a full Business Plan for my RE business. This should include my business goals, strategies, tactics, and risks. It should go into detail about investment criteria and how I will potentially work with outside investors and supporting team.
To be successful, I need to build a strong supporting team. At the very least I need to identify (and retain) the following team members:
- Certified Public Accountant (CPA)
- Real Estate Agent
- Property Management Company
- Insurance Agent
- Title Company
- Property Inspector
I will create a set of criteria and questions used to judge the ability of each team member to support the company and make us successful. I will use that criteria and question list to find the most complementary team members.
While I’ve already identified the area where I will be living (Atlanta), it’s not yet clear exactly where I will be investing. It would certainly be convenient to invest in the Atlanta metro area (and if at all possible, I will), but the decision on where to invest should be based on much more than just where I live.
I will do some formal analysis of various location criteria to determine my primary investing location(s). If Atlanta proves to be my preferred investing location, I will do more formal local analysis to provide direction on which specific local areas I should be targeting.
Once I identify an investing location, it’s time to start buying property. Unfortunately, until I actually start trying to locate and acquire property, I have no baseline to determine how many units I can/should expect to acquire over a given period of time.
Additionally, being new to REI, I don’t want to rush into large investments just for the sake of owning units. Instead, I will acquire properties at whatever pace feels natural, and only when I find properties that meet my criteria.
All that said, I think it’s important that I state a goal for how many units I plan to own by the end of the year. Based on the fact that I don’t yet know if I will be buying single family homes, duplexes, triplexes, 4-plexes, apartment buildings, or apartment complexes, I don’t want to be too specific with this goal. But, I think it’s reasonable to set a goal of 10 units (where a unit could be a single family home, half of a duplex, or single apartment unit, etc) for the remainder of the year.
I will likely revisit this goal as I continue to learn and gain experience.
Those are my RE investment goals for 2008; I will communicate all progress and obstacles here on the blog throughout the year, and have even created a separate section of the website to track these goals and my progress against them (this section is linked to from the main navigation bar at the top of each page).