164: Year-End Update & Your 2018 Strategic Plan

SHOW NOTES FOR EPISODE 164: YEAR-END UPDATE & YOUR 2018 STRATEGIC PLAN

Developing a good strategic plan is very important if you are serious about reaching your real estate investment goals.  In this episode, Bill zeros in on the importance of compiling the previous year ‘s data to help create your 2018 Strategic Real Estate Investing Plan.

Without a vision, people perish.  Proverbs 29:18

This is the time of the year when we look back at what we accomplished this year and look ahead at what we want to accomplish in the year ahead, with the idea of developing a Strategic Plan for 2018.

As we approach year-end, I am very excited about completing my 2018 Strategic Plan.  If you are just starting out in real estate investing, this could also be a great time for you to start putting your first strategic plan together.  Or, if you are already investing, to review your 2017 plan and look ahead to what you need to do to reach your investing goals.  In this episode and next week, I will explore the importance of careful preparation and planning for your 2018 Plan and what is required.

Developing a good strategic plan is very important if you are serious about reaching your real estate investment goals.  Just buying a house here and there is not a plan.  Or even saying I will buy one house a year.  Your Strategic Plan puts your goals into perspective, helps define HOW you will achieve those goals and keeps you on track to achieve your goals.

My Personal Update

• My First Issue – Not acquiring the 100 units I wanted to in 2017
  • So what happens if you don’t achieve a goal you that you set out to accomplish
  • Now, I guess this is a place where many people may lose heart and get discouraged. You can’t let your attitude get so bad that you are unable to keep moving forward
  • In my case, sure I was disappointed, but will it deter me from still trying to achieve my goal of 1,000 units by 2020?   I may have to ramp up and re-tool my overall, 6-year plan but that’s OK
  • What’s more important is why I did not accomplish it and the key issue
    • While I was plugging away, researching markets, evaluating properties and submitting LOIs, yes there were challenges in that area
      • Very competitive
      • Compressed cap rates
      • Not finding the properties that met our criteria
    • But there was something more overriding…
    • One of my properties still had some big issues
    • You have to look at your current properties and make sure they are cash-flowing the way you want and are being solidly managed – in other words, they are doing what they’re supposed to be doing
    • My 22-unit had many issues that had not been resolved
      • Difficulties with property management
      • Overriding expenses
      • Higher vacancy that I wanted
      • Unfinished rehabs
    • So, I turned my focus to those issues and that took me away from finding properties
    • The good news is that the property is at 100% occupancy and I have made big leaps to control most of the key issues
    • My AirBNB unit is also doing very well – generating twice what I would have with a conventional tenant – and I am looking at adding a second unit in 2018
    • But I had to get that in order before I could jump ahead to pursue the next property
    • Well, anyway, on with your strategic planning

Start collecting all your data in one place.

• I would recommend buying a notebook – one with the clear slipcovers so you can put you 2018 Strategic Plan on it with relevant tabs.
• I also love whiteboards (you don’t have to do this but it was helpful for me) I have a big one I use when planning where I can joint down random thoughts, ideas, goals, etc. to help me organize my thinking and ultimately the plan,
• Don’t get hung-up on how it looks.  You are not writing a doctoral thesis.  It just has to work for you.  But do take the time to map it out carefully so that your goals and objectives are realistic and achievable.

Newbies

If you are just starting out, then, you won’t reflect back on your real estate business but, instead, look back at your personal situation.

• Carefully examine your personal finances, spending, debts, obligations for 2017
• What is your liquidity? How much in emergency funds do you have?
• Determine your net worth (there are many great programs and free worksheets/spreadsheets online that will help you do this
• Look at your credit – How is it? What do you have to do to improve your credit scores (pay off debt, remove negative items from your credit report, etc.)
• What capital do you have to start your real estate investing? Or, will you do a HELOC, and take equity out of your home or other property to launch your real estate business.

Ready to Go

If you have not yet invested but feel you are ready to buy in 2018, instead of looking back at your real estate a and business, look at what you have done to prepare.

• Are you regularly attending REI or other real estate meetings?
• Have you found a mentor?
• Have you established an LLC or other entity and obtained a separate business tax ID just for your business to protect you and your family from loss?
• Have you opened a business checking account just for your business?

Experienced Investor

• Make sure you have careful and comprehensive a comprehensive record/summary of everything that happened during the year
• Print out all your financials — all the financial tracking data.  Profit and Loss statements.  Balance Sheets.  Rent Rolls.  All of your income and expenses. If you don’t have those numbers readily available, it time to consider getting a financial bookkeeping program like QuickBooks or maybe even hiring a part-time bookkeeper.  If you use Excel spreadsheets you can draw from that data but it’s best to have a way to easily input data, track and generate reports that will help you continually assess how you are doing.
• Also, look at other data pertinent to your real estate investment activities over the last year – look at your calendars, daytimers, whatever records you had to get a good perspective of “The Year in Review,” so to speak.  Where did you go?  How did you spend your time?  Track how many hours per week you spent on real estate investing education, mentoring, research, etc.   Did you attend any industry boot camps or conferences?  Did you listen to podcasts?  Read books? Write down how much you spent on all these things.  Make records of your hours spent as well as how much money you spent on those activities – even mileage, as those are all legitimate tax deductions.  Approach as if you are a reporter, writing about someone or chronicling a company. Dig deep.
• Look at what you accomplished.  Did you meet any of your goals?  It’s time to celebrate your successes and learn from your failures.  It’s OK to pat yourself on the back for your wins.  Write them down.  If something worked well, make a note and do more of it, but refine and do it even better.  If you blew it, take the time to look at why you messed up, learn from it and either refine or kill it!
• Paint a good picture of how your year went and write notes for what you would do differently in the year ahead — to do it better, in the year to come.
• If you have not done anything yet but plan to get started in 2018, now is the time to look ahead.

Next week, I will look at the details of writing your plan.  And, you’ll want to set aside some time to do just that.  If you and your spouse are working on this together, I would recommend, like we used to do in the corporate world, that you schedule a Planning Retreat Weekend.  Get away, just the two of you or, if you have business partners, as a team trip.  Set up whiteboards, those large sheets of paper that you can peel and stick on a wall, and start mapping out your plan.

Good Planning Resources

I would recommend that you get some good books that will help you plan such as the ABCs of Real Estate Investing by Ken McElroy, The Unofficial Guide to Real Estate Investing by Martin Stone, BiggerPockets The Ultimate Beginner’s Guide to Real Estate Investing (free), The Millionare Real Estate Investor by Gary Keller, Multifamily Millions by David Lindahl or The Complete Guide to Buying and Selling Apartment Buildings by Steve Burges, listen to our episodes #006 – “How to Get Started in Real Estate Investing” and #010 on “Setting Your Real Estate Investing Goals.”  Both are good primers before you write your plan.

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