12/04/2024
Paying the current owner for extra money you figured out how to make is actually insane. Part of what makes you a good investor are the ADDITIONAL returns you can create above normal operators.
These lessons are hard-learned IP that you need to keep close to your chest.
If you include them in your underwriting while making an offer, you are juicing the Seller’s returns while sacrificing your own.
For example: If you self-manage a deal and save money on third-party property management, does that mean you are going to put a multiple on the saved cash and juice your offer? I wouldn’t. You will drag down your returns. You might have spent years learning to be an effective property manager and now you just sacrificed the return on that time.
The cons: Does it mean you win fewer deals? Yes. Should you care? Only if you truly stop growing in alignment with your goals.
For those fine with slow growth and following the most important rule: don’t lose money, this approach will bring peace of mind.
Remember, you are only as good as your last deal.
