HOW TO ACTUALLY KNOW IF A PROPERTY IS PERFORMING
Dive deep into your numbers and second guess everything. Look for costs that are missing, line items in the wrong place, expenses you've been calling one-time that keep coming back. Read your P&L like you're trying to find something wrong.
Ask yourself three things:
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Did I use conservative numbers going in, or did I build this deal on a perfect scenario?
Are the actual numbers from my books better or worse than what I projected, and do I understand why?
Is this property taking more of my time than expected, and what is that time worth in real dollars?
If you can't answer those cleanly, you don't actually know if your property is making you money. You just hope it is.
DIVE DEEP INTO YOUR NUMBERS AND SECOND GUESS EVERYTHING.
THE RESERVE QUESTION NOBODY WANTS TO ANSWER Going back to my 1970 single wide, that property never technically became a loser. But the moment I knew it could have crushed me was when that plumbing bill came in. What kept it from being a disaster was reserves. And it wasn't my only property.
on a property that should have been a win. Positive cash flow on paper is a starting point. What protects you when the paper lies is reserves, conservative underwriting, and numbers you actually look at on a regular basis. The properties that feel like they're bleeding you are trying to tell you something. The question is whether you're paying attention.
If that had been my first deal with no cushion, it would have ended differently. A lot of investors find out they don't have enough reserves the hard way,
ADRIAN SMUDE Real Estate Investor, Educator, and Author
Inside Lifestyle REI Lifestyle-REI.com
Adrian Smude is a real estate investor, educator, and Author of How to Buy Mobile Homes. He has been a real estate investor for over 20 years and leads Inside Lifestyle REI, a group coaching community for investors who want more clarity, momentum, and freedom in their business.
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