Indigo Flag Investing
Indigo Flag Investing - "The Project" helping reshape the communities that we live in
For as long as I can remember I have had a passion for home improvement, at age 10 I helped my father fix up our first family home. The satisfaction that I get once a project is complete is priceless to me, so it is only natural that I would catch the bug for flipping houses. Like many investors, I began flipping houses because of the profits involved, and with many investors when ever there is a down turn in the market, profits suffer. Having never experiencing anything like the great depression, which is how some refer our current economic situation, I asked myself how can I protect myself and my investments from going south? This is when I came up with "The Project" as I like to call it.
What is "The Project"
First I would like to point out that I use a different approach to my real estate investment strategy than most investors that I have come across. Of the many that I have talked to and worked with the mindset is why create an exceptional property for ungrateful tenants to come into and destroy. So what tends to happen is you have a property that over time gradually deteriorates into inhabitable spaces. At this point investors may do a modest rehab and try to rent it again or put it on the market. It always amazes me when I go out to visit these properties how if there is a realtor involved they will often times say "this property is rent ready" and in the kitchen there is a sink with a single base cabinet, a stove and most times no refrigerator, hideous laminate flooring and poor lighting. The bathroom is in no better shape either and if there is carpeting it is usually no padding just installed on the sub flooring! I mean come on really who would want to live there and if you are fortunate enough to find a tenant how long do you expect them to stay? So I decided to take a different approach to my properties by making them properties that I would be proud to stay in.
A "new" approach to investing
My strategy relies a great deal on creative investing, be it purchasing the property using creative financing techniques or using creative investing techniques to increase the income of a property, a great many of the deals that I make revolve around being creative with the properties that I invest in. While numbers are important to me, I am more concerned with the satisfaction of the client. This helps me create more win-win situations for sellers, other investors and myself, more over I can find ways to serve the community that I am investing in.
So what is creative investing? Basically it is finding a way to serve, finding new and innovative ways to invest in, purchase and sell properties. A salesperson that I know once got a listing for a vacant parcel of land. He was assigned this client by his broker and wasn't very happy about it. If you know about vacant land you know that it is not very easy to move. This client just happen to be an bank so it was pretty important to the firm. A quick sale on this property would mean that picking up all this particular bank's REOs so he was under pressure. One good thing about this property is that it was along a well traveled corridor, so this guy gets the idea for an electronic billboard. After a few phone calls he found that it could be pretty reasonable to have one built, a lot cheaper than a building. Then he checked the traffic data report for the area where the parcel is located. Using data those figures and figures supplied by the billboard company he came up with projected returns on the project. All that was left to do after that was put together an info pack to send out to investors. Well after all that leg work so to speak he got the property sold within 30 days of the listing, the buyer built the billboard and is making about $100,000 a year from the advertising alone. Just imagine how much the property value increased with the addition of the billboard. How is that for creative thinking? In the end there was a happy client, a happy investor and the community also benefited from low cost advertising for the area businesses.
This type of investing is by no stretch of the imagination a new investment strategy, it has been used over the many years by some of the largest names in investing history to finance projects and create enormous amount of wealth for those parties involved. William Zeckendolf a pioneer who paved the way for uncommon real estate transactions, in his book The Autobiography of William Zeckendolf he talks about how he purchased the Empire State Building and sold parcels of the building and land to make a lot of money for himself, a great book to add to your recommended reading list.
A lot of these same techniques are still relevant today and can be used create profits for you, those willing to invest in you and to enhance the lives of those who depend on you as an investor such as tenants. This country is in a transitional period, according to the Bureau of Labor Statistics the service industry has steadily grown with Professional, scientific and technical services seeing the largest expected growth at 34%. Real Estate, Rental and Leasing is expected to grow at 11% as well. The companies that will set themselves apart from their competition will be the ones that keep their consumers best interest in mind. In times when money is tight, people are going to want to get a little something extra for their money, and if you are willing to give it to them, then guess what that means, repeat business. Now in the case of being a property investor creating an environment that is suitable to their needs is the key to longer leases at higher than average rates, increasing your property value and enhancing the neighborhood that you are investing in. Now with this age of social media it is much easier for a consumer to find out information about you or your company fairly easily, even if you are not using it in your business, you better believe that someone who patronizes you or your company has and guess what if their experience was unpleasant there is a good chance that it will find its way into the social media stream. By the same boat consumers who have a very pleasant or unique experience will likely tweet, post or yelp about it. This is free advertising, word of mouse they call it now, and it is a good way to quickly brand yourself or your company in a good way.
By using creative investing techniques we are able to purchase properties in such a way as to give the sellers a good price, do any fix-ups for our tenants while keeping the rents stable, help improve the communities that we invest in and still make a decent return on our investment. The best part is when you look back at your investment 5 or 7 years down the road and see how much it has grown.
How Does Creative Investing Help
Well as you can see from the example above that creatively approaching your real estate investing activities, you can not only create profits for yourself but also for your clients and those who invest in you. It also helps improve the communities that you are investing in and when the community improves guess what so does your investment. Not only this but by branding yourself as a creative investor, your services will be sought out by the masses. When you are in need of a good tax accountant or financial planner are you not going to search for the one who is the most creative in saving or earning you money? Of course you would as long as what they are doing is legal. The worst thing that can happen is that you run out of time to serve everyone.
Take Archie Aldis Emmerson who invest in forest of all things. Actually he is the largest forest owner in the U.S. owning 1.7 million acres of forest. There is not a lot of competition in owning forest land, however Emmerson who also owns 15 saw mills pretty much has the market covered for lumber. Where would real estate be without lumber? He saw an opportunity back in 1988 to purchase 522,000 acres for $460 Million that he borrowed, created jobs by opening saw mills in the communities that he invest in. Pretty clever I think. Chip Conley is another name that comes to mind. Founder of the Joie de Vivre Hotels which were awarded #1 in customer service in 2010 beating out Marriott, Hilton, Hyatt, Sheraton, Westin, Kimpton and Peninsula Hotels. Chip is also an author and his book Peak is on my recommended reading list.
Being different
To lead the orchestra, a man must turn his back on the crowd are famous words from Max Lucado, and they are especially true if you want to succeed in business today. You have to offer something that your competition is not willing to, something that sets you apart from others, you stand to be an individual that is sought the world around.
