Entrepreneur Credibility: The Importance Of A Real Estate Investment Portfolio

It’s time entrepreneurs started looking at the real estate investment portfolio for what it really is: an invaluable component to establishing credibility.

If not for credibility, residential redevelopers and entrepreneurs alike would have a very difficult time moving forward with their respective endeavors. That said, what is a business owner without an inherent degree of credibility? You could argue that they are nothing; the trust of others is that important. Nobody in their right mind would choose to work with a business that is, for all intents and purposes, not credible — not when there are plenty of businesses out there with the appropriate credentials to back up what they promise. For what it’s worth, credibility is everything to a real estate investor, and those with it are sure reaping the rewards of a market that currently offers sound fundamentals.

It is important to note, however, that credibility is not handed out on a whim, nor is it bestowed upon the undeserving. The test of others is not something to take lightly, and it’s not garnered easily, but rather earned through hard work, determination and due diligence. Anyone who thinks otherwise is only fooling themselves and hurting their bottomline. Credibility is a testament to the work investors put in, and there is nothing more valuable to a lucrative real estate business than trust.

Of course, building trust with those you just met is no simple task, which begs the question: How do you build credibility with a stranger?

The answer is relatively simple, and even something relatively inexperienced investors can carry out: craft a well-devised real estate investment portfolio. Nothing, at least that I am aware of, is more capable of establishing credibility in the field of residential redevelopment than a great real estate investment portfolio.

The Perks Of A Great Real Estate Investment Portfolio

Investopedia defines a portfolio as “a grouping of financial assets such as stocks, bonds and cash equivalents, as well as their funds counterparts, including mutual, exchange-traded and closed funds. Portfolios are held directly by investors and/or managed by financial professionals.”

More specifically, however, real estate investment portfolios represent an entrepreneurs allocation of funds into physical properties, and perhaps even REIT portfolios. Having said that, it may be easier to look at real estate investment portfolios as a resume; a comprehensive compilation of previous deals (even existing ones). In its truest form, a real estate investment portfolio is a collection of one’s previous successes, and even failures. It’s the closest thing to a track record as you will see, and a lot more valuable than many may realize.

Take, for example, the interaction one may come to expect between a motivated seller facing foreclosure and a residential redeveloper; chances are the seller at risk of losing their home won’t put their fate in the hands of a stranger. Through no fault of their own, motivated sellers have the right to be skeptical of anyone looking to buy their property. It’s only natural that such an important process coincides with at least a slight degree of trepidation. That said, the more an investor can do to quell any concerns the seller may have, the more likely they are to close a deal.

While you may not be able to eliminate all concerns exhibited by the seller, but it’s entirely possible to provide peace of mind. I maintain that said peace of mind is enough to place the odds in your favor of closing a deal the majority of the time. The best way to do so is to provide the seller with a real estate investment portfolio. Not only is it the only way for them to gauge your capabilities, but it also enables them to evaluate you based on the only merits that matter: your previous deals. In the event you are able to provide them with multiple deals (and the data to back them up), you will likely gain their trust. Once you have proven your credibility, moving forward with a deal will be a lot easier.

Let’s assume you are not working with a motivated seller, but rather a buyer. The same concept applies. Real estate is a people business. The more trust the community has in you, the easier it will be to carry out any real estate activities. Buyers are no different than sellers, in that each party will be more wiling to work with you if they trust you. Providing a prospective buyer with a real estate investment portfolio that highlights the properties you have sold in the past will go a long way in building trust. That trust, as it turns out, can serve as the foundation for an entire deal.

What’s more, the perks of a well-crafted real estate investment portfolio don’t end there. It’s worth noting that I have yet to discuss the best advantage a portfolio can give respective investors: funding opportunities. As I am sure you are aware, investing in real estate isn’t cheap, but that doesn’t mean you need to use your own capital. It’s entirely possible to fund a deal using other people’s money. However, obtaining financing is often an obstacle in and of itself. Fortunately, a real estate investing portfolio can ease the burden of receiving funding.

Not unlike working with buyers and sellers, a real estate investment portfolio can establish credibility with money lenders. Instead of having to take your word on previous accomplishments and experience, they may be able to asses your level of expertise form a more objective position. With a hard copy of the deals you have completed in the past, the will feel a lot more comfortable lending you money, provided they like what they see in your real estate investment portfolio.

Far too many investors have come to view their portfolio as a reminder of what they have accomplished. It’s worth noting, however, that the best investors understand the true potential that hides within their portfolio. If for nothing else, a real estate investment portfolio is a window into previous successes that everyone can see. As a track record of sorts, it can be used as a tool to build credibility with those you choose to do business with.