In our last article, we established how crucial it is as a real estate investor to work with the right people. As such, this article will go a layer deeper to shed light on ways to know if you are hiring or partnering with the right people. When coaches evaluate basketball players, there are four main categories they look at: Skill, Savvy, Moxie, Athleticism. More about these later. As a real estate investor, what is your criteria for evaluating potential new hires, partners, contractors or other team members? Just as it is a fundamental necessity for you to gain clarity on which investing model is best for you, it is a fundamental necessity for you to have clarity on the type of people you want to work with. It is also critical for you to have a process to identify them.
Skill, Savvy, Moxie, Athleticism
Many basketball coaches will tell you that there was a time when they became overly infatuated with a player’s athleticism. Certainly, a requirement of being an effective player is to have a certain level of proficiency to run fast, change direction quickly, or jump high. Highly athletic players are typically the favorites of casual fans. However, despite the excitement and attention that a super athletic player attracts, if their assets are limited to athleticism alone, they will not be productive players. Similarly, the player who is extremely skilled at shooting a basketball may look awesome in practice and warm ups but will be of no use to a team if his athleticism limits his ability to shoot against quicker, more athletic players during real games. Players must be multifaceted to be productive in games. Savvy in the basketball sense is one’s natural intelligence or feel for the game. Highly savvy players are able to pick up concepts quickly, and fit in well naturally within a team structure. They “get it”, get it quickly and can positively influence their teammates. Moxie is defined as “force of character, determination or nerve.” A high moxie player is tough, highly competitive and practices and performs with strong purpose. Excellence and winning truly matter to a high moxie player and they tend to always find a way.
The greatest basketball player of all time, with all due respect to LeBron James, is Michael Jordan. He is the best because of his extremely high scores in all four of these categories. There were more athletic players, there were more skilled players, there were players who may have been a bit more savvy, but NO player combined such a high level of proficiency in all 4 categories. So what does this have to do with real estate investing?
Let’s Start With Self Evaluation
Are you fit to be a real estate investor? Is real estate investing right for you? Let’s examine our four categories in relation to investing in property.
How skilled are you?
- Can you analyze the different models of investing, understand them and know what is right for you?
- Can you analyze different financing options and determine which is best for you?
- Can you analyze different markets and neighborhoods and determine what is best for you?
- Can you analyze deals/properties and recognize a good one from a not so good one?
- Can you negotiate well?
How savvy are you?
- Do you understand the game enough to know you have to be stable and strong in your personal financial situation to be an effective investor? The non-savvy investor has high debt and is prone to making frivolous purchases.
- When presented with real estate related concepts, do you pick them up quickly or do you struggle to understand them?
- Do you know how to read and understand buyers, sellers, lenders, potential partners and team members?
How moxie are you?
- Do you recognize that lasting success will not come easy. Are you willing to deal with the discomfort of losing 20 or 30 deals or more in order to get 1?
- Do you have a natural passion for the real estate game?
- Instead of thinking “this is why I can’t”, do you ask the question “How can I”?
How “athletic” are you?
- Can you react and act quickly when the situation warrants (good deals don’t wait for the overly contemplative)?
- Can you recognize opportunity and act with power when you have leverage?
- Do you have the ability to change direction quickly, if externalities (market conditions lending terms etc…) change?
You do not have to be perfect in all of these categories, but you should have a decent level of proficiency in each. (If you recognize that you are overly deficient in an area, you may be able to overcome this by partnering with someone who is strong in that area)
Understanding who you are as a real estate investor, your PARTS and your ideal model as well as your proficiencies/deficiencies will make evaluating potential team members much easier. Having a deeper understanding of and knowing who you are (and aren’t) will allow you to see who the people you interact with are (or aren’t).
Evaluating Potential Team Members
When evaluating a contractor, for example, having already done a self evaluation, you will know to not just check how skilled his/her craftsmanship is, but how important is it (moxie) for them to get the job done on time and on budget. Can you trust that they are savvy enough to make the proper adjustments if something unforeseen comes up? Interacting with your contractor or realtor, property manager, lender etc.. in a variety of contexts will shed light on their overall proficiency. Of course if you have highly trusted people that refer and can vouch for a potential team member that can be very helpful as well. Just be sure the referring person has considered the person they have referred through the broad spectrum of things that are important to you.
It is less important to specifically use the Skill, Savvy, Moxie, Athleticism model to self evaluate/evaluate others than it is to have SOME model of assessment. Without a model or process your actions are more likely to be driven by external forces present at the time or worse yet, randomness. You are less likely to learn from your efforts if you are acting randomly because you have no baseline or framework against which to gauge your progress. Since nothing is ever static, having an assessment process/model will provide focus as well as a starting point for evaluation as you and the environment change over time.
What is your model/process for evaluating potential members of your real estate team?
