Your To-Do List Before Moving Into Investing And Development

by Mark Polon, CCIM

1) Build your portfolio, not someone else’s.

When brokers represent investor clients, they spend a lot of time making their clients rich. Development projects and investment real estate assets allow you to build your own personal portfolio. When the proper analyses are applied, the potential upside and long-term returns on time invested are significantly greater for investors and developers than for brokers. 

2) Assess your risk tolerance.

Think long and hard about the many factors that can impact the value and performance of a built or purchased asset over time. Development is riskiest of all investments. But potential developers can use tools such as STDB’s ArcGIS analysis to evaluate market feasibility and Tapestry Segmentation to forecast demand. Potential investors can run financial models to assess current income streams and ultimately determine an asset’s risk and sensitivity to changes in market fundamentals. 

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3) Turn clients into partners.

A great way to make your first entry into the investment or development world is to use your earned commissions from the transaction to join your client in the ownership of the asset. First, you have to build trust by doing a great job representing the client. Then, once the client has faith in your knowledge and capabilities, you can propose putting your commission into the deal and becoming a partner. Typically they’re more than willing to bring in a broker who demonstrates a thorough understanding of investment analysis fundamentals.

4) Know your ethical obligations.

Brokers are often among the first people to access assets that are newly available to the market. If you’re interested in investing in an asset (and potentially representing the seller), you’re obligated to fully disclose that interest right up front. Review the Code of Ethics and Standards of Practice of the National Association of REALTORS® to ensure that you’re complying with all applicable guidelines.

Learn more about investing and development

Visit CCIM Institute’s Development Specialty Track or call +1 (312) 321-4460, option 2.

5) Choose the right property type. 

When looking at investment or development opportunities, stick to the types of assets that already resonate with you. Don’t chase the money. You can work with different property types on commission before taking on investment or development risk. For example, I discovered that I was most interested in office properties, though it hasn’t always been the most lucrative sector. You’re not going to be an effective investor or developer if you’re not comfortable with the property type you have in your portfolio. 

Mark Polon, CCIM, is a senior instructor for CCIM Institute and president at Polon Consulting in Middle Haddam, Conn. 


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