Your "Acre Of Diamonds" And Tomorrow's Real Estate Investments

September 13th, 2022

By?Michael J Polk ??Polk Properties

Russell Conwell, the founder and first president of Temple University, is well known for his famous lecture, ?Acres of Diamonds .?

The heart of that lecture focused on a farmer named Ali Hafed who heard of diamonds being found all over the world. Ali sold his land to hunt for these diamonds—depleting all of his money and energy and committing suicide after failing to find any diamonds. The person he sold the land to discover … wait for it ,,, diamonds on the very land the poor fellow sold. Never did he think to look right under his very own feet. His "fee " was a mother-load of sorts.?

Is your investment portfolio real estate weighted or are you thinking about investing in real estate? If yes, then you should read this article.

Real estate investment can be very lucrative. There are several ways through which you can invest in real estate. Most people have heard of various hot trends or sectors that will make your time investing in real estate supposedly pop.?

Real estate investment is a great way to build wealth. In fact, according to Forbes magazine, real estate is the number one asset class for Americans. Homeowners' most valuable real estate is their home.? However, to build wealth through real estate investment without having to wait several decades for your home to appreciate you need to look at real estate vehicles that provide faster appreciation. The reason why it is such a good investment option is that it provides passive income.

Here is the thing, is the income you expect to receive just performa or the historical performance of existing tenants? Passive income is good to have but you must get it in hand.

I wrote an article in Forbes on the supply chain and its effect on your tenants' ability to manufacture, distribute, stock store shelves with items for sale,?etc.

This also extends to residential tenants since they either work for a company or are owners of an enterprise that performs the same said initiatives.?

Given discovering your acre of diamonds is a superb idea, I think you should take stock of what your current position is before you seek out the next great investment.

The video below may be enlightening for some.

We have not yet fully turned the corner on the awful and deadly pandemic we just experienced.? Every day there are stark warnings of more viral poxes to come. This surely will affect any long-range planning You may identify the advantage of bringing new properties into the fold.?

First, what is the real financial condition of your existing tenants? Is the capacity up to their obligations to the lease? How can you know that?? Ask them. In a previous article entitled "Existing Leases After The Pandemic: Considerations For Property Operators" I discussed why it is important to speak to your tenants, at least annually, regarding the condition of their business as it affects you and your desires and obligations. If they are in a worsened position then you want to avoid that worsened condition becoming your fate as well. Many reading this article experienced many pandemic horror stories as they relate to eviction and rent moratoriums.?

"The sophisticated property operator armed with a bevy of attorneys who, to the best of their abilities, crafted leases to provide for most common and some outsize occurrences should be well ahead of the game. But what about the rest of those who operate the real property"?

It is time to start taking stock of your diamonds. Pull out your leases and reacquaint yourself with the Improvements that have yet to be recaptured. There can be other things as well, so a lease review is important. Some may say if they are paying me, then why should I ask them anything? Better to employ proactive thinking and know for sure the position of the parties. Perhaps a lease restructure could be done to preserve an otherwise great tenant.

Many commercial property owners are due to refinance.? In the current climate, it does no good to have a failing tenant or a vacant property.? I am not asking anyone to give anything away just make sure you open your eyes and look at the diamond or coal you have on your acre.

If it's coal perhaps it can become a diamond with active management. If it's a diamond held with a few prongs loose, tighten them up if possible. After you have done this house cleaning,? go and look for more diamonds. I caution you to skip the coal unless you are a coal miner.?

Thank you for reading, please subscribe.