Private Money Partnering

What About You?

One of the first elements in private money partnering is taking a good look at yourself, who you are… what makes you tick… what you think about … what you worry about… what you’re trying to achieve. Perhaps you've attended one or two real restate seminars and you’d like to team up with someone on a deal, just to “try things out”. Perhaps you've just retired from some corporate environment and you’re considering a new career. Maybe you’re younger in years but have big plans and big visions for what you’d like to attain. You may have even been investing for a quite a long time and you've always done things on your own, but an opportunity has come up that requires more money than you feel comfortable investing by yourself, or more time and attention than you have to spare.

If you’re thinking about possibly joint venturing with someone, that could be risky. Any business venture is risky. It could also be tremendously rewarding, both financially and personally. In his recently published book “The Tom Peters Seminar”, Peters talks about the need for everyone to embrace the future. We are all challenged to try new formats and take risks in order to get somewhere, to create a future for ourselves.

In real estate, risk is the possibility of financial loss of funds, or of time invested. How do you really feel about taking risks? Write down your answers to the following nine questions to assess what kind of risk-taker you are.

1)What best describes your feelings about investing?

a)_____ better safe than sorry
b)_____ moderation in all things
c)_____ nothing ventured, nothing gained

2) Which is the most important to you as in investor?
a)______ steady income
b)______ steady income and growth
c)______ rapid price appreciation

3) An investor friend has excitedly told you about a good deal, but you've never heard of the neighborhood. What would you do?
a)______ pass on it
b)______ get more information
c)______ trust your friend’s judgment

4) You've won a contest. Which prize would you select?
a)______ $4,000 in cash
b)______ a 50% chance to win $10,000
c) ______ a 20% change to win $100,000

5) You found a good deal on a rehab house, and if you handle it yourself you know you will make a lot of money but that it will take a long time. What should you do?
a)_____ tell someone else about it and get a ‘bird-dog” or referral fee
b)_____plan your time and your funds wisely and do it yourself
c)_____joint venture with somebody you don't know who has done other houses in that neighborhood

6) The stocks in your 401K and statement have gone up 20 percent, you have no further information. What would you do?
a)_____ transfer out of the stocks and lock in your gain
b)_____ stay in the stocks for more gains
c)_____ transfer more money into stocks because they might go higher

7) The stocks in your 401K have dropped 20 percent since last quarter, but the market experts are optimistic. What would you do?
a)_____ transfer out of stocks to avoid losing more
b)_____ stay in stocks and wait for them to come back
c)_____ shirt more money into stocks because if they made sense before, they'll be a bargain now

8) Would you borrow money to take advantage of a good investment opportunity?
a) _____ never
b)______maybe
c)______ yes

9) You inherit a $100,000 free-and-clear house in a great neighborhood, appreciating faster than inflation, but it has deteriorated. Rental new would be $1,000 a month without fix-up, or $1,500 with fix-up – which you can finance. What would you do?
a) _____ sell the house
b) _____ rent it as it is
c)______ fix it up and rent it

All right, now add up your points. A’s are worth one point, B’s are work two, and C’s are worth three. Compare your total score with the following ranges:

9 to 14 points: You’re a conservative risk-taker.
15 to 21 points: You’re likely to be a moderate risk-taker.
22 to 27 points: Changes are you’re quite an aggressive risk-taker.

Risk Taking - Chapter A (continued)