What do You want ?

These words can be the start or the beginning of the end of a great relationship. Lets choose to start rather then to end.

Although, this question can come across as rude, (I prefer "direct). It is the start of every successful venture, including each Client/Customer/Employee based relationship that we have. We often focus so much on making new relationships at any cost, simply filling a quota or goal,that we do not stop and drill down to an actual answer to this question. 

After a decade of working with Investors possessingvarying amounts of resources, widely divergent goals, across several market cycles and in a few different roles, i have found a commonality of success among those who could answer this simple question with a direct statement that was both measurable and meaningful to them. 

This is true concerning most any goal that you set for your self or your organization, however I am not qualified to cover many areas so I will stick to that which I have some experience in, namely investing in Income Producing Properties.  

Whether you are reading this in order to serve own interest or that of a Client the first order of business remains the same. You must answer this question and do so in a way that can be documented and used a measuring stick to screen out bad choices and a filter for a plethora of good choices as you move to the other stages of Investing. 

Unlike many areas of life the answer to this question in the arena of Investing is usually easy to quantify and pen down if you spend a few minutes pushing aside the nebulous knee jerk responses that you encounter at first. The answer to what do you want in an investment is some variation of this; "a nice home in a nice neighborhood that will provide some cashflow and appreciation for the future"

While this is a common answer to many people, it is not the answer of a true Investor. Can you hear Warren Buffet or any Professional Investor giving this answer concerning a company they want to buy or invest in? When Investing for income the answer to this question must have an acceptable or hoped for number attached to it. This is commonly referred to as a Return on Investment or as is seen on most proforma's (ROI).

Simply put,  ROI is what you get back in return for what you put in. it is usally expressed in a % over an annual period.

If you invest $20,000 and receive $5000 back after a year then you have realized a ROI of 25%. 

Although this is not rocket science I am often amazed at how many otherwise very successful people fail to check this box in the beginning of their endeavor and then suffer through the consequences of not doing so. This prolongs their search for an Investment, decreases their Return on Investment, Creates stress and uncertainty, fear and doubt. Failure to do so is generally bad for everyone involved. 

In this series of posts , We will explore how to determine a realistic ROI in an Investment that is right for you.