From real estate to equities, from standard investments to creative investments, one thing is always the same: you want to generate a positive return on your investment. Here’s how to do it, every single time…
Every investor, regardless of the investment, is ideally looking for a positive return on investment (ROI).
Whether you’re investing in single family homes as rental units, or you’re a rehabber, or you do large resort developments in the Caribbean, or you buy and sell businesses, even if you’re investing in Wall Street stocks, even if you’re starting a lemonade stand in your front yard…
… EVERY time you invest, you want that positive ROI… you want profit.
But most investors find out sooner or later that they don’t always get that hoped-for profit. Sometimes their investment falls short.
Maybe they invest $100…
Or they invest $10,000…
Or they invest $100,000…
…and don’t make enough to break even.
Positive ROI? Not at first glance.
… But before you write off that investment as “bad news” and walk away, consider how it can be made into a positive investment… and even generate a positive ROI.
I believe every investment can be turned positive if you just change how you think about your investment…
Adjust Your Timeline
You may not have earned a profit on your investment within the timeline you set. But that doesn’t mean it won’t happen at all. Perhaps you need to rethink how quickly you were hoping to see a return. Maybe your estimate was overly optimistic or maybe the market changed. Whatever the situation, rethink how your ROI might adjust if you start thinking in years instead of months or decades instead of years.
Adjust Your Assumptions
Perhaps you invested because you were expecting a certain type of return… but maybe you need to adjust how you assume your ROI will come to you. I see this a lot with people who jump on the rehabber bandwagon because of the big dollars they hear about on those flipping TV shows… only to discover how much work it is to rehab a house! In that situation, your ROI of dollars may not have included the ongoing expenses and effort required to get the house fixed up. I’ve met several investors who started out as aspiring flippers… and became rental real estate investors because they couldn’t fix up or sell the property. They’re getting an ROI but it wasn’t the kind of ROI they expected.
Or here’s another example: let’s say you buy one rental property and it does okay but the costs are higher than you budgeted. However, you own it outright so you borrow money against it to buy another property. By adjusting your assumptions, and through the power of leverage, you now have two properties for the price of one.
Adjust Your Measuring Stick
If the first two ways to extract ROI work for you – great! But if not, this third way is a guaranteed ROI: Adjust how you measure ROI. Instead of hoping for money, consider your return on investment to be lessons you learned. As the saying goes, “I never lose. I either win or learn.” No matter what you’ve invested in, that holds true: Even if you sunk thousands of dollars into real estate, the lessons you learn are invaluable… but only IF you recognize the lessons and take the time to learn them.
If you’re not getting the ROI you were expecting from your investment, and if you have make the difficult decision to consider this a “learning opportunity”, that’s okay. It happens (… it happens to EVERYONE). But here’s the key to make this a valuable ROI: Sit down and list everything you’ve learned. Seriously, write it down into a notebook. Push yourself to distill your learning into notes. Write down what happened, try to make an educated guess why it happened, and list what you’ll do different to keep it from happening again. THAT is when you’ll start generating some significant educational ROI from your investment.
It doesn’t really matter what kind of investment you’ve made: maybe it’s an investment into a single family home… maybe it’s an investment into a business… maybe it’s an investment into a piece of software to help you run your business… heck, maybe it’s an investment into a piece of artwork…
Whatever it is, you have NOT lost that investment if it does not turn out the way you wanted. Instead, you need to re-think what you think of ROI and find ways to intentionally and strategically achieve a positive ROI.
Your profit might not always be dollars in the timeline you expected… but you CAN create a profitable investment every single time.