It’s confusing enough out there without making it even more confusing. It helps to look at things with a few guiding principles. So I’m going to share some of the thinking I have recognised and developed over the years. What has worked and also what has held me back. I’m also really lucky to have the experience of mentoring a few commercial property investors over that time too and it can give you quite a unique perspective. It has given me the chance to look at things from the outside. This alternate point of view has helped me see some of the blockages holding people back.
Some of these mindset conditions are going to be the same for building a residential portfolio or even a business but others are more specific to commercial and this grey marketplace. I say that to remind ourselves that although many of us would like commercial property to be black and white, it isn’t. That is the big opportunity.
Here are 15 different mindset traits I think are really important for Commercial property developers.
Begin with the end in mind
Always think about where you are going before making a decision. Does this next potential step help me or at worst hinder me? Is it a distraction or an opportunity?
Create your own investment criteria
That in of itself is not a mindset characteristic, but when you have done it you can use it as the framework in your mind to test projects with. Once you have memorised that investment criteria and you’ve got it in your mind then it becomes second nature.
ROI should be the number one factor for your investment choices
Not how pretty it is or trophy like the building is for your ego. I don’t mean the ROI as soon as you have bought a property. What I mean is the likely end return on investment after you have done your thing. This is often called asset management in commercial circles. If you are an active investor then this one is really important. It’s how you can build value, create more leverage and grow the size of your pot.
In evaluating our investments, one of our unique investment criteria is that a property needs to have the capacity to return 20-25% ROI on the total purchase and redevelopment costs.
So this mindset needs to be around prioritising return on investment. I know there may be some other factors but this should be really high up the list. If you don’t have that mindset then you may end up with a great looking building but the opportunity cost is too high.
Adding value in commercial is all about seeing things in a different light. You don’t need to be some sort of architectural genius or interior design icon. Actively seeking out problems and trying to solve them, whether they are on the ‘profit & loss’ or in the physical way a building is configured and used. This mindset will really help. I know you can do the same in residential but commercial brings you the added opportunity to fix things that are going wrong on the balance sheet.
An example of this could be as simple as; the service providers for the communal costs are simply charging too much and by swapping some out you can drop the costs by 10-15% and instantly increase the profitability without doing anything to the property itself. This is just one example, there are countless others.
Conditioning can be a real block on your expectations, targets and ultimately your outcomes. This is a key mindset adjustment.
Suffice to say that you have to try to become aware of the limiting factors that others and your environment have imposed on you. And try to break free from them.
Don’t get overwhelmed by all the different ways you should be thinking to get ahead. If I think about it all at once then my head hurts! And anyway, it’s impossible to change all of these habits overnight. They have taken a lifetime to build. I think the important thing here is to recognise what is going on. The first and often biggest step is recognising you have a problem, then you can work out how to make it better.
It will take time to understand the layers of the Commercial Property market and that actually, nobody really knows everything that is going on anyway. All of the projects you look at, the podcasts you listen to, the offers you put in, the P&L’s you look through will all add to your knowledge.
Don’t get upset easily by something that could happen, or might never happen, or what someone has said to you. At the same time just keep forward thinking and always seek the silver lining if challenges appear. Even if it is the universe trying to tell you something.
Abundance of Opportunity
Abundance of Opportunity is all around. You just need to get in tune.
Don’t keep seeing problems as holding you back
Some are massive opportunities in disguise. For instance the commercial property industry is clear as mud but that provides a great opportunity. It’s the same for everyone and they just go back to what they know in residential rather than pushing through it. It is that old adage “do you see opportunities or solutions?”. You need to try and make that change in your head.
Don’t overestimate what you cando in the next month and then underestimate what you can do in five years. Pick a target and then ask “how would I do that?”. “What are the steps I would need to accomplish in order to get there?”. “How can I break that down into yearly and monthly interim goals?”.
There’s a lot of money out there
Don’t be held back with thinking that there is only what is in your bank account or what the bank will lend to you. Some people who have money have a different challenge. It is burning a hole in their pocket and they want to put it to work as soon as possible. This can lead to lowering their ROI or deal targets because they simply must get a deal done asap.
Time is finite
Everything else is a replenishable resource. Choose the right things to be doing and not just the things that will make you feel busy.
Think long term
Commercial Property works in cycles like everything else and is for the long game.
Build trust in yourself
You need to be able to trust yourself. Do you do what you tell yourself you’re going to do? If you can’t trust yourself then you will subconsciously tell others that you don’t trust yourself. But don’t over promise to yourself either. Pick and commit to smaller goals.
I also think this is linked to integrity. Doing the right thing. It is really important for your own self-worth to always do the right thing.
A lot of this boils down to self-awareness. Having the ability and confidence to check your thinking and mindset every now and then. To make sure you have not become too overwhelmed or too arrogant. Be confident but pleasant to deal with. Understanding but not overstepping the mark and sounding like you are full of BS.
One way we can change a ships course is by slowly turning the wheel. You can’t change everything immediately. What you think you can achieve in 30 days is often an overestimate but what you can change in many months and even years can be profound. So start with some basics.
Change your conditioning
Put more good stuff into your head and more good stuff will come out. Read more good books. Listen to people who are going in the direction you want to travel.
Find others who are further down that road. Study them and Learn from them. Just being around them can lift your game immensely.
Take some time to work out your 5 year goals and work it backwards, piece the roadmap together.
Relisten to this podcast to help reset your thinking every now and then to remind you that you can do more and you can build trust in yourself.
There are lots of other factors I have missed out here, such as having a strong work ethic, working smart or hiring smarter people than yourself. But this has been more about what goes on in your head. Nobody else has more influence over that than yourself. Unless you have given that influence over to somebody else of course.
Perhaps you have surrendered it in small bits, to lots of people over the years. Maybe a surveyor who laughed at your commercial property plans or a teacher at school who was particularly belittling. Maybe it was a domineering ex-partner or may be someone who doesn’t even know you, but you follow on social media. All of them might have stolen some of that control over the years. You don’t realise it but many others have taken away your control over how you think about yourself and what goes on in your head. It is time to fix that. You can’t do it instantly but with a plan and a strategy to overcome the barriers, you will be able to make the very best version of yourself. One that you can be proud of.
Maybe I’m just writing this for my own benefit and actually you just want to know how you can charge a better rent on your industrial units. But I do think mindset affects most people to one degree or another. So it is worth covering. If I’m going to stay true to the principles I started my business with, then I need to share my experiences. What I have either felt or witnessed as affecting commercial property investors. It might not be everybody but I think it’s a lot more than we think.
This stuff is really important to help you move forward in a stronger more focused way so make sure you book some time to reflect on these mindset parameters, for yourself.
For further information, join our Facebook group to meet others on their commercial property investment journey.
If you are in a hurry then get in touch to see how we can help.