One of the most common mistakes newer investors make is becoming obsessed with the property while paying very little attention to the person operating the deal.
They focus on:
- The neighborhood
- The after-repair value
- The rent projections
- The equity
- The purchase price
And while all of those things matter, experienced lenders and investors often spend just as much time evaluating the operator as they do the property itself.
Why?
Because a great operator can often rescue an average deal.
An inexperienced operator can destroy a great one.
Real Estate Is Not Just About Properties
If real estate investing were only about buying good properties, everyone would be successful.
But we know that’s not true.
We’ve all seen investors buy properties with tremendous equity and still lose money.
We’ve seen projects that should have been easy become disasters.
We’ve seen borrowers with excellent opportunities run out of money, miss deadlines, and fail to execute their plans.
In many cases, the property wasn’t the problem.
The operator was.
What Is an Operator?
The operator is the person responsible for executing the business plan.
In a fix-and-flip, the operator is the investor managing the acquisition, rehab, and sale.
In a BRRRR, the operator is the investor managing the renovation, stabilization, and refinance.
In a rental portfolio, the operator is responsible for acquisitions, management, maintenance, leasing, and long-term strategy.
The operator makes decisions every day that determine whether the investment succeeds or fails.
The Best Property Doesn’t Always Win
Imagine two investors purchasing nearly identical houses.
The first investor:
- Has completed dozens of projects
- Has reliable contractors
- Understands budgets
- Communicates consistently
- Makes decisions quickly
- Has contingency plans
The second investor:
- Is inexperienced
- Has no contractor relationships
- Underestimates repairs
- Has no reserves
- Changes plans constantly
- Avoids difficult decisions
Which investor would you rather lend money to?
Which investor would you rather invest alongside?
Most people would choose the first investor.
Not because of the property.
Because of the operator.
What Professional Lenders Look For
At Conduit Capital, we certainly evaluate the property.
But we also spend considerable time evaluating the borrower.
Some of the things we consider include:
Experience
Have they successfully completed projects before?
Experience doesn’t guarantee success, but it often helps investors avoid common mistakes.
Communication
Do they communicate clearly?
Do they provide updates?
Do they respond when challenges arise?
Good communication builds confidence.
Poor communication creates concern.
Decision-Making
Can they make timely decisions?
Real estate rewards action.
Delays can become expensive very quickly.
Financial Discipline
Do they understand budgets?
Do they track costs?
Do they have reserves available?
Many projects fail because investors run out of money long before they run out of work.
Problem Solving
Every project encounters challenges.
The question is not whether problems will occur.
The question is how the operator responds when they do.
Great Operators Create More Opportunities
One of the reasons experienced operators continue growing is because success attracts opportunity.
Lenders become more comfortable funding them.
Investors become more willing to partner with them.
Contractors prioritize their projects.
Agents bring them deals.
The better the operator becomes, the more opportunities tend to appear.
That’s one reason successful investors often seem to have access to more deals than everyone else.
People trust them.
The Property Matters. The Operator Matters More.
Don’t misunderstand the lesson.
The property absolutely matters.
Location matters.
Equity matters.
Numbers matter.
Exit strategies matter.
But real estate investing is ultimately a people business.
A great property in the wrong hands can become a failure.
A solid property in the hands of a disciplined, experienced operator can become an outstanding investment.
That’s why professional lenders and investors evaluate both.
Because when things don’t go according to plan—and eventually they won’t—the operator is the person responsible for finding a solution.
Final Thoughts
The next time you evaluate a real estate opportunity, don’t stop at the property.
Ask yourself:
- Who is operating this deal?
- What is their track record?
- How do they communicate?
- How do they handle adversity?
- Do they have the discipline to execute the business plan?
Because sometimes the most valuable asset in a deal isn’t the property at all.
It’s the person running it.
At Conduit Capital, we believe great real estate investing starts with great operators.
And that’s why we spend just as much time evaluating the person as we do the property.
Need funding for your next deal?
Learn more at:https://youconduitcapital.com/borrowers/
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Learn more at:https://youconduitcapital.com/investors/
Conduit Capital
Be a Conduit, Not a Bucket.
