3 Things You Need To Do For Multifamily Goal Setting in 2023Jan 15, 2023
With the new year the team at Apartment Educators always gets an influx of questions about setting financial goals for the new year. I constantly see people get too focused on the wrong goal metric, or they just try and mimic something they heard on a podcast vs acting towards what is best for their situation. For this month I’d like to dive into how I approach multifamily goal setting with the hopes of making your goal setting experience better. What makes goals better? Making them REALISTIC and attainable, too often people grab a number out of the air to decide they need X doors within the next 12 months. Would you be happy if you added 500 doors to your portfolio this year if they all were poor investments…? Of course not, so don’t have your goals reflect arbitrary metrics of success. Set goals around what will make you successful as an operator, because if you are a better operator you not only get more doors they are profitable doors! (Trust me this is way better) Easier said than done, so let's dive into my top 3 tips for successful goal setting in 2023.
1. Reflect on the previous year and understand your weaknesses
That’s right before you even start goal setting you need to do a rundown of how the previous year went. Be it multifamily or any other goal, I see so many people take the new year as a blank slate while ignoring their efforts in the previous year. Do NOT be one of these people, it will set your 2023 goals up to fail. Imagine if every January a company made an entirely new strategic plan regardless of how they did the previous year, sounds like an awful idea but most of the population sets their goals using the same methodology.
Let me give you an example to illustrate the point, if last year your goal was to add 100 doors to your portfolio and you fell short you need to understand why. If you ignore previous issues you might be tempted to say “Oh well I’ll just work harder and go for 500 doors”. Sure sounds great in practice but what caused you to fall short of 100 in 2022? Did you have capital constraints, or issues with partners, are you not networking enough? If you break down what happened previously you can set better goals based on your prior efforts. Maybe you had access to 500 doors last year but because you lacked a wide enough network you couldn’t build out your GP team. This means your goal should not be focused around a number of doors but rather an attainable goal around expanding your network. Maybe you should attend 2 meetups a month or join a larger investing group. Don’t try and pick an end goal without solving the root cause of your problems it just sets you up for failure. Once you have reflected on what went well/wrong you are ready to start setting goals.
2. Use the S.M.A.R.T methodology for goal setting.
The SMART goal system as defined by a University of California study on goal setting.
S Specific What will be accomplished? What actions will you take?
M Measurable What data will measure the goal? (How much? How well?
A Achievable Is the goal doable? Do you have the necessary skills and resources?
R Relevant How does the goal align with broader goals? Why is the result important?
T Time-Bound What is the time frame for accomplishing the goal?
This system significantly increases the odds of success because it forces your goals to be realistic and actionable. This is particularly important in Multifamily because there are so many ways you can overstretch yourself or not understand how possible it is to be successful as long as you break goals into steps.
Bad example of a 2023 goal:
I want financial freedom
This does absolutely nothing for you, aside from saying you want to chase an arbitrary buzzword. You have no way to define success or break down smaller targets that will allow you to accomplish something.
To make this goal SMART you could say: By the end of 2023 I want to be an owner-operator in 250 doors. Keep in mind to have this truly be a SMART goal you should have the resources or a plan in place to make this possible. This means you might have smaller goals like you will attend 3 meetups a month to get X investors to help drive your top level goal. Giving yourself a deadline allows you to work backward, if you want 250 doors by Dec. what do you need to be doing in January? Write down a plan for each month so you can make actionable steps each day vs having a panic attack in Oct. when you realize you haven’t taken any action.
3. Focus on how you can make deals work vs blaming everything on interest rates
If I have another person call to tell me Multifamily is dead because they can’t underwrite anything I’m going to lose my mind. YES, it is harder to make deals work compared to prior years but stop letting that control your investment journey. Many other mainstream investments are getting crushed right now, crypto, stocks, and other investments have lost tons of value. Does this mean those investments are just done in 2023? Absolutely not, the same thing holds for Multifamily. You will need to bake in additional time for more underwriting, creative financing, and capital raising. If you are using the SMART goal setting method give yourself more time for finding deals. Maybe in 2020 you could find 500 doors but with capital being harder to raise this year you can realistically aim for 400. Too many people hear the word interest rates and sit on the sidelines until the market is hot again. Don’t get left in the dust by people willing to put in the work, yes it will be harder this year but just schedule the time. Our members are still doing deals and successfully funding even in these hard times, which means YOU CAN TOO, don’t let fear kill your goals before you even try and go after them.
I’m excited to hear about your goals for 2023, please keep the Apartment Educators team updated at: [email protected]. Our team loves celebrating wins with our community and looks forward to helping make this year amazing for your multifamily journey.