How Emotional Intelligence Creates an Advantage in Real Estate Investing

Updated: Mar 7, 2021

Successfully investing in multifamily real estate requires hard work, knowledge, and intelligence along with a good deal of experience. After all, if real estate investing was easy to do, everyone would do it and would be successful. However, in addition to traditional intelligence, or IQ, there’s another element involved in the process, which is emotional intelligence, also known as emotional quotient, or EQ.

Each element in the acquisition process plays a significant role in how I evaluate a real estate investment, helping to determine if a property is worth investing in. I’m a numbers person and data driven, thanks to my educational background at MIT, and even though numbers are without question the driving element in my acquisitions process, I also put emphasis on EQ, which helps me evaluate the people involved in the sale of the property. Emotions play a role in most everything we do, and real estate investing is no exception.

The Acquisition Process at a Glance

Acquiring a multifamily property is an extensive process. It starts when we see a property that’s for sale or hear from a broker, “I have a deal worth looking at.” Other times my team may find a deal listed on a broker’s website. Once there is a deal to explore, the work begins.

It starts with an examination of the numbers, a look at the seller’s Offering Memorandum, or OM. It is often a massive document that discusses the property, the market, and other factors that provide us with the numbers associated with the property, but also a glimpse of where value add enhancements might be made. That might include adding a washer/dryer in each unit, putting in an Amazon locker, adding a yoga room, or adding other amenities. However, the figures in the OM are to be taken lightly, as more often than not the numbers are over exaggerated. Just remember that the OM numbers are pro forma numbers and are usually based on assumptions – which is nothing more than guesswork.