Why Do I Need a Framework?
Have you ever considered how vines grow?
Now, admittedly, I’m no viticulturist – I don’t even drink wine. But believe it or not, I’ve given this question a fair bit of thought — and even done some research on the topic (Jesus talked a lot about vines — see John 15).
Vines are natural climbers. They have modified shoots called tendrils that coil when they touch something. These tendrils allow the vine to cling to things like rocks, trees, or fences so it can reach higher and soak in more sunlight.
Vineyard managers use a structure called a trellis to help the vine grow unencumbered and reach its full potential. Without one, vines mat together on the ground, block out sunlight, and choke airflow. They eventually become diseased, wither pitifully, and end up trampled underfoot.
In short: you won’t be sipping any Dom Pérignon from an untrained vine (what viticulturists call a vine with no support structure).
So… what does any of this have to do with real estate investing?
In the same way vines need trellises to grow and produce fruit, investors need frameworks to make sound decisions, build momentum, and avoid getting tangled in confusion.
An untrained investor (one with no framework) often ends up the same way as the vine: vision choked, deals stalled, and goals trampled underfoot.
What This Framework Is (and Isn’t)
This is a framework I’ve developed through years of buying rental property in Memphis, TN. It’s not a one-size-fits-all prescription, and it doesn’t cause growth by itself — just like a trellis doesn’t produce grapes. But it helps facilitate growth and provides clarity around how your capital moves and what steps to expect along the way.
There are other frameworks out there — some great, some garbage. The one you choose should align with your goals, experience, and market. But if you’re looking for a simple, repeatable process to start (or refine) your investing journey, this one might just be your vine’s best friend.
The Real Estate Investing Cycle
I like to think of the investing process as a cyclical journey for your capital — broken down into three key phases or six actionable steps:
- Entry Phase:
1. Find the deal
2. Fund the deal
3. Finish the deal - Growth Phase:
4. Renovate the property
5. Rent the property - Exit Phase:
6. Refinance or sell the property
Repeat as desired. Let’s take a closer look:
1. Finding the Deal
This is where it starts — and if you’re new, it might take the longest. Building your buy box (your specific criteria for location, size, price, cash flow, etc.) requires time and research.
You’ll also need to:
- Build out lead sources for deals
- Learn to analyze cash flow quickly
- Practice negotiation tactics
- Understand what belongs in a competitive offer — and what protects your best interests
2. Funding the Deal
Once you find a deal worth chasing, you’ve got to decide how to fund it.
In the single-family and small multi-family game, cash is king. If you show up with bank financing, appraisal contingencies, and a 45-day close, your offer might never make it off the table.
Don’t worry — there are ways to make competitive cash-equivalent offers even if you’re not yacht-rich. We’ll cover those in another post.
3. Finishing the Deal
Most frameworks skip this part — and it was a source of confusion for me early in my investing career.
You need to:
- Know your due diligence checklist
- Understand how to read a settlement statement
- Become familiar with the closing process, and know what questions to ask your closing attorney
This step ensures you’re not blindsided right after the deal is done.
4. Renovating the Property
This is your chance to add value through forced appreciation.
Whether you plan to DIY or build out a network of trusted vendors, the reno phase really starts during due diligence with a:
- Thorough inspection process
- Comprehensive renovation checklist
- Timeline and budget guardrails
This step can make or break your returns.
5. Renting the Property
Now it’s time to fill the unit. If you don’t have a system for:
- Finding and screening tenants
- Determining rent rates
- Onboarding and managing lease compliance…
…you’re asking for a headache.
Ask me how I know: I cut corners with our first 10 doors and ended up paying a tenant to leave after three months of no rent. (The infamous “cash for keys” approach.)
Good property management can save you here (Insert plug for Grind City Property Management) — but only if you know what to look for in a manager. We inherit investors every month who are in the hurt locker because a bad or incompetent landlord took advantage of them. Do your homework – it’s worth your time!
6. Refinancing (or Selling) the Property
This is the exit point for your capital, and it sounds simple — until the bank says “no.” I went through five local lenders before I finally figured out how to earn a yes from bank number six. And I still work with that same loan officer today on every deal I do.
You’ll need to:
- Understand how lenders assess property/portfolio value
- Learn new terminology, like NOI, DSCR, LTV and seasoning (hint: banks don’t want to hear the words “cash flow”)
- Decide whether to refinance and hold or sell to another investor
And the kicker? Your decision tree here should be worked out from the beginning of the process, not figured out on the fly at the very end.
Bonus: Know Where You Fall on the Investor Spectrum
We tend to think about most things on a spectrum these days. For example, on the political spectrum – you’re either conservative, liberal, or moderate, but you fall somewhere along the continuum and it’s probably not too hard for you to identify where. What about on the investor spectrum? Are you:
- On one end with the analysis paralysis crew, who have to learn everything there is to learn and will probably never take action?
- On the other end with the over-eager risk-takers who are too careless to do their homework, and regularly jump into bad deals?
You really want to live in the middle — with those who are using a solid investing framework to act decisively, but wisely. That’s exactly what this trellis is designed to help you do.
A Fun Statistic to Wrap Up
According to Pew Research, less than 17% of people who believe real estate is the best investment actually buy a rental property. Most people who rent the house they live in will admit that it would have been better for them to just buy a house. There seems to be a veil of confusion around buying and owning real estate, but there doesn’t have to be.
Don’t be a statistic.
Use this framework — or develop your own — and get after it.
