If you’ve ever felt like you’re doing all the right things in real estate but still not building the kind of wealth or stability you expected, this conversation will give you clarity. I sat down with Dr Danica Cicmil to unpack the difference between how most investors operate and how institutional investors think, and the shift is simpler than most people realize. We talk about strategy first, not deals, how to evaluate risk properly, why staying busy is not the same as building wealth, and what it actually looks like to create a repeatable investing system that supports long-term growth.
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Hello everyone, welcome to another episode. I’m Adrienne Green and today I have with me Dr. Danny. Thanks for joining me.
Thank you so much for having me.
And as you know, listeners, what we do is help real estate entrepreneurs escape the grind so they can really live the lives of freedom that they got into real estate for in the first place. Dr. Danny has a really cool background and perspective with a PhD in finance and all of this great experience that she’s going to share with us. So, Dr. Danny, let’s start. Can you give people a quick understanding of how you help your clients today when it comes to building long-term wealth?
Yes, thank you so much. So I was for almost 10 years in institutional real estate so that my background started more on institutional side, advising pension funds on multi-million projects. Now I transitioned to helping private clients do literally the same, which is really interesting because there is such a huge gap between what people want to do and how to do it.
And if you take institutional framework and you set it for the private investors, then you have a beautiful strategy that works. So for example, private investors would tend to do like, okay, I’m going to start with this apartment. An institutional investor would be, okay, what return do I want, what is the risk I take, what are the cities or countries I’m going to.
So you start first with a strategy and that is something I try to bring to clients.
Okay, let’s define strategy. Let’s see returns, not the purchasing prices. Let’s see the values of the property. Because they tend to say, I know 100K is too expensive. Not correct. We need to see the value, the return, what you’re going to get in return for that 100K. So 100K can be cheap and expensive. It doesn’t give us anything until we know what is the return we can get. So that is something I’m really trying to work with clients on, setting up strategy.
in terms of risk profile, returns, and location. And that’s the first step we go through. So it’s a bit unusual. I know how was your experience in US. Is it similar that people start from the property instead of from the strategy?
Right. I love that you do that because that’s also what I recommend for investors is you need to start with your vision, your why, and how real estate is going to fit into that. There’s a reason that we need to tell people that because a lot of people just get into it because my friend at work, the guy in the cubicle next to me, he’s doing this. It seems like a good idea. He’s making lots of money. So I’m going to do the same thing when your strategy, your goals, your vision, your why may not be the same as the guy in the cubicle next to you at work. So I love that you recommend people start with the strategy piece.
And what I really think is crucial is risk profile. I might not be fine with flipping a house because a crisis can come and then I can really end up in loss. Someone else can be fine with that.
Another person wants long-term investment, wants to have cash flow. So you can be focused on cash flow, you can be focused on appreciation. And that’s something you need to define beforehand, not just looking at what your friend is doing, because you can have completely different ideas how it needs to look and if you can really handle that type of stress and the work that comes with development, redevelopment, and higher levels of real estate.
Right, and people, when I was an active real estate agent working with investors, I can’t count how many times I had to say risk and return go hand in hand. So if you want that higher return, you have to be comfortable with higher risk. Otherwise, let’s look at something lower return that has lower risk. It’s so important.
Yeah, what you just shared is so important because independent of which asset class you want to invest in, that is the number one rule. If someone says they can get 20 or 30 percent return, yes you can, also with real estate development, but you need to take into account all the risk you’re taking and everything that can go wrong. So that’s the number one thing people need to learn.
Now, I’d love when you’re looking at experienced real estate investors, because that’s a lot of our listeners here, they’re already in the business and figuring out how to make it work and optimize it. What are some big gaps you see in what they think they’re doing and what they’re actually doing?
What I notice mostly is that they’re not aware of the amount of work that comes with real estate. They underestimate the technical analysis, really checking the property properly. I had experience with people that bought a property and afterward they had huge legal issues because nothing was well written.
So a huge gap is that they try to rush and not properly evaluate everything that comes with the property, which is the technical part and legal. Both are equally important and both can bring you huge problems afterward.
If there is a bad pipe installation in the apartment, you have a problem as long as you have it. The tenant will complain constantly. You’re going to have higher turnover. It’s something that you needed to check before you bought it.
Right. I think a lot of people in real estate have the personality of wanting it all done yesterday. We tend to rush through and a lot of real estate investors are optimists. They’re seeing all the amazing things a property could bring.
In the institutional world, there is something called a red flag report. Before you go to negotiating the contract, you do proper analysis, technical and legal, and identify if there are red flags.
In the private market, that doesn’t exist, but I recommend having something like that. Inspect as much as you can, gather as many documents as you can, because that really helps you. Whatever you’re going to do with the property, that evaluation is the number one thing.
Right, the more you know, you can make an informed decision.
You can also negotiate the price if you see something that needs to be fixed. It helps your strategy and negotiations.
Now, as people are scaling their portfolios, a lot of people think property by property instead of systemically. What would you recommend?
One thing I recommend is to have a property manager. When you start scaling, you lose sight of small details. Institutional investors always work with external parties managing properties so you can focus on growth.
Even though it’s an expense, it’s worth it. It helps when you scale. They can also help you with analysis, local knowledge, and operations.
Right, I talk to people about that a lot. Many people move from being employed to self-employed, but to become a business owner, you need people. Bringing on virtual assistants was a game changer for me. It allowed me to move to high-level work.
Yes, virtual assistants can help with so many tasks. If you have someone local, they can also support operations.
Right, especially with short-term rentals. If you’re still doing low-level tasks yourself, this is your wake-up call to delegate so you can focus on high-level investing.
There is a calculation method where you take your monthly income and break it down to your hourly rate. Any service that costs less than your hourly rate should be delegated.
Right, and if you feel resistance to that, there are often underlying beliefs. Step back and examine that.
Let’s talk about capital allocation. What are your pro tips?
Capital allocation starts in strategy. You need to know what you want to achieve. If you have capital and access to financing, plan how many properties you can buy over time.
The more you plan, the easier it is. Otherwise, you don’t know where you’re going. It’s like using Google Maps without entering a destination.
Right, we all have a destination, but without a plan, we wander.
There are also differences between Germany and the US. In Germany, you need equity and stable income. In the US, financing is more flexible.
Right, the US offers strong opportunities for building wealth through leverage.
Yes, it’s a great opportunity if done correctly.
Now, for investors relying on instinct, what would you recommend?
Gut feeling develops over time. In the beginning, rely on analysis. With experience, you can combine both.
Analysis is a must. Then you can trust your instincts.
Right, you can have both.
Yes, and if you’re unsure, it’s better to walk away. Another opportunity will come.
Right, scarcity mindset can push people into bad deals, but there are always more opportunities.
Yes, there is no need to rush. Real estate is a people business and takes time.
I always need that reminder. There is no need to rush.
For consistency, what would you recommend?
Set a clear return target. If a property doesn’t meet it, don’t pursue it. That’s how you build a repeatable system.
Right, set your criteria and stick to it.
Exactly. It saves time and keeps you aligned.
Shiny object syndrome will come up, but if it doesn’t fit your criteria, you need to walk away.
Yes, that’s crucial.
As we wrap up, how can people connect with you?
The best way is through my website, where you can book a call to discuss how I can help you bring more strategy to your investing.
Well, thank you again for joining me. I’ll see you next time.