The One Page Memo Professional Investors Write Before Any Money Moves.
Professional investors put the decision in writing before they commit capital. This post explains what goes in that document and gives a short version that any individual investor can use on a single page.
Moma Marick
10/10/20264 min read
Most property decisions are made in conversation.
An agent describes a plot. A cousin says the area is developing. A contractor gives a price and a timeline over the phone. Somewhere in those conversations the buyer starts to feel that the decision has been made, and then the money moves. At no point does the reasoning exist anywhere except in the buyer's head, shaped by whoever spoke last.
Professional investors work the other way round. They write the decision down first.
A research brief published by Addepar, and hosted by the Stanford Long Term Investing programme, surveyed professional investors about how they make decisions. It found that 97 percent of those surveyed have a formal investment memo template and process, and that among the firms using memos, most make completing and reviewing the memo a requirement before an investment can be made. This is one survey and should be read as such, but it points to a consistent practice. Before capital goes out, the thinking goes down on paper.
The reason is practical rather than bureaucratic. One real estate framework describes the purpose well: a memo should make the decision auditable, not merely persuasive. Anyone reading it should be able to see what must be true for the deal to work, what could break, and who is responsible for each response, before any capital is committed. Another source on memo writing makes a point that matters for individuals, that the memo is worth writing even when the investment committee is just you.
Institutional memos are long. A typical outline runs to around ten sections covering the property, the market, the business plan, the underwriting assumptions, the returns, the sensitivities, the risks, the exit, and the legal structure. An individual buying a plot or building a single property does not need all of that. But the underlying questions are the same, and they fit on one page. What follows is a short version of those questions. It is my adaptation of institutional practice, not an industry standard.
Start with the thesis, in two sentences.
What are you buying, and why this property, in this place, at this time? Institutional templates open with the thesis because it forces clarity. If you cannot explain the reason for the purchase in two plain sentences, the reason is probably not yet clear to you, and the agent's enthusiasm is doing the work that your own analysis should be doing.
Write down what must be true.
Every property investment rests on assumptions. Rent level. Occupancy. Build cost. Completion date. Resale or letting value later on. A good memo lists these separately rather than blending them into one general feeling of confidence, because an assumption you have written down can be tested, and an assumption you have only felt cannot. This is also where the discipline from this page's earlier post on anchoring bias applies. Write down your own estimate of value, based on yield and comparable sales, before you hear the asking price, so the seller's number does not become your starting point.
Write down what could break.
Institutional templates typically ask for three to five key risks, each paired with a response, and note that credibility comes from completeness, since risks the reader already knows about are still worth listing. For a Cameroon property, a risk line might read like this. The risk is that the contractor stalls after the foundation. The response is payments tied to independently verified milestones, funds held in escrow, and a written completion date. Many of the protections this page has described, from title verification to milestone payments, are simply responses to risks, and the memo is where each response gets matched to the risk it answers.
Stress the numbers.
Institutions test their assumptions under pressure. They ask what happens if rent comes in lower, if costs rise, if the exit takes longer than planned. For an individual, a simple version is enough. If rent comes in 20 percent lower than you expect, does the property still cover its costs? If the build runs six months late, can you carry it? A deal that only works when every assumption holds perfectly is a deal one piece of bad luck away from trouble. This page examined the same idea when it looked at how institutions stress test investments.
Decide your exit before you enter.
Memo guidance consistently treats exit thinking as a discipline that sharpens the whole analysis, and names a single optimistic exit assumption presented as the plan as a common weakness. Write down who would realistically buy or rent the property, at roughly what level, and after how long. This connects directly to this page's earlier post on why knowing how you will sell matters before you buy.
Say in advance what would make you decide again.
This last part is the most useful, and the one individual investors almost never write. Memo frameworks note that a price change, a financing revision, a change in construction scope, or a delayed closing may require the decision to be reconsidered rather than relying on the original approval. Writing those triggers down in advance is a direct defence against the sunk cost trap this page examined recently. When the price rises or the scope changes, you are not asking whether you can bear to walk away from what you have already spent. You are returning to a page you wrote while thinking clearly and asking whether the original reasoning still holds.
Done once, the memo also becomes a record. Some institutions review each completed investment afterwards to work out which outcomes came from market movement, which from errors in the original assumptions, and which from execution. A one page memo gives an individual investor the same chance to learn from their own decisions instead of relying on memory.
None of this removes risk. A memo cannot make a market behave or a contractor honest. What it removes is surprise. It forces the questions that agents, recommendations, and excitement tend to skip, and it does so before any money has moved, when the answers are still cheap to act on.
Write it before you pay.
If the price, scope, or timeline changes, go back to the page and decide again.