How Do I Overcome Paralysis of Analysis?
I always have question asked of me , such as, I've recently started going to meetings of my local Property Owner's Association, and I think they're great. The problem is, there's so much information that I don't know what to pay attention to! Every month, there's another speaker with another opinion on the "best" strategy for this or that. I'm overwhelmed, and can't seem to get out and actually do anything. Please recommend a course of study that will help a new investor make a nice, simple deal.
Here's my answer. I'll go you one better than that; I'll tell you the absolute best strategy for buying and selling property...or would that be less than helpful?
New investors who attend real estate association meetings often come away with the same "paralysis of analysis" that you describe. There's so much information available, and so much of it appears to be contradictory (buy foreclosures...don't bother with foreclosures...buy to hold...buy and sell) that one wonders how anyone ever figures it all out. And adding to the problem, every successful investor is willing to defend to the death their strategy as the best strategy. Although they're trying to be helpful, they often add to the confusion experienced by newbies trying to make sense of it all. In my experience, new investors that don't start making offers in the first 2 to 3 months never get around to doing it at all. The fear of doing deals only fades with the actual doing of deals; no amount of "book-larnin" will ever give you the confidence you want. So stop trying to learn everything, and focus on what you need to make the first offers. Those things are:
1) Some idea of what you want your real estate to do for you. Know this, and you'll have a good idea of the exit strategy and the type, condition, areas, and price range of properties you should be looking at. Want quick cash? You'll need to wholesale properties. Looking at anything other than 1-family junkers is a waste of time. Eliminate other properties and from your thinking and move on.
2) A working knowledge of how your one exit strategy works. Building on the last example, once you know that wholesale deals are sold to cash buyers for 60%-70% of as-is value, you know a) how to calculate an offer and b) that you need to start finding buyers now.
3) Two or three strategies for finding the types of properties you want. Whatever your chosen strategy, finding the good deals will consume most of your time and energy. So try 2-3 methods all at once for a few weeks. Discard those that fail and amplify those that work, but always use more than one way at a time.
4) The ability to evaluate the properties you're viewing. In the case of junkers, you'll need to know how to find the after-repaired value and the cost of the repairs. Don't worry about figuring out what the property will rent for; it's not important to your plan. Conversely, if your plan is to buy and hold multis, you'll need to learn how to calculate the return on investment.
5) A team and a contract that will keep you out of trouble. Why do you need to know how to do a title search when there are folks who do it for a living? Sure, it might be good to know later, but it isn't crucial for you to know right now. And if you have a well-written purchase contract that allows you to get out of a bad deal before it closes and an experienced mentor that will help you through your first few deals, how can you lose?
There. Now instead of a billion things to learn, you have 5. Now get out there and make some deals.
by Vena Jones-Cox
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"