Deal analysis and doing your due diligence is critical to the success of real estate investors. There seems to be three kinds of investors when it comes to doing deals:
Debbie Deal Maker
Gary Guesser does a little research, reviews some information and then decides, “Yep, this one looks like a deal.” Being like Gary is very scary. This type of investor gets into trouble –usually very quickly. Guessers take the numbers on a deal from wholesalers, agents, sellers and other and believe that the numbers are true without doing their own research or they don’t get all of the required information and just assume that the deal is a good one. Investing in this manner causes one to quickly become frustrated with investing and decide that it just doesn’t work.
Debbie Deal Maker, now she has a complete due diligence process whereby she runs all the numbers and does all the research. She knows how to properly compare comparables and determine the after repair value of a property (ARV). She also knows how to calculate all the expenses in a deal – not only the expenses to get into the deal and hold it, but also the expenses to exit the deal. Debbie knows how much profit she needs and she knows how to calculate the amount of discount she needs on a property before she makes her offer. It doesn’t stop there – Debbie actually makes an offer. She takes the necessary actions to make the deal happen once she has done her analysis and found a good deal. Remember if you want a deal, you’ve got to make the offer.
Ronny Rocker, he does everything that Debbie does except take action. He continues to analyze and analyze a deal until he has what we call “paralysis of analysis”. It’s kind of like this quote, “Worrying is like a rocking chair, it keeps you busy but gets you nowhere.” Can you get a visual on this? It’s like Grandpa sitting on the porch rocking back and forth and contemplating. Even if he figures everything out, he’s still got to get up and take some action or he goes nowhere.
The goal of all investors should be to be a Debbie Deal Maker type. If you’re already that type, congratulations! If you are not at this place in your investing then STOP and take a look at what is getting in the way. Are you clear on your strategy for real estate investing? Is there something else that you need to learn to feel comfortable doing deals? Do you need to learn more about how to do your due diligence? Do you need a mentor or a coach to help you so that you can feel comfortable with doing deals? If there is something standing in your way, figure out what it is and take the action you need to take to move past that obstacle because guessing nor rocking will get you anywhere in this business. Don’t end up frustrated – ‘Turn Your Intentions into Action!’
To learn more about analyzing real estate deals, visit http://dealsorduds.com.
Nancy Spivey, known as The Real Estate Investor’s Resource, is an active investor, speaker and coach. Through her training and coaching programs, she helps new and experienced investors create profitability, productivity and prosperity. Nancy serves on the board of directors for the Georgia Real Estate Investors Association, the largest investor association in the U.S. She is also the host of Real Estate Reality Radio.
For a free copy of the eBook, The Science of Getting Rich, a list of Nancy’s Private Rolodex Resources, and information on events go to www.transformit.net and sign up for her free ezine, which is loaded with free tips, resources and tools that will help you create profit, productivity and prosperity in real estate investing!