New to flipping? How to avoid the pain trap.
Tuesday, January 15
I see a lot of posts on BP from people either feeling discouraged or struggling to get their first deal done.
We are wired to respond to reward, we all move towards pleasure and away from pain right?
So the difficulty when you get started is that your bank account shows you a lot of pain until you are successful.
I think the "keep going till you make it" model is fundamentally flawed because not only are you battling stress from your new venture you also worry about money and in many cases have people around you telling you that you're crazy.
Now I have had lots of experience in New Zealand but the USA market was new to me. Not only did I have to figure out how to make money here I also had to learn all the US jargon and to actually understand these Southern accents etc. So if I can do it anybody can.
Here is what I highly recommend if you are starting out to help you get results faster and to reinforce the positives.
Instead of initially investing your energy in finding your first deal and your first buyer invest your time in finding someone who is already flipping. Now I don't mean a guru. Anybody who wants to charge you for their help run a mile.
But find someone who is flipping and arrange to become a finder for them.
This gives you the opportunity to
1. Get paid a finders fee with no risk to you.
2. Have someone experienced able to vet the deals and tell you why they are good or bad
3. Most importantly it enables you to negotiate deals knowing you have a buyer.
This is what I did by purchasing for a hedge fund. I knew exactly what they would pay so I could make all cash offers with no fear of how to sell it.
4. You may even find that this becomes what you do instead of yoru own deals. Some people work better in a team.
For many of us it is preferable to do several deals a week and get paid a fixed fee with no risk rather than do it all myself and worry about finding buyers.
EVERY city has a few big players. Go and sit at the courthouse steps till you identify them and then just ask if you can work for them.
I have my own sales channels internationally but I still buy homes for local wholesalers knowing their rules. This gives me extra deals every month with little extra effort.
Remember every single deal you look at has a cost attached. By that I mean every deal you can do is worth let's say a thousand dollars. So if you look at ten deals and do nothing with them because you couldn't onsell them or couldn't find one with enough margin then you have lost ten grand and done all the work researching the deals for no result. This creates pain and makes you want to give up.
But imagine if you could have gone into those deals saying
"I can close in 7 days, I am all cash and all I need is to get the price right"
Not only will you be taken more seriously, you will actually feel better inside and negotiate better KNOWING that if you get the price right you already have it sold.
I have about 20 bird doggers trying to sell me homes every day in Memphis and most of them tie up homes for a few days and desperately try to find a buyer. They never build their businesses because they are panicked. The price changes daily, you always feel like you are being lied to even if they aren't. In other words their stress and pain comes across in their negotiations and actually puts off buyers.
So do yourself a big favor newbies, find someone to find for. You will learn more, earn more and yearn a whole lot less!!