Get in, get out, get paid
Wednesday, January 16
I guess "investors" fall into 2 groups. One team wants to build passive income and go and semi retire and the second group actually loves real estate and just wants to make a living out of it.
I find that a lot of people don't understand that these 2 sides of real estate should, in my opinion, have very different rules.
If you are buying and holding to build passive income then the quality and location of each deal is pretty important. A home in area A can out perform an identical priced property in area B and you only have so much money to invest so you really should have very, very clear rules on net return, location, construction and rentability.
BUT if you are flipping, wholesaling, buying and selling under whatever title you want to call it then NONE of those rules apply.
The rules for that are simple
Get in, get out and get paid.
I deal with about 20 wholesalers and bird doggers in Memphis and only 1 of them understands this concept. Rather than try and tell me how this house in a bad area is a good deal and why I should pay too much for it like the other 19 this guy tells me what his contract is at, how much he wants to make and lets me tell him if I can make it work. As a result I buy from him nearly every week. Yet most of the other people try to jack up their profit and end up with the property appearing later on the steps or elsewhere.
Their desire for a big pay day seems to usually end up with zip!
Now don;t get me wrong I am all over making money on a deal and when you can go large do so. But if you want ot be a practitioner in this business I see the pragmatic guys doing well. Make a grand here, 3 grand there, skinny deal is still better than making nothing. it takes the same amount of work to check out a deal and lose it as it does to check it out and sell it.
So don't get greedy and set a minimum earn per property and don't be angry with yourself if that is all you make sometimes, celebrate instead.
it's real hard to go broke if you keep making a profit.
PS: If you get into your brain that every deal you look at COSTS you money in time and gasoline then your focus becomes how to maximise the percentage of deals I look at turning into a pay day instead of trying to maximise profit on a few.
If you look at 20 deals at a cost of $500 a throw you have to make 10 grand on the 21st one just to brea even.
Ain't it better to look at 20, make a grand each on ten of them and have one 5 or 10K win out of the other ten?
Do the math, then get going!!