Comming unstuck, almost

Hi Guys. So last week I mentioned I would talk about a Seller finance deal on a Duplex, I was going to buy. That has changed for now and I have learned a very important and valuable lesson.

So the deal was my first seller finance deal and I was excited about getting the property, without going to the banks. The figures made sense and I thought I could negotiate a little more, in my favour.

I ran the BP software and everything looked good. I am somebody who keeps reasonable control on my finances, with a budget of “sorts” and that’s why, I could have come unstuck. It was not good enough!

When you decide to become a real estate entrepreneur you need to start strong. As has been said, you cannot build the empire states building on a 6inch slab. You need better foundations, make sense? It is essential that when starting out you take time, to build these strong foundations. Implementing good business practices early on is essential. It does not matter if you only intend to buy one house or one thousand, take the time to do this and you can easily scale up with little difficulty.

So my problem came as I decided to begin to do a yearly budget, to see my cash on hand for the rest of the year. I reviewed my monthly income and outgoings and projected this for the rest of the year, including planned and unplanned expenses. Now this may seem like something that is very basic, but I guarantee I am not the only person not doing this. I charted out two paths, one buying the Duplex with seller finance and one without. With it in black and white it was clear that I could be finding myself a little short, while paying off the down payment over the next few months. This simple error probably would not of landed me in the debtor’s jail but imagine this problem scaled up 5, 10 or even 100 times. This is how empires fall and fail!

So let that be a lesson, do your personal budget, and always do a forecast before committing to anything. With things written out in a spreadsheet it is clear to see what can and will happen. It’s easier to click a mouse and make a change on paper now, than to spend sleepless nights worrying about how the hell you can change things later on.

Until next time

Nick