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Slowly Remove the Real Estate Investor Band-aid

by Clay Huber on December 28, 2012 · 14 comments

  
Bandaid

The majority of us have been there. Sitting on the floor or edge of chair as our moms are about to remove the band-aid. We all know that going quick is the best process to use to ensure minimal amounts of “sting”.

When it comes to real estate and making mistakes, you want to do the exact opposite! You want to remove the band-aid nice and slow. You need to feel that sting. In the long run, you’ll be happy you did.

Last week I wrote an article about a huge bone-headed mistake I made regarding a deal. This prompted a great discussion down in the comment section (nice work BiggerPockets community!) and I noticed a few people mentioning, “you just need to move on” after making a mistake.

The question is, should you immediately move on after making a mistake?

In sticking with the analogy, let’s take a look at the two options. Ripping of the band-aid quickly (moving on immediately after mistake) or slowly removing the band-aid (NOT moving on immediately after mistake).

The ‘Rip-Off-Quick’ Real Estate Band-Ad Method

When you make a mistake in real estate, the tempting option (since it is least painful) is to throw your hands up and say, “My bad! Won’t let it happen again. Moving on.” I’m not saying to sit there and never let go of the mistake; however, by taking this route you rob yourself of a valuable opportunity to learn.

You may think to yourself, “won’t happen again”, but if that’s all you think before moving on, how much confidence can you actually put into that statement? This is the problem with removing the band-aid too fast. It drastically reduces your ability to rationally analyze the situation and figure out ‘what-went-wrong’.

On the other hand, “pain adds value”…

The ‘Rip-Off-Slowly’ Real Estate Band-Ad Method

Eeek. Ouch. Ohhh.

It hurts. But as kids, it reminded us to do our very best to AVOID whatever it was that put the band-aid there in the first place.

This concept is the exact same for real estate. How can we as flippers, wholesalers, landlords, private money lenders, etc. avoid the “ouch mistakes” that have placed the real estate band-aid on us? If you want to truly dodge future bullets, you can not just move on. You need to harp on it a bit and feel some pain/frustration about whatever boneheaded move you did.

It’s human nature to want to run and hide from these sorts of things, but if you put yourself through the pain and anguish, you’ll be thankful you did later on down the road when you don’t find yourself say, “Whoops, I Did it Again!”

Pain & Anguish Learning Process

In order to slowly remove that band-aid, consider doing the following…

  1.  What was the scenario? Don’t skimp on this either. Ask yourself ‘what’ it was, ‘how’ you got there,  ‘why’ you were there, and ‘who’ you were there with. What days did things occur on? Time frames are super important.
  2. What was the goal/wanted outcome? Were you looking to put a house under contract? Purchasing a house? Preparing to close a private money loan?
  3. What was the ‘actual’ outcome? Compared to your #2 answer, how did the scenario play out in reality?
  4. Any ‘fixable’ variables? Is there something that could have been differently that would have affected the outcome? Sometimes it is just flat out bad luck and totally out of control. If this is truly the case, then yes, move on! (Warning: make sure everything was sincerely out of your control.
  5. Implementing ‘fixable’ variables. If #4 yielded some things you could have done better, how are you going to implement them going forward?

Join Me in Slowly Removing my Band-aid

No better way to show something than by using a real life example, so I’ll use the one I spoke about in last weeks article.

  • I was presented with a wholesale deal on a Tuesday. A meeting was set up for Thursday morning of that same week. I figured I would ask a few more questions and then pull the trigger if everything still ‘made sense’ after meeting.
  • I planned on purchasing a wholesale deal that would be put into my land contract portfolio.
  • As I was meeting with the guy, his phone rang and the other investor he told about the deal bought it. The house evaporated right before my eyes.
  • The timing of the meeting. My ‘politeness’.
  • Next time, I will not be so polite and at least ask if he can meet up any sooner.

For me, I could make it as simple as, “don’t be so slow next time, I’m moving on” as the solution but in all actuality, there was more to it than that. I needed to be more assertive and request a meeting sooner. “Being too slow” is too general. You should nail down ‘what’ caused you to be so slow.

Bottom line, access the mistakes you make honestly and dwell on them a bit before moving on. Don’t dwell on them forever, but dwell on them long enough to be able to analyze the mistake. It hurts at times and will get you upset, but it’s worth it. Remember, if you find yourself saying, “whoops, I did it again”, you are going to really really be angry with yourself. Avoid that at all costs.

How about you? I know from my other article (thanks to the comments) that many others have made mistakes. Do you take any steps to reduce the odds of it happening again? I know I’m always looking for any suggestions possible to ensure prior mistakes are never repeated again! Leave your comments below.

Photo: Bark

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{ 14 comments… read them below or add one }

Sharon Vornholt December 28, 2012 at 7:05 am

Clay –

I have found that when you take the time to really do a “full autopsy” of your mistakes you are much less likely to make that same mistake again.

Reply

Clay Huber December 28, 2012 at 7:08 am

“Full autopsy” – a bit gruesome, but a great analogy ;-)

Thanks Sharon.

Reply

Robert Watkins December 28, 2012 at 11:22 am

Hello Clay,

Thank you for sharing this, It is very true.

My mistake.. I offered the potential buyers the option of selecting the double stainless steel oven for a 5000 sq ft home in a gated communuty.
The problem, people could not invision the oven in the rather large hole where it was to be placed. I lost a lot of potential offers because I didn’t want to invest the money of $3000. up front.

Reply

Clay Huber December 28, 2012 at 12:07 pm

Robert, thanks for the comment.

Your story is the exact reason staging is so powerful. People have a hard time envisioning things, so the more you can do to aid this, the more buyers are willing to put pen to paper and write up an offer.

Reply

Glenn Espinosa December 28, 2012 at 7:09 pm

Hey Clay,

If you analyze enough of these mistakes you’ll have enough to write a book of golden nuggets!

Lets face it, these golden nuggets are what we look for in real estate books anyway.

Thanks for the nice article and for reminding me to really reflect upon my mistakes. I think I’ll go write down some methods to avoid my most recent mistakes so that I crystallize them in my memory bank.

Reply

Clay Huber December 29, 2012 at 7:12 am

While I would never wish a “book of golden nuggets” upon anyone, you make a great point, these are the best ways to learn. Especially given the fact that the vast majority of the gurus make it sound like this business is a piece of cake.

Thanks for the comment Glenn.

Reply

Jose Gonzalez December 29, 2012 at 8:23 am

Hi Clay,
Good way to recommend going the slow way and analyze things. Just like any sport you do… no pain.. no gain!

As for me I had left some properties with carpets with small dark spots or medium color spots throught the rooms or living rooms… The results are just that it takes 15 to 30 days more in average to get them leased. Instead I decided to install laminated floors through the whole house and leaving no carpet at all. The result is that the investment pays itself with the time they dont get leased, and the laminated last much more than carpet.

About your example, if you are insistent and call your sellers before, dont you think that some might play the role of “this guy wants the deal baddly, lets inflate the price a little bit”? It has happened to me in some business (non real estate though) transactions, and the sellers just let you wait even more, to make you considerate increasing the offer or even suggest the increase.

Thanks for the post!

Reply

Clay Huber December 29, 2012 at 8:52 am

Exactly. No pain, no gain. Nice way to put it.

Interesting about the carpets. Definitely makes sense though, particularly regarding their ability to last longer than carpet.

Thanks for the comment.

Reply

Alan Mackenthun December 31, 2012 at 3:52 pm

It is important to dwell on your mistakes for a time. You need to learn your lessons. On the other hand, you can’t hold onto them forever either. Learn your lessons and move on to the next deal.

Reply

Clay January 1, 2013 at 7:26 am

Good summary Alan.

The tendency can be to move on too fast from the mistakes, but overall, I agree 100%, you can’t sit around and cry over the spilled milk for too long.

Reply

Michael January 1, 2013 at 8:28 am

Good analogy Clay. I certainly have had my share of “mistakes” but none of them were just pull the bandaid off approach due to the circumstances not by choice that reminded me everyday of the potential disaster they could of caused. As a full time investor now for 4 years I can’t tell you how many newbies I share the “what not to do” or if you do know this!
I have learned some good lesson’s by doing & I have other’s say I bet you wouldn’t do that again and my answer has always been yes I would I would just do it different now that I know what I learned from the experience. Happy New Year!

Reply

Clay January 1, 2013 at 8:32 am

Michael. Great comment. You’re right, it’s now ‘whether’ or not you do it, it is ‘how’ you do it the second time, and like you said, you would do it again, but just DIFFERENTLY.

Enjoy the New Year!

Reply

Melodee Lucido January 3, 2013 at 12:06 am

Another good article Clay.

Great teams and coaches review their moves after the game from the videos to determine how to sharpen their game. We would do well to do so too for the home runs and the “oops, that didn’t work”. Running the film on slo mo to see what and how we do it differently is a good idea.

Thanks for the article!

Reply

Clay January 3, 2013 at 7:24 am

Great analogy Melodee for anyone who has played high school sports or beyond. I certainly remember having to wake up early Saturday morning to go in and watch the previous nights football game on film.

As you noted though, NOT just to see/learn from the mistakes, but also the successes.

Great comment. Thanks!

Reply

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