On a recent BiggerPockets Real Estate Podcast episode, I addressed a question from a listener that I get from a lot of people: “As a fairly new investor, are there any tips, tricks, or methods that you would use to get past the analysis paralysis and feel confident about a property?”
Analysis paralysis is a term describing when a new real estate investor is so caught up on which strategy to choose, how to execute it, and whether or not they will make a mistake that it ultimately leads to them never taking action at all.
Here’s my take on this issue.
The No. 1 Way to Overcome Analysis Paralysis
So, the short answer is I don’t have any tips and tricks other than just putting in the hours, putting in the reps.
It’s kind of like asking if there are any tips and tricks to get over being sore when you first start working out. Not really! I mean, yeah, you can get a massage and it might help a little bit. But really you’re just going to be sore. And until you do it enough, you’re always going to be sore.
Therefore, the best tip I have is make it a regular routine. Make it so you’re no longer a newbie.
Analyze Deals Every Day
In other words, analyze deals every day. In fact, I usually tell people to analyze 100 deals before you make your first offer. Think about it: If you did three properties every day for the next month, when you run the numbers in the beginning, it’s going to be painful. You’re not going to know what to do—which button to press or how to analyze it correctly or whatever.
But after a month of that, you’re going to be a rock star. You’re going to have all those little things figured out and it’s not going to be hard anymore. There’s not going to be pain when you work out, so to speak.
And so the best tip or trick I have to get past analysis paralysis is just get so good at analyzing deals that you’re not afraid to make offers—that you’re not nervous—because you’re confident you know exactly what you’re doing.
And that just comes from “reps.”
Consult Seasoned Investors
Now, one thing I could add on, though, is it’s one thing to analyze deals. But then take your numbers and go meet with local real estate investors in your market and compare those numbers to what they’re doing.
Ask them, “Hey, you know, does this look about right to you?”
Sure, not every investor—or even every good investor—in your market is going to actually know their numbers. Many investors out there just buy stuff and hope it works out. And at the end of the year, they’re actually not making money. They just think they are.
So, be careful that even if a local investor says, “Oh, yeah. You’re doing fine.”
Make sure you’ve actually done your numbers to make sure that they’re correct. Don’t forget to include things like capital expenditures and repairs and property management (if you’re not going to manage yourself).
Hope this is helpful for you!
What’s holding you back from getting started? How can I help?
Let’s talk in the comment section below!