When crunching numbers for potential deals

Question

is it better to be a pessimist, a realist, or an optimist?

If you are a pessimist, like me, I feel like that I have passed on a few deals that could have been good just because I tend to estimate vacancy rates, repair / maintenance, etc to be towards the bad end of the spectrum.

Derek Guyer · Answer

I 100% agree with All Cash. Anytime I have veered from that, I was ticked later. Stay focused on good clean numbers that are conservative and don't let someone talk you into anything different.

For newbies, this is very difficult because there is so much hype in this field. Just because someone tells you it's a good deal doesn't mean it is and your ability to analyze is critical because of that.

Stop listening to the voices and look at the facts. They'll tell you everything you need to know about a deal.

Frank Adams · Answer

I think it's best to be a realist, with a hint of pessimist in you. That's what I am and it's served me pretty well for almost  30 years of REI. Sometimes I've suffered from "gottadoadealitis" and it's bitten me in the butt every time.

About a year ago I did a rehab/flip that every time I went to look at it I jumped my rehab cost estimate more and more. It went from about $8K to $15K. In the end the rehab cost me $17K, some of which because I tend to "overimprove" on some cosmetics (kitchen and bath) and I don't take any "shortcuts" on structural and other things.

Remember, the deal of a lifetime comes along every week. You don't "lose" money by passing on a deal.

all cash

N/A N/A · Answer

a while.  I must say that all cash, your suggestions and advice are the ones that always seem to get my attention.

Thanks for providing valuable advice to all those folks, including myself, who are just starting out in this area of business.