Are there any math impaired RE investors here? :)

Julie Hill · 2021-01-15T17:57:07-08:00

First of all, I consider myself very smart. I run a very successful company, have always excelled in everything I do (including school), and have even been pretty successful with RE investing & flipping so far (with my husband) but what holds me back is MATH. It is super frustrating because I cannot conceptualize or visualize math at all. I can't think in terms of percentages or ratios, and can't "see" what other people naturally "see" when it comes to numbers. And I don't mean mathematicians, I mean normal everyday people. THIS is what holds me back in real estate investing. I am a creative and massive problem solver. I see all the opportunities in front of me and all the different scenarios but the math part stops me short. I literally would be UNSTOPPABLE if I could conceptualize the math of these deals/situations. I was listening to a Clubhouse chat with Grant & Elena Cordone and Elena said she doesn't do any of the math because she can't think that way. She let's Grant handle all of that. And I was like... OMG THERE'S SOMEONE LIKE ME???!! So that gives me hope. I feel like if I had a RE Math coach, who would practice with me every day, I might get better at it but I don't think such a person exists. I really need to learn one concept really really well so that I actually understand it and then move on to the next. Just like learning a language or an instrument. Ho hum. I was talking with a lender today and he asked me some questions that I just felt... stupid answering. I definitely wasn't confident. Anytime I'm chatting with anyone in RE I just feel dumb. Just a Friday rant I guess!

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

5y

You're not alone. I used to tutor math, and I can tell you that you are not one of the few, you are one of the many. The concepts of math are actually very simple, but math is taught wrong in school...and it has been for years (decades,...maybe centuries). PM me, and I'll give you some tools to help you. REI is nothing but math with dollar signs in front, so it's kind of important. Trust me, I can help you.

26 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

5y

Yup.. its just reality that math concepts can be quite tough for many.

I see it all the time with whole sale deals.. IE pay 200k sell for 250k and make 50k with no concept of the expenses that go into it and that that kind of spread equates to maybe 10k profit not 50k

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10 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

5y

Originally posted by @Jay Hinrichs:

Yup.. its just reality that math concepts can be quite tough for many.

I see it all the time with whole sale deals.. IE pay 200k sell for 250k and make 50k with no concept of the expenses that go into it and that that kind of spread equates to maybe 10k profit not 50k

More than that. They don't understand the concept of exponential returns, and rely on percentages in their answers to measure their success. Percentages lie when they are the answer in a REI analysis.

They also accept the answers as givens, instead of the answer being results of the givens...and the variables...and don't realize they can control the variables, because too many live on the right side of the equal sign. The variables, and the control of them, live on the left. If the REI understood the left, instead of taking the quick (lazy), instant gratification the right side gives them, they would see a whole new world of options in REI they never knew were there.

This is why, when asked what books a REI should read, I always give the same answer: Geometry and Algebra. Geometry teaches how to think through a problem, and multi-task it to build a path (plan in REI) to the future answer. Algebra teaches how to apply that plan.

Math is nothing but a series of different languages. No different than French, English (OK, I have to count British English and American English as 2 different languages), etc... Just like those languages, one language can talk to another with the use of an interpreter. Math is no different. You need to interpret each math language into English, and back to math to fully understand math...and the REI needs to be able to be that interpreter.

I blame the way they teach math in school for the struggles found doing this. They teach/use story problems backwards. They should use story problems first to teach the math, instead of teach the math, then apply it to story problems.

Math is in EVERYTHING we do and experience in life.

6 Reply

Jill F.

Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes

5y

@Julie Hill "math" is a pretty big topic. What more specifically are you not understanding and what are you trying to accomplish with math? What did the lender ask you about? I'm just curious.

3 Reply

Michael CuriaPro Member

Investor · CA · Member since 2010 · 6 posts · 3 votes

5y

Hi Julie,

There is a book real estate math DeMYSTiFieD (exactly like that) A SELF TEACHING GUIDE, by Stephen P Mooney. That book might help as there is a section on investment real estate with examples. There are many online videos about real estate math. There may be other helpful information on this site.

Good Luck,

2 Reply

Tushar P.

Member since 2019 · 332 posts · 171 votes

5y

Struggling with math associated with real estate? Really? Its not calculus, and no one is expected to write sophisticated genome sequencing algorithms on quantum computing platform to generate nanotechnology stem cells via artificial intelligence. That would require real math skills as a baseline.

I think you may be struggling with real estate concepts rather than the math associated with it.

1 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

5y

Originally posted by @Tushar P.:

Struggling with math associated with real estate? Really? Its not calculus, and no one is expected to write sophisticated genome sequencing algorithms on quantum computing platform to generate nanotechnology stem cells via artificial intelligence. That would require real math skills as a baseline.

I think you may be struggling with real estate concepts rather than the math associated with it.

A lot of people struggle with math. It's not a question one extreme (basic adding and subtracting), or the other (whatever the h*** you are trying to impress us with). REI, like life in general, is a combination of Geometry (recognizing and multitasking/planning out solutions to problems) and Algebra (application of those solutions).

This is why whenever someone asks "what books they should read to help them learn REI", I always answer with "Geometry and Algebra".

6 Reply

Ana Marie B.

Rental Property Investor · SF Bay Area, CA · Member since 2015 · 206 posts · 156 votes

5y

I totally relate with you @Julie Hill and appreciate your post! I have a master’s degree from a great private university and managed to get a 4.0 throughout college and graduate school through sheer hard work and perseverance, but absolutely hate math.

Math just doesn’t come naturally to me. I often joke that I must’ve missed a foundational class or 2 during junior high that led to my inability to “get” math. I simply must use a calculator (and even then I wonder if I’m plugging in the correct formula!).

I guess I’m lucky that I married a math whiz. So we complement each other in RE. I handle most aspects related to selecting properties, contractual matters, property management, etc., while my hubby computes all math-related problems in his head and asks all the right questions when meeting with lenders. Don’t get me wrong, I can grasp the bigger picture when it comes to math and can’t be swindled, but yeah when it comes to doing math problems in my head, for instance, I just can’t do it.

FYI - When I have free time, I visit Kahn Academy (free online courses) to re-visit basic principles of math that I may have missed in school. It’s amazing. I recommend it highly! Wish my teachers taught math this way back then.

1 Reply

Julie Hill

OP

Denver, CO · Member since 2017 · 102 posts · 48 votes

5y

@Tushar P. I didn't say I couldn't DO math... I have a Masters Degree. Of course I can do math. It doesn't mean I ever UNDERSTOOD math concepts though. RE math is mostly simple and I can do it on paper just fine. But I can't THINK that way. I can't quickly "see" good deals until I sit down with a pen and paper to figure them out. And I can't visualize ratios. I read a ton of RE books, and listen to a ton on audible and when they get to the math part, I struggle to "see" it. I have to reread it and figure it out myself to understand. I definitely can't do quick surface level analysis in my head. (I mean the 1% rule sure...) When I tell you... "Film in S-log 10-bit 422 at 3200 Kelvin" can you visualize it? I can. Obviously this is my career and not everyone knows film production but this is also a visual concept. I can "see" it in my head. I know what it will look like. My point of posting this was out of frustration because I would love to get into note investing and more complicated things but that might make my head explode. I also have a couple of partners who will send me deals sometimes... "look at this!" it will be a sheet of numbers and I'm like... "um walk me through this". It sucks. Be very lucky this comes easy to you!! Knowing how to do math and being able to conceptualize math concepts are two different things.

8 Reply

Julie Hill

OP

Denver, CO · Member since 2017 · 102 posts · 48 votes

5y

@Ana Marie B. thank you for sharing... I feel the exact same!!! I was watching TV last night and my husband comes in and starts blabbing about this house he just saw and if we do this and this and this how it could work and I'm like "omg it's Friday night I can't even right now". Thanks for the suggestion... I will look it up!!!

0 Reply

Julie Hill

OP

Denver, CO · Member since 2017 · 102 posts · 48 votes

5y

@Michael Curia. Thank you!!!! I will definitely take a look at this!!!

0 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

5y

Originally posted by @Tushar P.:

Struggling with math associated with real estate? Really? Its not calculus, and no one is expected to write sophisticated genome sequencing algorithms on quantum computing platform to generate nanotechnology stem cells via artificial intelligence. That would require real math skills as a baseline.

I think you may be struggling with real estate concepts rather than the math associated with it.

you would be surprised at how hard basic math is to many.. I worked for a big syndicator in the 80s and when they had a new hire he would pop a 6th or 7th grade math test on them.. many failed some just got up and left etc. personally I think its also a perishable skill. For instance I did quite well at high school Algebra and really loved it.. but could not do a simple problem today since in the real world I never had to solve for X

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3 Reply

Steve O.Pro Member

Rental Property Investor · West Caldwell, NJ · Member since 2019 · 104 posts · 65 votes

5y

@Joe Villeneuve if you told me to read an algebra or geometry book as a reference for RE, I would have never got into RE. However, I do understand your concept and agree.

3 Reply

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

5y

some of the in BP people are really bad in math, , eg they keep asking question how to get 1.0 rental value in 7% highly appreciating market. Gossshhhhh.

Same as Joe, they don't know ratio, exponential , and percentage and keep asking where to invest where basically everything real estate is just a matter of math calculation with some sort of probability and risk management stuffs.

1 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

5y

Originally posted by @Steve O.:

@Joe Villeneuve if you told me to read an algebra or geometry book as a reference for RE, I would have never got into RE. However, I do understand your concept and agree.

LOL. Love it.

0 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

5y

Originally posted by @Julie Hill:

@Tushar P. I didn't say I couldn't DO math... I have a Masters Degree. Of course I can do math. It doesn't mean I ever UNDERSTOOD math concepts though. RE math is mostly simple and I can do it on paper just fine. But I can't THINK that way. I can't quickly "see" good deals until I sit down with a pen and paper to figure them out. And I can't visualize ratios. I read a ton of RE books, and listen to a ton on audible and when they get to the math part, I struggle to "see" it. I have to reread it and figure it out myself to understand. I definitely can't do quick surface level analysis in my head. (I mean the 1% rule sure...) When I tell you... "Film in S-log 10-bit 422 at 3200 Kelvin" can you visualize it? I can. Obviously this is my career and not everyone knows film production but this is also a visual concept. I can "see" it in my head. I know what it will look like. My point of posting this was out of frustration because I would love to get into note investing and more complicated things but that might make my head explode. I also have a couple of partners who will send me deals sometimes... "look at this!" it will be a sheet of numbers and I'm like... "um walk me through this". It sucks. Be very lucky this comes easy to you!! Knowing how to do math and being able to conceptualize math concepts are two different things.

You nailed it. Math, all versions from Algebra to Advanced Calculus and beyond, are just languages...like French, English, etc...and need interpreters when/where/how you use them. I'm lucky, I understood (or at least recognized that long string "Film in S-log,...or whatever...") because my daughter is graduating in the same field (she wants to direct). The reason why is I've been exposed to it, and my daughter showed me (many times over...eventually) until I kind of got a handle on it (don't test me). In other words, I had to practice using it, over and over, until I had that "eureka moment". I'm sure you are in the same position, applying algebra and geometry to REI. I'm also sure, that based on the rest of what you've written here, you can get it...much better than you think you can. All it takes is a little patience, and the right person teaching you. PM me.

1 Reply

Erik B.

Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes

5y

@Tushar P.

Your post is not helpful at all and is a little insensitive.

6 Reply

Erik B.

Rental Property Investor · Amityville, NY · Member since 2018 · 351 posts · 441 votes

5y

@Julie Hill

May I ask what have you tried to help your understanding of percentages and ratios?

Perhaps it's just an area you will need to do countless repetitions and examples for it to click?

There are many tricks that maybe someone like Joe villeneu can show you. For example

The 1% rule you are basically moving the decimal to the left 2 places.

House costs $187,000.

1% rent would be $1,870.00

6 Reply

Steve Morris

Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes

5y

If you don't know, find someone that does know and UNDERSTAND your deal. Relying on the kindness of strangers (ie brokers) to tell you what is "good" is gonna get you.

Plenty of "smart" people (including me) have gotten burned in real estate.

0 Reply

Curtis Mears

Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes

5y

@Julie Hill

That's why spreadsheets were invented. So us math impaired can enter the data and sound smart reading out the answers.

0 Reply

Michael Temple

Rental Property Investor · Toledo, OH · Member since 2017 · 262 posts · 215 votes

5y

@Julie Hill I really identify with your post! I have struggled with math my entire life. Like you I also have a MBA with my undergrad in finance and economics for god sake :) I have gutted my way through and I can do it, but I wouldn't say it comes easily or that I can visualize it like others seem to be able to do. So having said that I will offer a couple of resources I found helpful.

First, a good financial calculator and I have a specific one in mind. There is an app on both Google and Apple for your phone or tablet called 10bii financial calculator. I found this to be awesome! Like any financial calculator you put in your variables, i.e. payment, number of months/years, interest rate, etc., but what is so cool is that you can actually see all the variables you entered on your screen and then change one to see how it affects your calculation, while actually seeing what the other variables still are. In a traditional calculator you enter them, but they aren't visually in front of you as you start changing them.

Once I got this for my phone I started punching in numbers and then started tweaking the deal by changing one thing or another. For example, I might extend out the payments, lower the interest rate, or change the payment amount. It will instantly show you how that changes the overall calculation. Personally I have found this to be an incredible tool.

Second, there is a book by an old time investor who has been gone for many years named Lonnie Scruggs. The book is called Taking the Mystery Out of Money. I loved it because it discusses in detail how to structure deals using financial calculators and how changing small variables had huge impacts on the outcome, but it helped me visualize what was happening. If you go after it on Amazon you might find the physical book insanely expensive. I bought the Kindle version for a normal price and it was fine for my purposes.

If you can't locate these resources please PM me and I will see if I can help you find them.

2 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

5y

Originally posted by @Curtis Mears:

@Julie Hill

That's why spreadsheets were invented. So us math impaired can enter the data and sound smart reading out the answers.

I use Excel all the time, but not as a substitute for "understanding" the math of REI. It's there to make the math go faster, and more efficient/consistent doing repetitive tasks. Using at a substitute for math skills weakens the REI's ability to negotiate, and to recognize deals. The deals are not found in the "answer" (the right side of the equal sign), they are found in the "formula" ( the left side of the equal sign).

"Analysis is a Science, Negotiation is an Art. In REI, the best Scientists make the best Artists"
...Joe V.

1 Reply

Tushar P.

Member since 2019 · 332 posts · 171 votes

5y

@Julie Hill I apologize if I came across as insensitive. I can follow the RE math alright, but I see all the tricks used by people in the RE industry that makes my head spin at times. It’s simple math, but the tricks needs to be identified. So I see it as a familiarity issue with the RE industry.

For example, in syndications, I see sponsors contribute a large sum themselves to depict they have skin in the game, but do not reveal that they are collecting a higher amount as fees at closing. Another one is for preferred equity, when the syndicator says they will pay certain percent every month, but do not reveal that the cash reserve for paying interest is created from LP contribution itself rather than cash flow from operations. They eventually reveal these things when asked, but it’s not transparently shown. So if I lose money it will not be due to my not understanding simple math, but because how the RE industry operates. I am assuming the same could be the case for you, since you are college educated and got good grades.

1 Reply

Matt Groth

Contractor · Grand Marais, MN · Member since 2016 · 249 posts · 417 votes

5y

@Joe Villeneuve love the idea of the story problem first.

My wife is a teacher. I can see math. I did well, went through calculus. People could never understand how I could do the story problems, and struggle more with the concept. This makes sense

1 Reply

Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

5y

Originally posted by @Matt Groth:

@Joe Villeneuve love the idea of the story problem first.

My wife is a teacher. I can see math. I did well, went through calculus. People could never understand how I could do the story problems, and struggle more with the concept. This makes sense

It's easier to see the math, when you can relate to it.

0 Reply

Are there any math impaired RE investors here? :)

Are there any math impaired RE investors here? :)

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