When I first got started with flipping houses, I got my first deal off my first postcard campaign. I thought I was a genius! Then my mentor reminded that me I probably got a bit lucky and that it takes most people six to nine months to get their first deal.
And sure enough, that second deal remained elusive for months, and I might have given up had my mentor not continued to encourage me enough to handle this “waiting” period.
Similarly now, I am frustrated by the lack of deals. I’ve had two apartment buildings under contract in the last three months, and neither of them worked out during due diligence. It’s frustrating to faithfully work the business like you know you should and not have anything to show for it.
Frustrating. What to do?
“First of all, what is a good enough opportunity is, as they say, in the eye of the beholder. I see plenty of smaller projects which 5 years ago I would have jumped all over, but not today. Five years ago I was a beggar, and as you know, to a large extent beggars can’t be choosers, so I did worked harder for less return than I am willing to do now. Time and circumstances adjust our perspectives.
But what this means is that it’s incorrect to describe the current environment as void of opportunity. I don’t want these deals, but for someone coming up through the ranks these may be perfect.
Secondly, while it’s true that I am striking out on finding the deals I want, this doesn’t mean I am “waiting.” I disagree with you, Michael, that there is nothing wrong with waiting–you remember Dr. Seuss, don’t you?! The waiting game is not for us. Minutes, hours, and days are too precious to sit around and wait.
I find myself shifting gears. I am interested in RE of a very specific type, and it is hard to find. I keep looking and underwriting deals every day, but at the same time, I am working on other projects and revenue streams.
My genetic make up is such that I can’t wait.”
“I handle it in two ways. First is to simply understand that this business can be feast or famine. I know that the tides change, and as long as I am consistently and actively trying, the right opportunity will present itself eventually. The second defense is to have multiple streams of income, even if they are all real estate. Flips, rentals, multifamily rehabs and holds–whatever it looks like, I have to have a variety of strategies in play so there is income even when one strategy is off-cycle.
But what if you don’t have the luxury of multiple strategies producing income? This business is all about employing the right strategy at the right time in the right location. If you aren’t finding a deal, you are employing the wrong strategy in your market right now. Either change your strategy or change your market (which means employ your strategy somewhere else where it is working right now).”
“Don’t focus on not getting a deal. Focus on two things:
- What you can do to prepare yourself for getting a deal
- What tactics can you implement to get the deal
Re: the first point, do you have all your ducks in a row? Usually there’s something that still needs to be done, whether it’s solidifying financing partners, making sure you have the equity required for the purchase, making sure the property management solution is in place, etc.
Re: the second point, drive for dollars and find distressed properties, then call on them. Do direct mail. Take brokers out for lunch. Start a meetup group and become a thought leader in your market so you get more deals sent your way. There’s always something else you can do to find a deal. ”
There are (at least) five lessons learned in the wisdom from these three experience multifamily investors:
- “Waiting” is a necessary part of investing but does not imply inactivity.
- Do not grow impatient and abandon your strategy prematurely.
- Evaluate and adapt your strategy; consider pursuing more than one at a time to achieve multiple income streams.
- Don’t put too much pressure on yourself by focusing on the outcome; focus on the activity, and the result will come.
- Make sure you have all your ducks in a row. What could you be doing that you’re not doing right now?
We all experience setbacks and delays that force us onto a timeline we don’t want. What’s different is how we handle these challenges. And what you don’t hear from these 3 investors is that they’re discouraged and are giving up.
That’s the last lesson, and a good one for all of us.
Thanks, guys, for your perspectives!
What are you currently “forced” to wait on?
Let me know your thoughts with a comment!