“It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all — in which case, you fail by default.” — J.K. Rowling
Did you know the following facts about these successful people?
- Before J.K. Rowling wrote the mega hit Harry Potter book series, she was just getting by on welfare. She was broke, depressed, and a single mother while writing her first novel.
- Oprah Winfrey was fired from her first TV job as an anchor in Baltimore.
- Steven Spielberg was rejected twice by the University of Southern California’s School of Cinematic Arts.
- Thomas Edison was told by his teachers he was “too stupid to learn anything.”
- Walt Disney’s former newspaper editor told him he “lacked imagination and had no good ideas.”
- After Elvis Presley’s first performance at the Grand Ole Opry, he was fired and told that he was going nowhere and he should go back to driving a truck.
Honestly, I can fill up this entire BP post with hundreds of examples of both women and men who have overcome insurmountable obstacles and have ignored naysayers to go on and become huge successes in their industry.
And the same goes for real estate investing. My husband Matt and I have been investing in real estate for about 10 years now. We have had many ups, downs, twists and turns along the way. We have focused our energies over the years on building our business that manages and controls a rental portfolio, while also working on fix and flip projects. In this year alone, we will be doubling our portfolio to approximately 200 units.
As we move through this growth and expansion, I need to tell you that it has not always been easy for us. We have had a ton of unpleasant things happen over the years — we have gotten sued, had money stolen from us, had to end partnerships, and the list goes on and on. It has not all been fun; however, one thing we have never done is QUIT. This is the reason we have continued to grow and expand our business.
I don’t know about you, but it is not easy for me to rebound after a terrible deal. Many, many people in this business simply give up after they go through a terrible deal. And believe me, we have had our share of terrible deals. However, we never gave up. We have been able to successfully move through these situations over the years and learn from them. These deals have made us better investors in the end.
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Our First Terrible Deal
We’ve shared in other blog posts the story of our very first fix and flip experience, which was about 10 years ago. Let’s just say this was a very humbling experience for us. We made every mistake we could and learned a ton of lessons as a result.
Here were some of the highlights from this deal:
- Immediately after buying this single family home, we were sued by the tax lien holder for “title raiding.”
- We jumped right in without a solid plan, timeline and budget (never a good idea!).
- We did not listen to the experts. Unfortunately, we thought we knew more than we did. We ended up replacing the roof to later find out that we had to tear the entire home down. (This was a killer!)
- As a result of the market crash, our expected ARV dropped significantly.
- We lost about $30,000 on this deal.
Here is the full blog post in case you want to read the entire article.
Despite this terrible deal and all of the mistakes we made, we did not allow ourselves to stop. We used all the learning and mistakes as raw material to help us in future deals. We have made back what we have lost on this one project many times over. However, following this disastrous deal, we had to pick ourselves up, dust ourselves off, and rebound powerfully if we were going to be successful in this business.
A Process to Rebound Powerfully
Step #1: Get brutally honest with yourself.
Start with an “audit” of yourself. I heard the term “audit yourself” from one of my favorite authors, Gary Vaynerchuk. He is a NY Times bestselling author and a hugely successful entrepreneur. He talks a lot about the necessity of self-awareness. You must get brutally honest with yourself.
When something goes wrong or a project turns out badly, most people get into the blame game. They point fingers at this person, they blame that person, they blame the economy, they blame anyone who takes the focus off of themselves. Don’t be like most people. Most people who turn terrible deals into an amazing business don’t blame anyone. They take accountability for what happened. It begins and ends with you — no one else.
As you conduct an audit on yourself, evaluate your strengths and weaknesses.
- What strengths helped you in this deal?
- What skills, experience, or personality traits helped you?
- What weaknesses got in your way? These weaknesses can be skill related, experience related, and even personality related.
If you don’t perform this step — getting brutally honest with yourself — I can assure you that you will NOT grow from this experience, and you will continue to repeat the same mistakes in the next deal. Albert Einstein said it best: “Insanity is doing the same thing over and over again and expecting different results.”
Step #2: Think of yourself as an investigator.
Dissect the entire project — every single step along the way. Get honest and determine what could have been done differently. Go over every single detail. Don’t forget to get clear on what you did well. You don’t want to throw away successes with all the mistakes.
Step #3: Evaluate EVERYTHING and EVERYONE around you.
This includes but is not limited to:
- Your Current Team
- Your Current Processes
I can’t stress enough the importance of continually evaluating your team and processes (not just after a terrible deal but all the time). This is not about blaming anyone. However, in order to avoid future mistakes, you need to have the best team possible (including both day-to-day people like contractors and external advisers like attorneys and accountants).
Related: 5 Ways Failure Can Help You (Not Hurt You) While Cash Flow Investing
You also need to evaluate your processes. Every project can be broken down into simple steps. Evaluate these steps thoroughly, and see what could have been done differently and then “course correct” for the next time.
Step #4: Ask for feedback from those who worked closely with you on the project.
From my corporate days, this process was often called “360 feedback.” This was a common practice in the corporate world, where people would get real, honest feedback about their performance from their peers — people who reported to them and people who worked closely with them. Now you can adapt this “360 feedback” process to something much simpler for yourself. You can interview at least three people who worked closely with you on the terrible deal, and ask them questions such as:
- What did I do well?
- What did I struggle with?
- What are my strengths?
- What are my weaknesses?
- What specifically could I have done differently during the process?
- What could get in my way in future deals? If I could do three things differently next time, what would they be?
Step #5: Share with at least one other person the actions you will CONTINUE doing, START doing, and STOP doing as a result of this terrible deal.
Get specific with what YOU are committed to changing and altering for the next deal. Remember, you will need to do things differently the next time if you want to get a different result.
Step #6: If you are the kind of person who thinks they know everything, then you are going to need to let this one go.
Before you get into another deal, you really should seriously consider finding a mentor and/or coach who has done what you are looking to do successfully.
I hope you found this blog post to be helpful. The best advice I can give you since I have been there before is to never give up.
You have the ability to turn the terrible deal experience into the raw materials for your success, no question about that. But you need to get honest with yourself, practice humbleness and self-awareness, and be willing to change and adapt. You cannot do the next deal the same way and expect everyone around you to change. YOU are the one who needs to change.
I would love to hear from those who have been there. Have you experienced a terrible deal and rebounded? How did you pick yourself up? How did you turn this terrible deal into your future success?
Thanks as always for reading and sharing!