How To Squash Analysis Paralysis

As a rookie (like me!) it's easy to get overwhelmed with the heaps of information we have available at our fingertips. Analyzing neighborhood stats, learning new real estate concepts, looking up crime rates, school quality, population trends, determining market value of a property you’re looking at… all that can make you feel, well… paralyzed. Thus the term analysis paralysis.

So how did I as a newbie investor overcome this thing that stops so many of us from getting started?

Let’s rewind to September 2020. At that point I had found a market I wanted to invest in, I knew how to analyze a deal, and I had started reaching out to RE agents, contractors, lenders, property managers, etc. I had even found a good agent that I started working with to help me find deals.

So what was stopping me? Well the truth is: The Unknown. I had all these different pieces to a puzzle but I didn’t know what to do with them and in which order to place them.

I was stuck in this perpetual cycle: find a potential deal on the MLS, analyze it, determine if the numbers made sense, and then… Well that was it. I didn’t know what to do if it looked interesting.

So what I started doing was asking myself two questions:

• What unknowns are stopping me from taking action on this deal?
• What do I need to do next to overcome that unknown?

Once I started doing this I started to feel something I hadn’t felt before as a newbie: clarity!

My issue was that even when I found a deal I thought could be good to pursue, I would end it there. So I asked myself what the unknown was. What is stopping me from buying this deal right now?

In my case, it was financing. I had talked to a few lenders on the phone but that didn’t mean I was ready to actually buy the deal when I found it. I didn’t know for sure if a lender would lend me the money I needed to purchase my first deal.

After identifying what unknown was stopping me, I started thinking about what to do to overcome it.

I figured out that my most important next step was to get pre-approved with one of the lenders I had talked to. A pre-approval would officially confirm that the lender had looked at my file and made the decision that they were going to lend to me. Plain and simple.

It’s crazy, even though I had been told countless times (by my agent, BP members, other online resources) that pre-approval was important, I still hadn’t done it! I was too wrapped up in my perpetual doom cycle: find a property, analyze it, stare blankly at my screen, repeat.

When I finally took action to break free from that cycle is when things started moving. I called the lender I had talked to in the past that had the most favorable terms and he gave me a list of documentation he needed from me (pay stubs, bank statements, etc). The process lasted about 30 minutes.

The next day, I opened my inbox and low and behold, the lender had sent me a pre-approval letter!

I was ecstatic. The letter did two things for me:

• It gave me confidence since I was able to get approved by an institution that would lend me money to buy an investment property
• It made it very clear what price I could purchase at. The letter stated that I was approved for a purchase price of $200,000.

Going forward, I knew that if I found a property that I liked for under $200,000, I could buy it!

I had enough pieces of the puzzle in place to move forward with confidence. I knew what market I wanted to invest in, I knew how to analyze deals, and now I knew that a trusted financial institution believed in my investment project and was willing to fund my deal.

Fast forward to mid November 2020. After searching the MLS every day, I finally found a deal for which the numbers made sense and made an offer. My agent told me that there was another buyer we were competing with so as a newbie I didn’t think I stood a chance. But I was wrong!

After a few hours of waiting (things move fast in my market) my agent called me and said these magic words: “Your offer was accepted, you’re going to be a property owner.” It’s hard to put into words how good I was feeling in that moment. I felt like I had just gotten first place in an Iron Man competition.

After a month of back and forth negotiation with the seller, I finally closed on my first property.

It’s easy to get caught up with all the information and advice we get when we’re first starting out. But when you feel overwhelmed or stuck, just remember to ask yourself the two questions that helped me land my first deal:

• What unknown is stopping me from achieving my goal?
• What is the single most important next step I need to take to overcome this unknown

Keep things simple. It’s good to educate yourself but don’t forget to implement what you learn if you want to move forward in your journey of becoming a successful real estate investor.

Now that you’re done reading this blog post, take 20 minutes to answer those two questions for yourself. It doesn’t matter what step of the way you’re at. There is always an unknown holding you back and there is always an action you can take to overcome it.