Analysis Paralysis and Self-Imposed Barriers to Start Investing
I was out of real estate for many years after a rehab gone bad (inexperience) and a divorce (all sorts of reasons). I sold all of my tools and said never again - at least to rehabbing on my own.
Then in the Spring of 2014, Fortune Builders started their incessant radio ads that they were bringing a seminar to my town and it sounded upbeat and welcoming, so I signed up for the two hour seminar. I attended and got interested in real estate again. I signed up for their weekend seminar. I attended the three day event and got the fever. I did not sign up for their training\mentoring though - far too expensive for me but I did see the value in it for some, just not me at the time. Their seminar gave me enough information to start and research further into different niches of real estate. I read a few blogs and sites and then stumbled on BP. I knew from what I had been researching that I wanted to wholesale to get money in the bank to then buy properties to rehab/flip for more money in the bank, and then to gain rental properties for cash flow, to one day being the hard money lender. I think at this point is when Analysis Paralysis started to show itself in my thought process. How can I do all of this? How do I get started? Let me keep reading more and more and more...
Analysis Paralysis is when you can analyze something for so long that you never end up doing anything at all except analyze stuff and you let deals pass you by because of fear. What if I make the wrong choice? What if I can't afford it? What if this deal costs so much more in hidden unknown expenses? And so on....
Fortune Builders had said it, BP has said it, and so many other RE Gurus have said it. Just Do It! You can't start building equity or bringing in cash flow or gaining experience just by being a book-smart investor.
I started my Bigger Pockets Pro subscription over one year ago. I saw lots of deals come and go. I have researched deals and learned proper due diligence. I have been in a local investment group. I subscribed to a property analysis database website (spending way too much money in the process and not using it). I have bought nothing since...
But then two months ago (August) I decided to figure out why I wasn't buying yet. I re-read my FB seminar handbook. While it's not 100% accurate in certain things (I detest bandit signs and they just adore them), it did provide a good basis of information. I figured out that it was a fear of not getting the finances to purchase properties and rehab them if needed. I didn't have a healthy bank balance to rely on. But I had cash flow - the money was there. I just had to utilize it differently.
I started looking specifically for owner finance deals. I looked for win-win scenarios. I filtered and focused and analyzed properties that had positive cash flow potential as well as built-in equity. I found one pretty good situation in Atlanta. The owner moved and was motivated to sell and she was open to owner financing. The numbers worked well, I put a contract on it, and closed within two weeks. The down and closing costs were $6000, the monthly payment is $494, taxes and insurance are $125/month, rent is $950. A tenant is already in place through next July. Placing some of the rent towards capital expenses, I think I'm at about $150/month for cash flow. I have an estimated $20K in equity. The house needed some sprucing up to get its full potential but not that much was needed. The previous owner was just overwhelmed. I got it back to shape with a handyman doing some odd-job work for less than a $1000.
Now I am a budding real estate investor with a one property to my name (or my LLC I should say). No more Analysis Paralysis - time to look for the next property. While I am doing this, I am also bird-dogging property for others and making a few bucks on the side for that effort.
Future blogs will cover:
- Dealing with Real Estate agents when Creative Financing is Used - some just don't understand how to present it to the seller.
- Researching Properties to Buy For Others and Yourself
Comments (2)
Thanks for your response. Keep reading BP and actively participating in your local REI group. The REI will have varying levels of experience to help you vet a deal and bounce ideas off. Regarding your concerns on rent coverage and finding workers - both are valid concerns. Don't forget the rental analysis tools that BP offers. If the rent doesn't help with the cash flow, listen to your "red flags", they are probably spot on warning you not to proceed. That's not analysis paralysis but good due diligence. Also, for the workers, talk to the REI folks - they'll know who to use and who to avoid. Good luck!
Doug Morton, almost 9 years ago
Good observation and explanation of what I am going through now.
I look at a lot of properties and 2 in the past months went to other buyers.
The 1st was due to the seller just not accepting my offer and having too many middle people - agents. She still didn't get what she wanted but it was still higher than my offer. I knew the work that needed to go into it and I knew that it would rent - but at what price to make sure it would cover the expenses.
The 2nd was a lot more work and I was on the line about making an offer when someone else picked it up.
In both cases I was paralyzed in some way - either unsure of the rent to cover the expenses or finding help to fix up the properties without spending a lot on labor. I don't have contractors yet that I know I could rely on - still meeting and talking via my REI group. All this takes time so when a property comes along its strained to get people in place.
Reading articles like yours gives me hope.
Thanks
Daria B., almost 9 years ago