So, I just got off the phone with an investor who just lived every new investors greatest fear. He lost a ton of money on a property.
Unfortunately, he ran into a massive amount of problems along the way and unfortunately his newbieness got the best of him. Because he had not fully plugged into a system and process that works, he was faced with countless decisions he didn’t know how to handle. So, I want to share with you some things we learned in going through the deal, that could help you prevent yourself from losing money. In working with over 100 investors with only 3 deals that have lost money out of several hundred, I know it is completely possible to never lose money and still be an active investor.
So, let me give you a few tips that could have saved this individual over $80,000.
When it comes to Numbers, Trust No One! – Unfortunately in this business, you have to understand no one is looking out for your best interest like you are. I tell my students, even if they were buying a property from me or my team, you can’t trust anything you can’t personally explain or reason out in your own mind. If you can’t argue why a deal is a good deal and how plan A and plan B will make money. You don’t have a deal. If someone tells you a property is worth $350,000 but you can’t understand why or find comps that support that value, you don’t just trust, regardless of who they are. So first and always trust only the cold hard facts. If you don’t know how to gather sufficient facts, thats what a good coach can do for you.
Contractors can kill a deal – Almost every successful investor I know sooner or later will run across a contractor who will screw them over. Ideally, it isn’t your first deal, but it will inevitably happen.
When working with Contractors always have a schedule, always have a cost to them for going beyond that schedule, and always have a budget. Be specific with the work, know going into it, which granite will you use, which cabinets will you use, what flooring will you use. Change orders will then be limited to unforeseen issues, behind the walls, and not due to you changing your mind.
One of the best ways to prevent contractors from screwing you over is to and sure you have multiple General contractors able to finish a job if your first contractor is not working out. Living in fear or paralysis due to a lack of options is a sure path to lost profits. However, If you have a backup contractor and your first contractor isn’t meeting the schedule and budget expectations you can act quickly in their replacement and save yourself thousands of dollars and hours and hours a headaches.
Exiting a bad deal – When asking wealthy individuals their biggest mistakes, one of the common themes I hear is, “I just held on to long.” I held on to the stock too long. I was afraid to lose the relationship or a account, or I tried to keep the company alive too long or in some cases I try to keep the relationship alive too long. Often, the emotional energy used up in bad deals impacts buy more than just a loss of sleep. We often discredit the financial loss or cost that occurs from hanging around a bad deal too long. My encouragement for anyone who has a deal that just feels like it won’t work out is to get out of it as quickly as possible. Get it behind you. Get it in the past. Take what you can from it; the cash, the learning lessons, and the good relationships, and go do a another deal. Go do a better deal and quickly you’ll find you’ve made that money back.
This individual has now committed to plugging in fully to the Real Alliance Systems, and I’m excited to see his new path and new success. I’m aware of only 3 deals where people have lost money out of over 300 deals now. Systems are critical to minimizing risk and maximizing profits in business.
With this client, I’m inspired at his resiliance. It is this level of commitment to success that leads people to great wealth. If you’ve had a bad deal, If you had a bad partnership, if you’ve failed at a business in the past, the good news is the past doesn’t equal the future and often if we allow it to, the past can actually provide the experience necessary for us tocreate a completely new and unrecognizable future your past would never have thought possible. At least 60-70% of of the wealthiest people I know have filed bankruptcy or been through foreclosure on their way to their success. Often the temporary failure IS the path that leads to ultimate success. Congratulations to this investor for finding the good in an $80,000 loss!
Keep your dreams in front of you, and Keep moving forward!