Well, obviously this is a continuation of a theme that started here. There really isn’t any order or pattern to these except as I happen to bump into them and I have been bumping into this one big time the last couple of weeks.
They spend too much time analyzing deals that are not going to go anywhere.
This is really easy to do. Almost everybody starting out goes to some kind of seminar (another mistake newbies make right there) where they teach you how to analyze a deal. This process is always more complicated than it needs to be because they are teaching sort-of a generic transaction which means you have to consider a bunch of factors that are only rarely relevant.
As a result our newbie who cannot figure out what is relevant and what is not spends hours and hours on each transaction. With each passing hour he/she gets more and more committed to making the deal work because of the amount of “sunk” time already in the deal.
I actually had a conversation this week with a guy who was going to take a tour of a property he had already been outbid on and they had accepted somebody else’s offer. I never did understand why he was investing his time in this way.
Notice that phrase “investing his time”. In the end Time is all you’ve got to invest. And every minute of it you invest in a dead deal is a minute you cannot invest in a deal that might work.
The other thing the weekend Guru wants you to do is make 100 offers a week or a month or whatever time frame. It doesn’t take a genius to figure out that if you are spending 4 hours on each offer you rapidly run out of time for all other activities including breathing.
Yesterday after a deal I really wanted to do fell apart I decided to look for other transactions of the same type. I expressed to one of my money partners how rare these transactions were and that if you ran across 1 every year or two I thought you’d been pretty lucky.
So this morning I started to work at 4:30 am. That’s because I had gone to bed thinking about how to manipulate a couple of databases I have access to in order to tease out the few relevant transactions.
By 7:30 I had reduced the search to a mere 3,000 properties and by 8:00 I had those reduced to 50 or so. By 9:30 or 10:00 I had identified 8 or 9 that were worth spending some real time on– I.e. 10 to 15 minutes each. And before 11:00 I had eliminated half of those.
I now have 4 properties with files on my desk that are worthwhile dropping a couple of hours each. Any of them would be a good deal within 25% of the asking price and a couple seem to be possible to purchase at considerably less.
The point, of course is that we got from 100,000 properties in the database to 3,000 to 50 to 10 in less than 5 hours. That is about the correct amount of time per transaction on the initial screen.
Of course this requires you to be VERY specific about what you are looking for and that is precisely the hardest thing for a newbie to do.