HOW TO GET FREE MENTORING

If you’re trying to get into real estate, here’s some advice: You need coaching.

Probably a lot of it.

This is not us trying to dissuade from joining the real estate industry, but rather trying to help you out before you make too great a mistake. Even the greatest athletes and the most accomplished sportsmen still need their coaches to point out what their weaknesses are and how they could improve. Similarly, you also need someone to guide you through the real estate industry.

But it does not mean you need to pay hundreds and thousands for it. In this post, we will look into how you can get valuable mentoring for free.

WHAT IS HAPPENING IN THE EDUCATION SPACE

Before we jump into the specifics of how you’re going to get free mentoring, you’re going to need to know how things are within the education space in the industry.

When I first started in real estate, there were very few people providing coaching. And the people who were doing it were almost all experts who had successfully navigated the financial crisis. These were people who knew their stuff inside and out. They had spent their time in the trenches and knew all there was to know, at the time, about the real estate industry. This made it easier to get solid training and education.

However, today we have two problems: The first is that there is an oversaturation of coaches and gurus and teachers and whatnot. Not all of them are good and rooting out the good ones is a considerably difficult task.

Then there is the fact that you still have the same people from 8-10 years ago still selling their courses from way back when. Nothing has been updated, nothing changed. You might ask why that’s an issue, after all, how much difference can there be between flipping a house 10 years ago and flipping one now, right?

So why update the courses at all?

While the very fundamentals of real estate might not have changed in that time, there are a lot of factors involved in real estate that have. Markets have shifted, the buyer networks are entirely different and the entire industry has so much technology involved. All of this means that real estate training needs to be updated to better reflect today’s world.

Sadly, in most cases, the only things that have changed in certain courses from then and now is the pricing. Drawing on personal experience, training that I paid somewhere around $200 to $300 is now being sold at a whopping $5000. Everything being taught at the course is the exact same things that were being taught back when I was learning… but the prices have been hiked up by a lot.

Most of these mentors are also simply just pushing their products. They may say that you can call them at any time and ask questions, but when you do call, you will likely just be connected to an intern who will just go through the same old material again and try to push more training down your throat.

Something else to consider is, of course, the fact that paying big money for a famous coach might not necessarily be the best course of action if you are not operating where the coach is operating. This varies from business to business, of course, but real estate is a very local industry. What I mean by that is that the real estate trends in a certain city will not be the same as those in another. If you want a proper coach, you are better off looking for someone in your own area and that makes it even harder to find a good coach.

All in all, the industry’s education space today has a number of issues and it makes finding good coaches hard. But you still need mentoring...

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HAVE A BASIC EDUCATION

...but one more stop before going into the actual methods of finding free mentors: the importance of having a basic education.

Before you can find yourself a free mentor, you need to be able to understand what they are talking about. If you’re serious about working in the real estate industry, this is the time to invest maybe a hundred bucks on yourself and buy yourself some books on real estate so that you can learn the language, learn the basics of strategies and learn other fundamental things.

Whether it’s by reading books or listening to podcasts like ours or joining meetups and talking to investors and taking a lot of notes, you need to be able to speak the language. All of this will ensure that you come off as someone with some experience and as such, you will be able to get free mentoring more easily.

There is no excuse for not learning. As we said, a hundred dollars will get you several books from Amazon, you can borrow from your local library, there are podcasts, there is YouTube — you have an impressive amount of resources and you have no excuse for not taking advantage of it. So, before you go and find yourself a mentor, do the groundwork and learn the basics of the real estate industry.

After all, if you really want to learn, you don’t chase the money, you chase the knowledge.

HOW TO GET FREE MENTORING

Now, finally, to the matter at hand: how to get free mentoring.

There are three ways, three different things you can use.

  1. Time
  2. Deals
  3. Money

TIME

The first way is time. First of all, if you want to learn how to wholesale, you need time.

Wholesaling is not a part-time business and anyone who says it is either trying to sell you something or they do not know what they are talking about. If you think it is, or believe that you can somehow make ten or fifteen thousand a month right away with very little work… You are wrong and this might not be the business for you.

That being said, if you do have a lot of free time and you really want to get into the real estate business, you can use your time as a way to get free mentoring. What you need to do is find yourself an investor who is successful, go up to them and essentially just say, “Hey, I have a lot of time, I know the basics of real estate and I want to learn more. What can I do for you?”

That’s it.

The truth is that as people already working in the business, we don’t have a lot of time. We have our business to run, we have our properties to manage and our flips to… flip. Take myself, for example, I have so many things to do on a daily basis that I don’t have time. So, when you come to us and say you have time and you want to work, we’ll put you to work. Teaching you strategies, pay for your marketing, pay for your time, even.

And when you get work like this, it’s not just, work. It’s a learning experience unlike any other. If you’ve found yourself a good mentor who is willing to invest in you and your time, you will learn everything there is to know about real estate from the ground up. You’ll do some groundwork in the beginning, cold call people, knock on doors and whatnot. But that’ll teach you how to generate leads from nothing. Then, just by watching how the experts handle deals, you’ll be able to learn how to handle your own.

Further, if you show and interest and if you go to your mentor and ask questions, trust me, they will be more than happy to share, simply because you’re putting in the time. You’re giving them a lot of value and they will know the worth of giving you value back. In a hot market, time matters a lot and we know it.

When you learn like this, everything will be engraved in your brain a lot better than they would if you were sitting through hundreds of hours of training. You're going to remember every single step and you're going to learn how things work in your area.

The best part, of course, is that you’re going to get this firsthand education for absolutely free.

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DEAL

If you have enough knowledge and are halfway decent at finding your own deals, you can even use that to barter yourself some further education. If this is the case, what you can do is take good deals you have to investors who are creating notes, flipping houses, or acquiring rentals, and tell them that you have a deal that you want to partner on and tell them why.

This is a great opportunity for you to learn how that strategy is done correctly. What you need to do is watch what they do and take note of everything. You’ll make some money off it, but again, the money is not what is important here — remember, don’t chase the money, chase the knowledge.

Don’t worry about the money and instead learn as much as you can. Once you’ve done this a few times and they’ll have taught you all they can now you can do your deals yourself, take them all the way to the close and keep all of the proceeds.

This also has an added benefit: having partnered with the right people also gives you a lot of credibility. Now, when you’re talking to other people and ask you what you know about the business, you can simply say, “I’ve worked for a while with the team at this business or that” and people will understand that you just might know what you’re talking about.

MONEY

Say you don’t have the time and you are not yet all that great at finding deals but you do have money. If this is the case, you can use your money to get yourself some free education. You might be asking “How am I getting a free education if I have to pay for it?” right now. But the thing is that you aren’t paying for your education, and you aren’t necessarily paying either.

What you can do is this: You go to somebody who can teach you what you want to learn — somebody who is acquiring flips, rental properties, or somebody who is doing whatever it is that you want to learn — and you tell them that you will fund their next deal as long as you can tag along and learn. You tell them that you’ll bring the money and give them favorable terms over whatever their money lenders are giving them but you want to be involved every step of the way and that you want to learn the process.

Obviously, you need to make sure that everything is done correctly and that your money is protected, but beyond that, you leave the negotiating and whatnot to the experts and watch from the sidelines.

What you want to focus on is learning the strategy, how they are negotiating terms, how they’re running their numbers and making their decisions. In essence, this makes you an investor as you are using your own money protected by somebody else's experience and knowledge and now you’re also making a little money off of it. More important than that, of course, is the fact that you are learning.

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SUMMARY

So, there they are. Three ways you can find yourself a mentor, for basically free: Use your time, bring the deal or bring the money. I can most assuredly tell you that there are plenty of people in your own market who are both able and willing to help you and speaking from experience, I can attest that real lessons learned from real people who are doing it day in and day out are the best education you can get.

Something you do need to keep in mind is the fact that markets will evolve and change, and it is always good to find new mentors to teach you new strategies. Once you’ve established yourself, finding new mentors won’t be hard at all, as you’ll have more knowledge than you did when you began and you can more easily find someone who has need of whatever it is you have to offer, whether it’s time, deals or money.

As always, good luck on your learning journey and feel free to reach out if there are any questions we can answer for you!

Listen to our podcast on the GO!

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HOW TO PAY YOUR CONTRACTORS

If you’re doing work that requires the help of contractors, you might have wondered whether it is better to pay them daily or by the scope of work. If you’ve been in this business for as long as we have – or even a fraction of it, really – you have probably come across this dilemma.

Well, you no longer have to lose sleep about it. In this post, we’ll take a look at the benefits and disadvantages of paying your contractors by both methods: daily and by the scope of work.

METHOD 1: PAYING YOUR CONTRACTORS DAILY

While we don’t often recommend paying your contractors daily – for the reasons we will get into in a bit – there are good reasons to do so.

When to pay by the day

For instance, if you have a project with an unknown scope of work, it is perfectly reasonable to pay them daily. For example, you’ve bought a house and you intend to renovate it but you just aren’t quite sure about all the things that you need to do. Or perhaps you’ve purchased a new property in an area that you are unfamiliar with – which means that you don’t yet know exactly how much you want to invest in the property.

In either of these cases, paying your contractors daily makes sense.

You hire your contractors, you tell them that you need work done on this area or that and they’ll get to work and you’ll have to pay them daily. That’s all well and good for small jobs, but for anything that is of any significant size… this is not the ideal method.

The challenges of paying daily

You also have to consider that your contractors also have employees they need to pay. So, if they get a job that pays them daily, they may very well bring in all their employees so that they have something to do. This is more likely to happen if your contractors don’t have any other jobs. In such cases, you’ll have a whole crew working on something that really doesn’t need everyone and you’ll be wasting your hard-earned money.

In addition to being a drain on your resources, paying your contractors daily can also have other problems. For one, it makes it very hard for them to coordinate and plan the job. Because they don’t have a scope of work – an idea of what things need to be done, how they need to be done and when they need to be done by – all the work they do will be done aimlessly. They’ll work on your siding one day, your tiles the next and your walls the one after. There will be no consistency to the work, no productivity and ultimately, lackluster results.

Also, don’t forget, if they don’t have another job lined up, your contractors will have no motivation to get things done fast.

Don’t misunderstand. This is not an attack on contractors. The fact is that this has nothing to do with them. It’s all about how you approach your project. The contractors you hire have absolutely no interest in whether you succeed or not – they should, because if you succeed, it can mean more work for them – but they don’t. But this is your project, which means you're the one responsible and you need to be managing your project and ensure that you're setting up your contractors for success.

How to make paying daily work

And how do you do that? One thing you can do is to break down the tasks that you know needs to be done and giving your contracts mini-scopes of work and agree upon a reasonable price. Once you’ve come to an agreement, say “Do Task X for $1000”, the ball is in your contractors’ court. Whether they work for two days or two weeks and whether they bring two workers or twenty – you’ll only pay $1000. Which means that the responsibility is on them to work responsibly.

But do know this: paying your contractors daily will hurt you in the overall scheme of things. The way the whole industry works is this: you will get a better price for overall scope because while there is a lot to be done and a lot of labor involved, a bulk price will ensure that they get the project in its entirety. If you break it down, however, prices tend to be higher because they won't know how to price each individual thing so they usually will overprice them.

Our advice is this: if you're going to be spending a good amount of money and you're doing a lot of work on the property, take the time to put together a scope of work together. Which leads us to...

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METHOD 2: PAYING YOUR CONTRACTORS BY SCOPE OF WORK

If you’re paying your contractors by the scope of work, it is infinitely easier to manage your budget. As we've already mentioned, there is the benefit of being given a bulk price. Additionally – again, as we’ve already mentioned – having the scope of work and budget agreed upon also provides a guideline for the contractors to stick to, which allows them to coordinate everything on their end better.

That doesn’t mean you won’t run into problems, though.

The challenges when paying for SOW

Where the trouble comes from when you’re paying by the scope of work is when contractors underbid for the job. They are prone to make human errors and they may not consider certain factors and when that happens, they will underbid and later find out that they’ve made that mistake. If that happens, they’ll start losing money and you can argue about whose fault it is for as long as you want but you need to realize that if your contractors are losing money, it will affect you.

There are three ways it can affect you.

  1. Change orders
  2. Delays
  3. Abandoning the job

CHANGE ORDERS

If your contractor is losing money, they may start hitting you with change orders – alterations to the original scope of work that will more often than not change the original contract amount and/or completion date.

If this happens and your contractors are coming to you with change orders, our recommendation is that you don’t fight them on it. We’re not saying agree to the alterations blindly, but instead, understand that this is most likely happening because they underbid and work with your contractors to come to a compromise.

Look at the scope of work again – it is just a document, after all, and nothing is set in stone – and see what you can modify to mutual benefit. Anyone who has done any real work in this industry will tell you, the scope of work will change as large projects progress. What you need to do is see how you can change it so that you get what you need while also not paying unnecessarily large amounts of money. If you can’t afford to lose more money on your current project, see if you can’t come to an agreement about future projects. There have been projects we’ve done where we had enough of a profit margin that we didn’t even negotiate with our contractors on the price. Good contractors will understand that a mutually beneficial working relationship is so much better than immediate cashouts. You need to understand it too.

DELAYS

Another big issue that you may face is delays. If your contractors have underbid and they aren’t hitting you with change orders, they made start taking other work on the side to make up the difference and that is going to cut into your time.

You may think that a few delays won’t hurt you all that much as long as the price is kept low, but those delays can affect you. If you’ve borrowed money, the delays might cause you to end up paying more than what you would have paid your contractors.

On top of that, something that you may not consider is the fact that the delays can push you right out of the prime selling season into the slower winter months. And if that happens, it's going to hurt you significantly. We don’t need to tell you that. As the solution to the previous problem, what you need to do is try to come to a compromise with your contractors.

ABANDONING THE JOB

Your contractors may also just abandon the job entirely. This has happened to us before. We’ve had contractors that underbid the job, then tried doing change orders, couldn’t agree to a compromise, delayed for a bit and then just stopped showing up.

This is a good reason as to why you should not pay your contractors in advance. There is no point paying for a job that has not been done yet and we know from experience that people may just take the money you give them and walk away, leaving you out five grand and with a job that is still incomplete. Then, you have to hire new contractors and pay them again and it is a whole process. When you don’t pay in advance, your contractors have to earn their payments and so, they are more likely to actually stick around and get all the work done.

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KNOWING YOUR LIMITS

Whichever way you choose to pay your contractors, something that I always tell people is that you need to know not only what you are doing but also what your limits are. If you’re doing your first deal and it’s a historic home or something that's ridiculously crazy – that’s a bad idea. Obviously.

If you’ve not done massive projects before and jump into it, you will lose a lot of money. You might learn something – because you can learn from your failures as much as your successes – but it will cost you. Instead, for your first projects, go small. Start with a cosmetic rehab, maybe a simple floor, and paint. Something light that you can use as a starting point to get to know some people in the business, learn the materials you’ll be dealing with and the ins and outs of the market. Then move to bigger things.

So, it’s vital that you know your limits. But then how do you take on bigger, better projects that pay well? You find people with who you can partner. By finding people who already know what they are doing and partnering up with them, you can learn a lot. The thing is, if you’re working with people who have some experience, you’re also likely to succeed in your projects because they won’t agree to projects that aren’t going to succeed. Remember, they want to make money, too and you can also profit using their knowledge.

But some people don’t want to partner and in our experience, it is for two reasons: one is ego and the other is greed. Both are terrible and you need to learn to overcome them.

DEALING WITH EGO AND GREED

Ego comes into play when you want to prove to everyone how "smart you are". You want to show people that you have watched enough HGTV, learned everything that is there and now know the secrets to success.

Greed comes into play when you simply don’t want to share the money. You want to get all the profits from whatever project it is that you are doing and you simply do not want to split anything with anyone.

Both of these will ruin you.

First, there are always people who know better. Your ego is going to get you nowhere, especially if you’re setting out to prove some stupid point. Second, remember that a 50/50 split is still better than a 100% loss.

You need to get over yourself and find yourself a partner that understands what they're doing. You may have found someone who doesn’t want to partner up because they think the project will go nowhere and the right action to take then is to accept their wisdom and move on – trying to prove your superiority will lead to potentially deadly levels of embarrassment.

At the end of the day, you want to make money. We get that. But you’re not going to make any money unless you learn. How do you learn? By looking at what the experts do. Partner with people who know how to make money and learn from them. Learn the strategies, learn the tactics, learn how they manage contractors, how they set up scopes of work -- Learn everything you can. That practical learning is going to help you more than you think.

Our advice to newcomers to real estate investing is this: today, be a sponge. Learn everything. Because tomorrow, you can apply that knowledge and actually make real money for yourself and your business.

IN SUMMARY…

Paying your contractors daily is suitable for smaller jobs and projects where the full scope is unknown, but it is likely going to cost you more in the long run.

Paying your contractors by the scope of work is preferable because you get bulk prices, but watch out for the very real consequences of underbidding and be ready to renegotiate.

If you’re just getting into real estate, first know your limits. Find an expert who you can partner with, learn everything you can. Swallow your pride, smother your ego to death and remember that as far as money-making is concerned, the long term rewards of learning with a partner first far outweigh the potential immediate rewards of working alone.

Good luck investing!

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HOW TO PREPARE FOR THE COMING COLLAPSE

A common point of conversation amongst investors around the United States – both new and old – is “What is going to happen to the market?” The concern for the market stems from worries about the coming collapse of the market. Because, have no doubt, it’s an undisputed belief that a crash is coming – despite the fact that we don’t know exactly when it will come.

In this article, we will look at how you can prepare for the coming collapse.

WHERE ARE WE NOW?

We’re in the October of 2019 as we write this and the general consensus seems to be that the sky is falling. Again, no one seems to be sure exactly when it will come down on us, but for the last five years or so, there has always been a crash in the making.

After the 2008 financial crisis, there have been a lot of mutterings that the crash wasn’t big enough, that the economy didn’t fall far enough. Many people claim that the number of preventative measures taken – these band-aids that were put on our economy – didn’t allow things to balance out as they should have. This lack of natural balance is supposedly what is meant to be setting the stage for the upcoming crash.

Since then, every year it’s been the same thing. In 2015, we started hearing claims that the market will crash in 18 months. It has been over 40-something months since then and… nothing. That is not to say that a crash isn’t happening. The point instead is this: people can try to predict what is going to happen all they want, but we don’t think it can be done with any sort of reliable accuracy.

The truth is, we haven’t been in a position like the one we find ourselves in now. Which means that when people use historical data and what not to try and predict market cycles, it’s not going to give dependable results.

What’s worse is that the world economy is such that governments can manipulate it to their liking. They can print as much money as they want, whenever they want. They can write things off when they want, nudge the market in this direction or that, raise or lower tariffs – there is an abundance of ways in which governments can manipulate the market as they need.

We could go on explaining, but the crux of the matter is this:

We are in a unique position right now and now more than ever, predicting the market accurately is a near-impossible task.

IS THERE A CRASH COMING?

Most speculations predict that the next crash will occur in 2020 because it’s an election year. But that’s not likely, at least, in our opinion. In election years we usually see the market slowing down, almost pausing, as we wait to see what’s going to happen, who’s going to take power and so on. There might be some volatility, but nothing that amounts to a crash.

Again, this is all speculation. We can’t rightly tell what is going to happen. Everything could come crumbling down in 18 months or 18 hours. There is simply no rhyme or reason for the way the market cycles. Even the biggest economists keep missing the mark and prefer giving us ranges.

So, is there a crash coming? When is it going to come?

Who cares!

You shouldn’t be basing your investing strategies on the possibility of someday, maybe, perhaps the market crashing. A market crash will only really hurt you if you’re doing speculative investing – where you buy hoping that the market is going up. Not that speculative investments are bad, but they should never be the entirety of your business portfolio. Instead, you should look at them as sort of extracurricular, experimental investments that you do alongside other investments.

WHEN IS THE BEST TIME TO GET IN?

We’ve heard a lot of people say something along these lines:

“I’m just gonna wait for the market to crash before we jump in.”

Our response is this:

Back in 2015, a good friend of mine pulled out all the money he had in the stock market – and he had a lot of it. He felt that 2016 was the year that the market would finally crash. Today, the Dow Jones Average is trading around $27,000 compared to the $17,000 it was at back in 2015. My friend is, to put it simply, very upset with himself because he has lost a tremendous amount of growth.

The point is this: you shouldn’t try to predict what’s going to happen in the market and try to make all your decisions based on that. Our advice, instead, is to make sure you are ready in case something does happen. If you’re prepared, you can act accordingly and minimize – or even completely negate – your losses.

Which finally leads us to how you can prepare, and now, we will share with you the three strategies we are going to use to stay in business.

THE THREE STRATEGIES

1) OWNER FINANCING

Strategy number one is owner financing.

First: what is owner financing? Simply put, it is when you make a financing arrangement in which you agree to accept installment payments directly from the buyer rather than having them obtain a loan from a bank.

A lot of investors choose to do it, but only in certain areas of the market. Personally, I don’t like owner financing in today’s market, but it is a viable option to prepare for a coming collapse.

When you have a property that you know is no longer going to appreciate and are sure that it will just stay stagnant, you can owner finance it. So, at the onset of a bad economy, you can sell these properties you know will not appreciate at a fixed value and enjoy constant inflow of cash.

2) SHORT SALES

Strategy number two is short selling.

In a crashing market, there will be an immense amount of layoffs and when people are laid off, they won’t be able to make their mortgage payments. There will be people who have bought houses priced over the medium price point for that market and in a down market, these properties will be worth much less, but because they bought it with cash they didn’t have, they will still owe the original amount.

That’s when you implement short selling.

For those of you who don’t know what a short sale is, here’s a quick breakdown.

A homeowner owes $250,000 on their mortgage but in the downturned market, their property is worth much less. It may be $240,000 or $220,000 or $200,000 – whatever the amount, the point is that it’s worth much less.

So the banks have to sell this property short, meaning they have to sell it at a loss. This has to be something the bank has to approve first, having verified that the seller simply cannot afford to keep making the payments, but once that is approved, the bank has to sell the property. Banks are generally not in the place to keep holding on to real estate, which allows us to come in and help.

One thing we personally do is refer all our short sales to another company that we work with, who will then process the short sale. Once the short sale process has been approved, we submit the first offer with a detailed scope of work which gives us first dibs at the property. As long as nobody else submits any higher bids, we'll get that property for much cheaper than its original value.

Short sales can also be utilized in another way if you’re an agent yourself. If you are an agent and you recommend a short sale property to an agent who specializes in such deals, you can get a nice referral fee. Some agents will even pay up to 25% of their commission.

Short sales can produce revenues in multiple ways and if you understand how it’s done, you can take advantage of it to get through recessions or crashes in relative safety.

3) RENTALS

The third strategy is to utilize rentals.

The owner of a property management company we work with told us that in a downmarket, rents do not typically fall if you can manage to keep your rent within a sweet spot. Which means that as long as you’re not renting your property either too much or too little, you can use rentals as a viable strategy to get through the collapse relatively unscathed.

When you’re staying in that sweet spot – which is not the same in every case because it can vary depending on the city – you’ll find that your properties become incredibly attractive options for a lot of people.

Thing is, most tenants can’t afford to buy a house in an economy that is in recession. The crashing banks are simply not going to be lending money to people who need it to buy houses, so these people need to find a place to rent at an affordable price. And when they find such a house – which in this case, we’ll assume is a property owned by you – they’re going to want to stay there.

In these situations, they don’t want to move and more importantly, they can’t afford to move. As our friend says, you can even increase the rent $50 or $100 and they’ll still stay. Because where else can they go?

This makes rentals a really good option in a downmarket situation. Even if you have equity tied up in the property, as long as you don't sell it in the downmarket you're not going to lose any money. So, if you can hold onto a property that can keep providing stable cash flow, you will be able to outlast the downturn in the economy.

But do remember, this is not us proposing that you buy rental properties that currently have negative cash flow simply because you hope they will appreciate. As we mentioned earlier, this will be speculative investing and that’s just not recommended.

We recommend having at least a $250 to $300 cash flow a month, including property management. What this will do is ensure that you have a safe amount of cash flow for you to play with and adjust as you need to get through the tough times. If needed, you’ll still be able to drop $50 or $100 from your rent and still be safe.

RECAP

So, let’s recap.

Should you get into the real estate market?

Absolutely.

Don’t try to time the market because it doesn’t matter when you get in. What matters is how you get in and how you stay in the market. As we like to put it, “It’s not TIMING the market that matters, it’s TIME IN the market.”

If you want to jump in now, jump in, make smart decisions and buy good investment properties. If you keep timing the market, you’ll never get in for fear of losing your investments or you’ll get in and start speculating more, which will just lead to further losses.

Are we going to crash?

Honestly, who cares if we’re going to crash or not. Further, it is near impossible to accurately predict if we are going to crash and if so, when we are going to crash. And truth be told, knowing that has no bearing on your success or failure. What does matter is that you’re prepared for the crash.

How to be prepared for the crash?

Remember our three strategies.

1) Owner financing.

2) Short sales.

3) Rentals.

Focus on these strategies and prepare yourself for a potential collapse. And as long as you keep an eye on the market and keep making smart decisions, you’ll not need to worry.

Tunnel Vision And How It Can Ruin Your Business

One of the lessons we’ve learned throughout our journey is how tunnel vision can hurt you. Not just in the day to day operations of your business but also managing renovations.

Tunnel Vision is a serious problem if left unchecked. When we spend so much of our time in one particular task it's very easy to overlook the details.

About tunnel vision; why it happens and how to prevent it.

We’ve had a couple of different issues with tunnel vision. We used to take turns renovating houses depending on who had more time available and who had what project going on.

What we realized was that when you're managing a property the correct way (by that I mean actually managing the project and going to the property consistently to make sure everything is getting done right) you tend to develop tunnel vision in that particular project.

This is common, it has nothing to do with ego. It has nothing to do with your inability to run a project.

When you go to a project consistently, it gets to a point when you start focusing on the end goal of the project. But because you're focusing on the end goal you tend to miss things along the way. You're actually starting to develop the tunnel vision to hit the finish line.

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Our Real Life ExampleTunnel vision

We recently had a project that John was managing. He was there every day, I was not. One day, I go to take a look at the property and as soon as I walk into the kitchen I say, “What the f#$@?!” "What happened to the cabinets?!” There were two different styles of cabinets installed in the kitchen. I reached out to John to ask what had happened and he said he honestly hadn’t realized the cabinets were different. I called the contractor he also said he hadn’t noticed.

What happened was the cabinets were delivered and they were all supposed to be white shaker cabinets. The contractor, as he’s moving along the scope of work installs the cabinets and they thought everything was fine. They were all the same color the difference was the style of the door.

In this situation, it’s very easy to blame the contractors but it happens to them as well. Tunnel vision doesn’t just affect investors it happens to anyone who’s involved in a project 24/7. You’re there every day and you stop paying attention to the details because your so focused on getting across the finish line. It was the first thing I happened to notice because I wasn't used to being there.

Yes, This Happened Again!!

We had another project that I was managing that we were having serious issues with the contractor. This contractor, unfortunately, was a typical contractor. Many contractors as soon as they get a little money and some work they think they can expand. In doing so they bring on a bunch of guys to do the job he no longer wants to do until eventually no longer even goes to the jobs. He could run a GC business without stepping foot inside his projects.

He talked such a good game and he actually did seem like he knew what he was doing but unfortunately, it all stopped at the talking.

We only took on this project because he said he could "definitely" get it done for the price we needed. At the time we were still getting our systems in place so we didn't know what we didn't know.

I started having so many problems and delays with this guy and he kept coming up with excuses every step of the way. So it got to the point where this project was becoming a nightmare for me. I could not wait to get through this project. I had horrible tunnel vision during this project.

In doing so, there were so many things I had overlooked. At the end of the project John came to check out the house and as he’s walking through he says, “Holy shit what happened?!’ And as he's walking around he’s rattling off all the things that he saw wrong with the house. And it wasn’t until he said it that I had realized there was anything wrong and I thought oh my god! I missed so many things.

We ended up having to spend an extra week or so fixing those things ourselves to make sure everything was done correctly.

Our Solution To Tunnel Vision

After these two projects, we realized that you need someone to check your work as you’re going through the project. We put in to place a form of checks and balance to make sure we don't fall prey to tunnel vision again.

What we do is every so often or before a scope gets done, whoever isn’t in charge of managing the project will go in and check how everything is coming along. This helps prevent tunnel vision because you have one person there 24/7 making sure the projects get done and then the second person is able to come in with a fresh set of eyes and see the project for what it is and pay attention to detail.

In this industry, as you take on more projects and move quickly from one project to the next it’s very easy to lose sight of the small things. It’s even easier for the contractors to overlook things which is why it’s so important for you to manage these properties and be there consistently.

The Opposite of Tunnel Vision

The other extreme I’ve seen some investors do is not visit a property for weeks or months at a time and then show up at the end with their roll of blue tape.

They’ll blue tape the shit out of a house.

That’s just inefficient and just ends up pissing everyone off. Now it's going to take more time and money to go back and fix things. And I get it, a lot of investors think, "Oh, well the contractors should’ve known better!"

They don’t!

It’s your project and you need to take care of it. You need to make sure it gets done properly. You need to be there on a consistent basis, you should be there every time there's a change to the scope of work or it's hitting the next phase. You need to make sure everything was done correctly. If not you’re only hurting yourself and your pocket. You’re also jeopardizing your relationship with your contractors if you just blame them for the project getting messed up. (I think YOU get it. It's all on YOU!)

Tunnel Vision Doesn't Just Happen On Projects

Tunnel vision has gotten in the way of the day to day business operations as well. I don’t know if it’s something that gets easier with time or experience. I think it's human nature to overlook things that we see or deal with on a regular basis.

I do a lot of the branding and marketing for the company and a lot of times I get caught up in trying to get everything done that I miss the finer details. Sometimes, I don’t realize I've missed them until it’s too late.

Same with running comps. We have a procedure for running comps but sometimes since you’ve done hundreds of them you get comfortable with running through the process and missing details. So now when I'm done doing the work I give it to John for him to give it a second look and make sure I didn't miss anything.

Recently, I ran a comp on a property and then gave it to John and once he saw it he realized the home was in a flood zone. It’s something I should have caught but when you're doing so many at a time you tend to miss things.

Now every time I finish something I say to John, "Hey, look it over what do you think?" When he finishes something he’ll bring it to me and say, "Hey, look it over what do you think?" This way we avoid tunnel vision and make sure we don’t miss anything. Sometimes it's not a big deal and other times those small issues have cost us time and money.

It's Not About Your Ego

You want to let the ego go out the window because all it does is screw you up.

We have a contractor we are going to start working with on a few projects. From day one, we told him how we run our company. That we will be checking his work every step of the way to make sure everything gets done properly.

At first, he took offense to it. He thought it was something against him personally, or the way he ran his own business or whatever else his ego was perceiving. We explained to him that it wasn't personal. Tunnel vision is just a part of our line of work. We deal with projects all day every day that we miss things and at the end of the day it's OUR business.

We are raising funds for these projects. These are our investments and how things get done reflects back on us. So we have to make sure everything is getting done right. It’s not that we’re checking up on him because we don’t trust his work. We’re just another set of eyes to make sure the project runs smoothly.

Tunnel vision is real and it does happen. The goal is for everyone to succeed. This is why I emphasize so much the importance of partnerships.

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What If You're Doing This Alone?

You maybe rehabbing houses and you're the only one that runs your company. Should you go get a partner to check your work?

I think you should. This business, if you run it like one, is too much for one person. I don't want you to think just go hire people. I think the value of a great partner is undeniable.

A great partner can take so much pressure from you. Dedicate on the other side of the business that you're weak on.

But, if you still don't want one, then call on an investor friend whom you trust and know they know their shit. Maybe by treating them out to lunch, they will be willing to walk your project and point out things you might have missed.

Once you have done this enough times it will require less and less the number of times you bring someone in. Especially if it's a small project.

No More Excuses

Now, you're completely aware of tunnel vision and how it can ruin your business. So don't let it. Put your ego aside and ask for help.

At the end of the day, you're helping yourself.

Like always, if you have any questions or thoughts make sure you reach out to us. Also, share your tunnel vision story with us of when this has happened to you too.

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