Do you have the necessary discipline to become a successful investor?
| | Monday, February 23, 2009 @ 06:01 AM EST
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Contributed by: Jason Hanson
Jason Hanson Properties
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One of the toughest parts of being an investor is that we want results and want them quickly. This is especially true for new investors. One of the reasons that so many people take an early (and unprofitable) exit from this business is because they fail to do their due diligence.
A while back in the newspaper, I read about a woman who decided she didn’t want to spend $300 on a home inspection. Of course, it came back to bite her to the tune of $25,000 or somewhere close to that.
Since we’re creative real estate investors none of our deals are what one would call “traditional”. This is why it’s so important to spend as much time as you need on a deal to ensure you’ve crossed all of your “T’s” and dotted all of your “I’s”. This includes things such as the home inspection, getting all of the information for the “authorization to release form”, to the title search to pretty much anything you need to do to ensure you’re comfortable with the deal.
Over the years I have had many deals that took two months or longer to put together. Some of these involved divorced couples where I really didn’t have a choice in how long things took. Other times, I was the one to cause the delay because I needed to gather more information to make my decision.
We all know that this business is a numbers game and it all comes down to simple math. Very simple math. I’m no math genius…I barely passed math in college. If you run the numbers and have positive cash flow, that equals a good thing. If you run the numbers and you’re sure that you will make a $5,000-$30,000 profit, depending on the type of deal that you do, that is also what we call “a good thing”.
Slow things down. There will never be a shortage of deals because people will always get divorced, die, lose their jobs, or want to get rid of a nightmare rental property. The disciplined people have no problem surviving 30+ years in this business and making millions. I know this because many were my mentors. I also know that fools speculate and investors invest. Speculating is not investing. So, in what areas of your business do you need to institute more discipline?
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