Squeezing every scenario into a spreadsheet before knowing the value is not a healthy thing to do in the notes business because this gives birth to analysis paralysis. Host Scott Carson teaches us some tips on how to not overanalyze everything with notes and lose money. Reminding us to take only what we can, he tackles the importance of narrowing your list and quitting the habit of trying to make every asset a deal. Keep on moving forward without the burden by learning the ways to overcome analysis paralysis in this content-filled episode.
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Overcoming Analysis Paralysis Today
I want to talk about something a little bit different and I am seeing people struggle with this and struggle with it again. I know that people are experiencing this and when it comes down to more than anything else as people are often their worst enemies. What am I talking about? It’s overcoming analysis paralysis. I see this happening on a regular basis. They keep looking to try to squeeze a square peg in a round hole or in worst-case scenarios, what they end up doing is they end up killing every deal because they start to rely on an ROI calculator, Return On Investment calculator, spreadsheet. It’s got all the expenses. Unfortunately, that’s where the problem lies in trying to squeeze every scenario into a spreadsheet before you even know what the value is, before you even know what the price point is. This is one thing that I want to spend a little bit time on talking about for those that are doing deals that are trying to get their feet wet. Let’s face it, you’re going to learn more from doing your first deal than you will from any textbook, any podcast, webinar, any eBook. You taking action is the most important that you can do.
Squeezing It In
What I have found, and I see this over and over again, and it’s just mind-boggling, is that people are lazy and so they rely on a couple of things to take place or not take place. They get a list and they try to squeeze that list into a spreadsheet into, “I’ve got to figure out every foreclosure costs. I’ve got to figure about every operating cost. I’ve got to figure about everything on the front end before I pull the trigger.” That’s not always the case. Why is that not always the case? Especially in the note business, you don’t know exactly which way the deal is going to go unless it’s a vacant asset. With a vacant asset, most of the time when you’re going to see the vacant asset is you’re going to have to foreclose on the property. You’re going to take the property back.
That’s not always the case, taking a property back. If it’s in good condition, you can often sell that note to foreclosure option. Sell it so you don’t have to take the property back and then fix it up and then try to relist it. Trying to squeeze every drop out of the deal is often going to lead to you losing money because you’re trying to get too much. You’ve heard the whole saying “A bird in the hand is worth two in the bush.” What am I getting at? When you have a nonperforming note, the first thing you’ve got to look at is just not, “Is it going to be a foreclosure?” You need to know what state it’s in obviously, and that’s going to dictate timelines.
If it’s a New York, New Jersey, even Pennsylvania, those who have longer foreclosure time frames, I tend to stay away from those states for that reason alone. Longer foreclosure time frames mean longer time frame before you get paid and also more expenses. That doesn’t mean I don’t own some in Pennsylvania. I bought some great deals that I either got modified or reinstated relatively quickly and are performing along the way. That’s the good stuff. What’s not the good stuff is when you’re looking at a tape, you can’t just take the tape and drop into a spreadsheet. First, factors along the way that makes things a little bit different. What do I mean by those factors? The first one being, we already discussed this, the state. The second one though is looking at is there equity, are they underwater? Are they break even? Where’s the borrower in this whole game?
A lot of people, I have seen this mistake happen many times, they take their spreadsheet that they get from a hedge fund or a bank or whatever. They drop it in and the numbers, it starts calculating numbers, so many values, so much in UPB. We start looking at values. This is where we talked about before about the seven biggest mistakes that fix and flippers make. They start going off of value. We can’t go off of value if we go off the UPB, but then you also have a UPB standing for, Unpaid Principal Balance. Looking at the balance of the loan plus the arrearages to see if there is equity. If there’s not any equity, they’re underwater that way, but if there’s still a lot of equity, you have to realize the seller is probably not going to sell at a big discount below UPB because you’re already at a substantial discount off of fair market value.
Fair Market Value
The fair market value of means as-is value, not ARV, After-Repair Value. We don’t want to be thinking about our ARV. Uncle ARV doesn’t need to show up. He’s not invited to the note game. If you have a lot of equity, 50%, 30%, let’s just say a sizable chunk of equity in a deal, do you think the borrower’s going to fight you for that? Yes, they are. Another thing to look at too that will effect bids and analyze is looking at what interest rate is on an existing loan. Is it a low sub 5% interest rate? What do I mean by sub 5%? If you’re buying a note at $0.50 on the dollar of the unpaid balance, a really easy way to figure out what a quick ROI will be is if they reinstate.
$100,000 loan at $50,000 at a 5%, if you can reinstate, you’re going to see a 10% return on the cash on cash return right off the bat. That’s what you have to look at. If it’s a low-interest rate, 4%, 3%, 2% and you’ve got to adjust down your offering to make sense. I have not talked about insurance. I’ve talked about mow the yard rehab costs because when you’re looking at a spreadsheet, you don’t know which way the deal is going to go. For you, the worst possible situation, like recording and foreclosure costs, you’re only killing the deal way ahead of time. If the seller tells you I want $0.85, $0.90 on the dollar, some idiot will say, “I want 95% on these, my performing notes, and a 5% interest rate.” I’m like, “That doesn’t make any sense. Go sell that to somebody else with cheap money.”
You have a lot of people though that are so scared about everything, they never pull the trigger for the first time and you can’t do that. You’ve got to pull that trigger and go out, make some things happen. You’ve got to realize and take a little bit away from the spreadsheet. Throw this spreadsheet out and look a little bit at common sense underwriting. I know common sense is not common all the time, but what you have to look at is a couple of things. Narrow your list down. Quit trying to make every asset a deal and I’ve seen this happen many a time. A lot of realtors overthink things to everything, every properties and asset. I had a conversation with a realtor who was an investor here in town. He was like, “We’re getting ready to buy this note.” I’m like, “What are you paying for?” “We usually pay 105% of UPB.” I’m like, “Why are you overpaying?” “Because it’s worth this much.”
I’m like, “Yes, but you’re not entitled, you’re the note investor. You’ve got to realize you’re a bank, not a fix and flipper. At least over analyze it.” He’s like, “I didn’t know what to make an offer on.” I’m like, “Let’s look at some numbers.” Throw in a dry eraser board. “What’s the property worth? What’s owed? Are you coming from a fix and flip side? Are you going from a note investor side?” If you’re buying at 50% of the unpaid balance, great. You’ve usually got a good chunk of change in case something goes wrong to be able to build some value. We’re not talking assets. It’s $50,000 underwriting. Try getting under $50,000, $3,000 value assets, you’ve got to be very careful, especially if you’re buying at 50% of UPB, if UPB’s higher or less. What I’m saying, let’s say that the numbers are the unpaid balance is at or above the fair market value or pretty close to it.
If you’re buying 50% in that, you’ve got some loan equity in there from you buying the loan at a discount and if it’s way underwater, then you’ve got to look at your bid as a part of fair market value. You don’t want to be really above 50% of fair market value and you don’t want to be further above 50% of UPB. The only time it would be above 50% of UPB is when there is a lot of equity on a note. That’s where you’ve got to adjust your things. You can’t take the stair-step pricing that we’ve talked about in the past and apply that to every asset. You’ve got to take a look at the deals, you’ve got to break it down. If you just dump things into a spreadsheet and expect the spreadsheet to have common sense underwriting, it’s not going to work that way. It’s not going to work effectively and you’re going to kill every deal. Let’s talk about some rules of thumb here and some average.
Analysis Paralysis: You’ve got to pull that trigger and go out, make some things happen.
First and foremost, if you’re buying occupied assets that are still occupied that made payments in the last six to twelve months, it’s probably a good idea that you’re probably getting a re-performing. If you’re making offers on occupied assets where they made payments in the last six to twelve months, what’s going to end up happening is they’re probably going to re-perform, especially if they’d made the last few payments. Taking a look at a deal and adding all these foreclosure costs to something that’s basically pretty close or performing note, that’s going to kill your deal. You don’t want to do that. Take it down. What’s the yield going to be based on what we offer for the note and some servicing costs? What’s that number going to be by taking the principal and interest payment times twelve months divided by roughly what you’re paying and investment for that amount? I’m talking about adding $5,000, $3,000 or $2,000 in foreclosure costs. That doesn’t make any sense in those cases.
You want to make sure you’re seeing a good return on the performer and you still probably want to be below 70% of value providing that the unpaid balance is a lot higher. I’m tossing different numbers out here. An underwater asset is wide. It’s the easiest thing to work on your numbers. I don’t really waste my time buying a lot of assets that have a lot of equity because then a pricing point is all varied. It gets hard to run simpler things. You’ve got to run some numbers in your spreadsheet and I’m talking simple spread numbers. I’m not talking about complex algorithms, V lookups and adding every expense under God’s green Earth what you can think of as a way to drive things. That’s how you’re going to kill your deal. You’re going to overanalyze your asset. It wouldn’t matter if it’s a note deal or fix and flip. If you’ve thought to throw everything possible on there, you can find an excuse not to do every deal. I had this conversation with a guy. He called me up and he knew the note investing game, does some fix and flips and he’s like, “I don’t know where to go. I don’t know what I should be doing.” I’m like, “It makes sense. Here, run some numbers.”
Get Rid Of Unnecessary Details
What I tell people to do is throw a bunch of stuff against the wall, throw that bowl of spaghetti and see what sticks. He goes, “What do you mean by that?” “Run some numbers down the whole spreadsheet. First of all, get rid of the states you don’t want. Get rid of New York, New Jersey. The longer foreclosure time frames, the lower valued assets that you don’t know in Podunkville, USA. Get rid of those. A lower UPB, lower unpaid balance. I say anything below $25 unpaid balance probably isn’t worth the time. Lower values, if they show values on there. Anything below $30,000, get rid of it. Run some numbers. P&I times twelve divided by a stair-step price provided they’re upside down.”
What does that mean? I’m going to re-rank my assets by values. If you’re using NoteProz.com, it can give you a quick rough value estimate. Highs, lows, go somewhere in the middle. Go median price point on that. Run those numbers. Run the spreadsheet. You know it’s worth $50,000, we’re going to times 0.55. If it’s worth $40,000, 0.45. If it’s worth $30,000, 0.35. Anything below $30,000 value, we’re going to drop it at 25%. Also, the opposite side of that is a little bit different. If you get to the $60,000 to $80,000, you’re probably going to meet somewhere in a 60% to 70% provided you’re buying the best assets. You’re not going to buy any junk.
If you’re looking after the best possible deal, you expect to pay a premium. That’s just what happens. You take the best without taking any of the crap, you’re going to pay a premium. You’re going to pay more per dollar, more per asset for that. That’s the thing to keep in mind. It’s taking your over analyst and over-analytical mindset and start focusing on some things. One, I say to people, “Get rid of the equity deals. The buyers are going to fight you. They’re going to fight you to keep that equity. They’re going to fight you to avoid foreclosure if they got $50,000 in equity. This is what’s going to happen.” I was saying you can’t do a deed in lieu, Cash for Keys. Give them some money to walk. They’re going to fight you on a ton of equity. Why would you want that added stress? It’s going to drag out for you. You’re not going to get all that equity-like a lot of investors has a tendency to think. No, you’re not getting the equity. That’s going to go back to the borrower or there’s the second lien holder. Keep that in mind.
Look At P And I Payments
Looking at some things, all these foreclosure costs, all these workout costs. If they already surfaced with a servicing company, you’re not going to have a transfer fee if you can keep the same servicing company. If they’ve made at least three on-time payments, most of your servicing companies will change that from a nonperforming note to a performing note. Three on-time payments, they’ll start doing that, so there are not as many charges. You’re going to pay $0.90, $0.95 per asset, you’re paying $20, $25, maybe $30 a month. Another thing you want to look at are the P&I payments. If the principal and interest payments are low, below $250, kill the thing. “Why, Scott? I like this asset.”
When you do figure in, you’re going to lose 10% or more on a servicing cost and then other miscellaneous fees, it doesn’t make sense to keep the asset. Doesn’t make sense to keep a $200 or $150 a month performing note if you’re going to lose 30% of it right off the bat in fees on a monthly basis or vice versa. Those are some things to narrow your list down. That’s not saying, “I want to put this in my IRA.” Put it in your IRA. If you want to make $100 a month, great, put it in your IRA. It’s a small thing. It all comes down to yield. You need to know what your costs are, but the thing is, don’t get so bent on a shape looking at 100 assets that you don’t know where to begin.
Filter it down and squeeze it down and run some numbers. Runs with simple high, low plays and throw the thing against the wall by emailing onto the asset manager and seeing what they come back with. Are they going to accept it? Are they going to counter? Are they going to decline? Give yourself a hard, fast number at that point, then you really work off of that. This wondering what’s going to happen, over-analyzing something that you don’t even know if your bid is going to be accepted wastes a lot of time. It stresses you out and then also you’re not growing. You’re not moving forward in the business. Everybody can look at assets. Everybody’s going to look at a tape. Some people don’t even do that. Some people don’t even email out for deals. They’re like, “We’re just going to get together and scratch each other’s back and do that.”
Don’t Waste Your Time
That’s not doing business. This business is about making offers, not a business about making bids on taste. It’s about reaching out to asset managers. If you’re not reaching out to banks or asset managers or making offers, you’re really not in this business. I’m not talking about the low hanging fruit that everybody sees out there. You can go to BiggerPockets. Also, we see you find the lowest hanging fruit of list exchanges and things like that that have notes. That’s the low hanging fruit. You’re going to pay a premium for that because people are selling their one-off deals and trying to get the biggest chunk of the change for it. That’s why I don’t waste my time with those. Why don’t I waste my time? It’s because I have better deals in other places. Why would I want to go where 100, 200 people are picking over something? I go direct to the source, get the list in and dive into it.
If it’s occupied and the house looks good, that’s great. If they made payments in the last six months, five out of six, three out of six and it’s much recently, they want to stay. Don’t overlook, “Are they making payments? We’re going to foreclose.” Be smart about it. Be smart about this business. We’re going to be going through a bunch of different case studies of what we paid for assets, of what we bought it, how we got them to work out, what the situation was, what kind of returns are we looking at. We’re going to be diving into a lot of individual case studies. I think you’re going to enjoy that. I think you’re really going to enjoy some of these deals that we’re breaking into and sharing with everybody. We’re selling stuff off and going through and finalizing deals. You’re going to the case study side. The thing is too, everybody, I know it’s harder to be that brazen gunslinger.
Analysis Paralysis: You need to know what your costs are, but don’t get so bent out of shape looking at 100 assets that you don’t know where to begin.
“I’m going to make 200 offers,” when you only have $50,000 or $100,000 to bid off of. I totally get that. At some point, you’ve got to put your big boy pants on or your big girl panties, pull them uptight and pull a wedge out of your ass. Realize what you’re doing, sending out isn’t going to hurt you. Some people are so scared of their shadow. I had a conversation with another guy and the first thing he did when he called me was like, “I know I should be doing other things, but let’s focus on this.” I’m like, “First and foremost, focusing on that doesn’t mean rat’s ass. If you want to go to your spreadsheet that you’re trying to make everything fit, you probably need to go do something else.”
He didn’t like that. I said, “If you’re not doing the two most important things and reworking your ROI calculator before you make bids isn’t helping, what’s your big goal?” “I need to close on 30 notes.” “That means you make 300 offers. Where do I need to make sure and streamline my ROI calculator before I make any offers? That doesn’t come in the picture. I’m sorry, it does not. Have you been making offers? Have you reached out to asset managers?” I don’t care if it’s five asset managers or 500 or 5,000. Reaching out to asset managers in paying what your timeframe is. For a lot of you guys and gals, you’re working part-time. That means you’re limited and you’re not making a lot of phone calls. Let’s face that.
You can leverage LinkedIn and reach out that way. You can leverage that in an email blast out to them and follow up with people that made phone calls or checked your email out by your breaks, lunches, after hours. If you’re going the East Coast to the West Coast and it’s a different time frame. We all know that 7:00 on the East Coast is 4:00 on the West coast. You get off at 6:00, you get two hours on the West Coast you’d be calling on. It’s the same thing. You wake up early before your job on the West Coast, you’ve got a few hours to call the East Coast. What I’m trying to get at is if you’re not doing the two basic things and you’re trying to squeeze blood out of a rock of a list that you finally got, that’s a problem.
You’ve got to realize this, and I see this happen in different groups online, this happened all of BiggerPockets, people trying to figure out everything. Here’s what I’m going to tell you. If you’re making multiple offers, one thing that you want to look at, you want to figure out some expenses along the way to figure that in to get funding. You may want to figure in and avoid the longer foreclosure states first and foremost. That’ll solve a lot of issues. Trying to squeeze blood on a rock and along foreclosure state isn’t worth it. Don’t do it. You may want to figure in $2,500 or $3,000 in foreclosure costs for faster foreclosure states, we’re talking nine months or less. $1,000, $1,500 for servicing. What are we talking about that?
Servicing includes the monthly servicing and then also a right party outreach if you’re going to hire a law firm to do some reach out for you ahead of time. You’re going to have some marketing costs along the lines of $500 to $1,000 from marketing costs. Marketing costs, it means your time. It means NoteProz, it means jumping on and then you pull stuff off of a niche or online and county records. You’re going to have some recording costs, $100 along the way. To do due diligence, you’re going to have to pay for O&E reports on your final accepted offers. For most people, that’s $150. I would throw $100 for that or less. BPOs, $150 is what people are going to pay most of the time. This is why it makes sense for you to spend some time with realtors. Try to give it $50 or even free. If you add those expenses up, throw in $700, $800 a year for insurance, that’s what you try to have funding extra above what you’re paying for the note. You’ve got to look at taxes. You’re going to deduct your taxes that are owed from the bid, but you’ve also got to figure that they’ve got to be paid somehow.
Full of what you’re paying plus taxes plus those expenses. That needs to be below 70% of the value. It needs to be able to be 70% of the as-is value, provided it’s below UPB. A UPB is overvalued because that still cuts you enough slack there in the backend. I would prefer you’d be below $0.60 on the dollar, provided that the UPB is higher than the property. That can give some cushion to foreclose and pay back your investor a good return. Also, look at what your money costs are. If your money costs are high, you need to be out of that deal faster. If they’re lower, you’ve got some flexibility there. I highly recommend if you are struggling in an ROI calculator, struggling how to pull things together, you’re not making offers, you’re not tracking them or bid as many each month, you’re doing yourself a disservice. An ROI calculator’s great, but it’s not worth the zeroes and ones it’s typed on if you’re constantly killing every deal across the board. I know years ago that people are like, “I have an ROI calculator.” You have to have an ROI calculator, but you don’t need to really spend a lot of time on it until you don’t even know what the bids are going to be. You don’t even know what the value of the asset is. Focus on getting bids accepted or bid submitted in at least, and then whatever falls through is being accepted or countered, then do a deep dive. Start looking at that.
Underwriting Deals
Use your common sense if you have it. Not everybody has it to really underwrite the deal. Is it occupied? Is it vacant? Vacant, you’re going to foreclose most of the time. It takes away all your modification deals. Here’s another thing. If your goals don’t line with what’s on the asset you’re making, then your problem, change your goals or change what you’re looking at. I probably get three, four emails from people each week asking, “I talked to the banker. He asked me what I want. What do I tell him?” I’m like, “What are you looking for? Are you looking for performing notes, semi-performing, nonperforming, occupied? If you’re looking for performing notes, great. If you’re looking for stuff that you can buy cheap and get performing, then what do you want? You want occupied assets at that point.”
You probably want an asset below $250,000 in value and above $50,000 because that’s where the majority of the assets are at. Not knowing the states you want to buy in, that’s a big no-no. Some people call them me, “I’ve got a list of stuff all across the country.” It’s all across the country. “I’ve got a list of stuff in New Jersey.” “You’re going to be buying in New Jersey?” “I don’t know.” That’s not a good number. I don’t know is not a number. I do not know is not an appropriate answer. It’s either yes or no. “I am buying in New Jersey.” “If you know that area, it’s your backyard, you’re buying stuff there, fine. You’re aware of the risks, longer foreclosure time frames. That’s fine.” Higher valued assets for the most part. That’s fine if you understand the risks.
Asking what am I looking for when they ask me what my buying criteria is, that’s a big no. You should know exactly what you’re looking for. “Mr. Asset Manager, Mrs. Asset Manager, I’m looking for homes, underwater mortgages, hopefully, occupied in the larger metropolis areas, larger cities. I am not really looking at rural, unless it’s nearby a major city. I would love to see some payment history, something received in the last several months and I want to be in between a $50,000 and $250,000 in market value. I would avoid the longer foreclosure states, New Jersey, you don’t get excited about. Puerto Rico too long, Pennsylvania is a little too long, but anything twelve months or less in foreclosure timeframe, I will look at that.” That’s great. That’s your buying criteria. That’s what you’re looking at right there. You want to make it simple for them. Say, “I can download it. Get rid of Newark, New Jersey, Pennsylvania and send it over to you.”
What you do not want to go comes to the opposite side of it and over-analyze things. “I only want something in the 78750, 78316 ZIP codes.” That’s not going to fly. “I don’t want anything in Dallas.” That’s not going to fly. You have to look at what’s coming up and you’ve got to be that sometimes in between aspect. Here’s exactly what I’m going for, but it’s still phasing out that I’m going to find some stuff from there hopefully. The only time that you want to be more narrowed down to one specific state is if you’re in a state that has a lot of distressed debt. If you live in Ohio, Indiana, Illinois, Michigan, you’re going to see a lot of debt there, Pennsylvania too, in Maryland, Baltimore.
Analysis Paralysis: Use your common sense if you have it. Not everybody has it to really underwrite the deal.
You’re going to see a lot of distressed assets there. I had a conversation with a realtor who’s in Washington, DC. She’s like, “We don’t see a lot of distressed.” I’m like, “No, you don’t because the city turns over every four to eight years.” Entire value houses. Higher class, higher educated people financially. You see some stuff occasionally, but not much. Know where you’re at. Here in Austin, Texas, if I say I just want something here in Austin, Texas and Central Texas, I would’ve gone bankrupt a long time ago and been sad because my business would have bombed.
Know it’s coming up. Someone called me, “I only buy stuff in Phoenix.” That’s great. Keep doing what you’re doing. “I’m struggling to find deals.” You’ve got to get outside of your network. You’ve got to quit over-analyzing the markets, overanalyzing the cities and go where the deal is. When I first started in the note business years ago, I was big on Florida. I love Florida. God’s waiting room. A little beach, a little sun. Viva la Miami. What happened with Florida? The market started coming back strong. There are a lot of people buying in Florida. $0.40 on the dollar is basically international money coming into Florida at one point. I was smart. I got in, bought a lot of assets and sold them off, worked through them, foreclosed, whatever.
Overpaying For Assets
As the market rebounded, I was able to ride that up. Too many people are looking at markets where the market’s too high and what’s going to happen when the market goes south? They’re going to be upside down. We see this happen a lot with fix and flippers. We see this happening a lot with landlords. They are overpaying for assets. The landlords can often ride this out as long as the market rent will make up for the difference, especially if they’re getting cheap financing along the way. Cheap financing or they’ve taken over mortgages that are relatively cheap with some equity. Maybe no equity, but the interest rate is low and they can offset it because their rent payments are a lot higher than the mortgage payments.
What you have to look at is this. If you’re buying at a peak premium of the market, you really don’t have any place to go except down. This is one of the things that we’ve seen here in Austin. People come in overpaying because they’re coming from California. They don’t mind overpaying because they’re getting a much more bang for the buck. For us locals here, I don’t want to overpay for a house. I would rather look at stuff where they’ll take $300,000, $350,000 and buy one house here. I was thinking to buy five to eight places in Columbus or in nicer parts of Ohio that I can leverage it. It could be renting out at $800 and $900 a month or getting the mortgages reinstated and seeing if 15% to 30% yield on the reinstatement.
Call Somebody When Struggling
Don’t overanalyze things. Please do yourself a favor. If you’re starting to feel the struggle of overanalyzing, you’re starting to feel like, “I don’t know what I’m looking at,” and you’re looking at your spreadsheet and all your deals are done because you’re a spreadsheet. Do yourself a favor. Take a step back and talk to somebody. Call somebody up. Go to our WCN Crew Facebook page and post something there if you’re a member of it. Say, “I need some help. Can somebody talk to me for a minute? Can somebody break down a deal or two?” Connect with me on the Facebook page or send me a message, and most people know that I answer pretty quickly back. I may have time to look into the deal. If I do, I’ll send you a link. If I don’t, I’ll tell you, but I’ll try to find something else to help out with it. It’s such an important thing these days.
There are still lot of deals out there. There are still a lot of things out there. If you’re struggling financially and you’ve been in this business for a while, it comes down to two things. One, you’re not marketing enough. You’re not making enough offers. Two, get more offers made. It means you’ve got to market more. If you’re not sending out emails, if you’re not reaching out on a regular basis, I’m sorry, there’s not much I can do for you. I can’t hold a gun to your head. I could, but it’s not going to be effective. Quit taking a look at all the spreadsheets and overanalyze. I’ve seen people come to tears because they’re trying to make something work out of everything and realize not everything is going to be a deal. Move on. Cut bait. Move on to another deal. Move on to another list. I’ll be saying next, “If you’re struggling and you’re over-analyzing a specific tape that came in because you don’t have anything else, then go out and market for some more.” Don’t try to shove a round peg into a square hole. You don’t want to do that because what ends up happening is that deal is not going to make sense in the long run. You’ll overpay or do something stupid, overanalyze.
Overanalyzing Things
What happens a lot of times too is the reverse side. You overanalyze things and then it doesn’t make sense in your initial due diligence, so you’d come back and make a ridiculously low offer to make it work. You lose that connection. You lose that opportunity with that bank or hedge fund because you over or underbid dramatically trying to get your ridiculous ROI calculator to work. That’s just as bad because then the asset manager, the bank, the hedge fund guy, whoever’s selling them a note, special asset manager, secondary marketing manager, it’s like, “What is he or she thinking? I’m not going to offer $0.10 on the dollar, $0.20 on the dollar in this deal. There’s a lot of value bond. There are a lot more numbers that make sense. I’m not going to give you this deal at a 35% yield in your cashflow on a performing note. I’m going to give you some at 15% to 20%, maybe 12% to 15%. You’ve got to know these things. I know it’s not the easiest thing, especially coming from the workforce. You’ve never made notes. Coming from a fix and flipper or a real estate investor and you’re brand new, I get that. I understand it. I highly recommend you check out our videos.
I highly recommend you check out the NoteBlueprint.com for the educational online home study course. That will help with a lot of this, but you’ve got to go back and talk with people. You’ve got to look at your numbers and go from there. When we did our Note Night in America a while back, the number one attended Note Night in America is still people are like, “Are you going to build this for me?” I’m like, “I’m not going to build you a calculator because the things I looked at can be completely different than what you look at.” We’ve got our due diligence spreadsheets. I have the short one-page version and then there’s a 21-page version. I call it the engineer’s wet dream. Do I look at the 21-page? Rarely. I go the one-page, I make offers and I wait to see what happens. I wait for my common sense underwriting to kick in. You’ve got to take action if you’re struggling with over-analysis on the back and you’re struggling with things taking place, just because you’re probably not doing enough marketing. You are probably not reaching out enough. You’re guaranteed not doing the things you need to be doing.
If your Facebook is full of more weekend getaways and deals that you’re working on, you’re not doing the right thing. If your Facebook or LinkedIn is barren and you’re not posting things that you’re doing, you’re doing the wrong things. I’m not saying it can’t be full of fun, it can’t be full of family. If you’re in a place that makes sense, great. If you’re going to market that stuff, but you’re not going to do an email blast out to asset managers and you’re going to complain about a 5% open rate, 5% open rate is still 5% better than if you didn’t do anything. If you made 50 phone calls, that’s still better than saying, “I’m not going to make anything.” Stick to the thing. Schedule things. I’ve talked about this as well too. If you can time block your schedule so you’re doing some other things every hour of every week, it will help you flow a lot better. It will help you move. “I got my email blast now.” I’ve talked to people like, “When was the last time you sent an email to asset managers?” “Two months ago.” “What stopped you from doing it last month?” “I forgot.” “Get on there right now. You forgot the last 60 days. There’s no excuse that you can’t take that action now.”
Quit overanalyzing and feel sorry about yourself and what you don’t have and realize you have the power. You’re the He-Man. “I have the power of Grayskull.” You can take action. I don’t care what you haven’t done in the last 60 days. That doesn’t mean you can’t take action now. It doesn’t mean you can’t jump on LinkedIn. That means you can jump on a MailChimp or Infusionsoft or something. Send an email right now. When you finish writing that email, take 30 minutes and write one for next month. Take another 30 minutes of that and write one for the following month. Take fifteen minutes and write one for the fourth month. Get them done going. Go and pre-schedule it so that when they do hit, when you start seeing emails come in out of office autoresponder, it’s like, “I just sent another email. I forgot.” That’s how you build systems. That’s how you do the things versus trying to throw it against the wall. “I’ll get to it when I get to it.” Life is full of things and it’s a lot of distractions. It’s full of a lot of distractions that will cause us to drift, to go away for what we need to do.
Analysis Paralysis: Quit overanalyzing and feel sorry about yourself and what you don’t have, and realize you have the power.
Do you want to read a good book about drifting and how to overcome things? Read Outwitting the Devil by Napoleon Hill and edited by Sharon Lechter. It talks about drifting. If you find yourself not doing the things you need to do, you’ve got the devil in your life. You need to have your own, not resurrection, but you need to have your own come to Jesus meeting with yourself. Start doing the things that you need to be doing on a daily basis to drive traffic, doing the things you need to do on a weekly basis to get bids, assets in, the money and things like that. You’ve got to do those things. Otherwise you’re going to be sitting here struggling six weeks, twelve weeks, eighteen weeks, and find yourself desperate. If you’re desperate, you’re probably 60 days beyond where you should have started doing things and gone from there. That’s the best advice I can tell you to do is if you’re struggling, killing every deal, look at what’s killing the deals. Is it your analyst? If you’re overanalyzing, you’re struggling paralysis, you’re only making offers on one deal versus ten deals. You’re trying to get too many bids down to a specific dollar and cent on the front end. That’s your issue.
If you’re not sending out to asset managers, that’s your issue. If you’re not following up with asset managers, if you’re trying to go after the lowest hanging fruit out there, that’s your issue. It’s not my issue, it’s not your family’s issue, it’s your issue. You need to look at yourself in the face, in the mirror and say, “Am I doing the right things I need to be doing on a daily basis?” I’ll tell you right now, we all struggle. Everybody struggles. What separates those that are doing an amazing job versus those that aren’t are the ones that are struggling, are the ones that says they understand the struggle and they keep to it. There are days, I think everybody feels this, where they get up on bed and they don’t want to go to the office or they’re just struggling or they’re tired. They go to their job. Maybe they don’t hate their job, but they would love to do something in their own time. They love to be control of their own destiny and we all are in control of our own destiny.
Guy, girl, whatever avenue real estate you’re in, you control your own destiny. You have to take the actions with the time that you’re allotted or the time that you have available in your schedule to do those things. If you’ve got ten hours a week, you need me to put it in at least five hours of those ten hours doing something. If you’ve got fifteen, then seven-and-a-half to ten hours. You’re not going to get anywhere in life by sitting there and trying to the least amount or trying to squeeze rock out of water, blood out of a rock. You can’t do that. Take time. Put your business in place, put in your priority. Focus on an hour, two hours of your time each day.
Everybody’s got an hour or we get two hours. If you get off at 8:00 at night, you’ll work until 10:00. You work from 10:00 to midnight. Most people are up anyway at 10:00 to midnight doing stuff. It’s important for you to realize these specific things. Time block your schedule. If you’re struggling, call somebody. Don’t wallow in guilt. Don’t wallow in despair. Take action. Pick up the phone and call somebody. Pick somebody. Trust me. If you call me and you have a spreadsheet and say, “Let’s make an offer on 12, 20, 30.” “I can’t do that.” “Why not?” “I don’t have that much money.” “We don’t know if it’s all going to be accepted or declined. Let’s just make a bid and go from there.” Don’t sit here with your thumb up your butt. What I’m trying to get at is pull your head out of your ass. Go make some offers. Get rid of the ROI calculator on the front end and run some numbers. Get some stuff submitted and see what comes in.
Quit overanalyzing every deal before you make an offer. You can kill a deal really fast. By the time you do make an offer, it may be already taken by somebody else being faster out there doing what they’re doing. I want to wish you all good luck. Go out and make something happen. If you’re struggling over-analysis paralysis, pick up the phone, drop me an email, shoot me a text message, talk to somebody. Post in the groups, post in different Facebook groups, post in BiggerPockets. Somebody will be glad to help you, but nobody has ESP. If you never say that you need help, you never say you’re struggling, I can’t help you. Other people can’t help you unless you let us know what’s going on so we can help you overcome your obstacles. Go out, make something happen. We’ll see you at the top.
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