5 Ways to Keep Emotions from Tanking REI Deals
One of the biggest forces out there that can sink a deal faster than the Titanic is something we all possess: emotions. To ensure a successful fix-and-flip, it is essential to keep emotions out of the picture as much as you can and trust the facts of a deal. Emotions such as panic, sympathy, doubt and fear can keep you from finding the best deals, securing them for the best prices and seeing lucrative deals through to the end in spite of common obstacles and issues which can pop up.
Do Hard Money has come up with five ways to keep your emotions in check as you execute profitable REI deals. Follow these tips and you are guaranteed to see much better profits and more successful deals throughout your real estate investment career.
1. Put Your Trust in Solid Facts and Numbers
Finding a property is one of the most difficult steps to fix-and-flip success. Let’s face it – after months of struggling to find a property, the last thing you want to hear is “it won’t work,” or “it’s not profitable enough.” Though it’s a major bummer to have to start over in your search for the ideal home, you don’t want to let your frustrations overrule your decision to move on or undermine your confidence. To keep these emotions in check, be sure to stick to the solid facts of a deal. Trust in the property evaluations which will outline the risk factors and determine the overall value of the property. Though it takes time to find a property, you do not want to waste time on a bad deal. It’s far better to start over and find a solid investment than to sink money and effort into a lemon which won’t give you any profit at all. If the numbers add up and the facts point to a lucrative deal, Thundercats are go!
2. Set Specific Boundaries
Once you have numbers in which to put your faith and trust, let those numbers work for you. It’s very easy to let emotions get the best of you in a price negotiation. Uncomfortable silence or a certain look from across the table can make an investor crack like Humpty Dumpty. To ensure the best price for a property, you have to come from a position of strength. This means doing your homework ahead of time (property evaluations, determining risk factors and getting values – by the way, you can do all of these things with our Advanced Deal Analyzer tool) and creating solid boundaries for yourself so that you don’t eat away at your own profits by acquiescing to a realtor or seller’s demands. Determine and stick with your highest purchase price and go no higher.
3. Establish Firm Criteria for Property Locations
Just as important as setting boundaries for your prices is setting solid criteria for which areas and neighborhoods you can work with. Do some thorough research on risk factors which can lessen the quality of an REI deal and establish area criteria based on those findings. Determine which criteria are deal breakers and which can be taken on (a GO/NO-GO indicator, if you will). For example, with your deal you can establish that the areas MUST NOT have high crime, but it’s okay for the neighborhood to have an incident of vandalism if it happened years ago. The criteria you set is up to you, but we recommend running over risk factors with your hard money lender or realtor to receive some good pointers. Once the criteria is set, do not stray from it. Stay out of areas that do not fit the criteria and don’t let the excitement of a potential deal get the better of you.
4. Patience is the Ultimate Virtue
While it is so easy to get caught up in the excitement of a potential deal, it is even more important to take a step back and rely on patience. Examine the deal with scrutiny to determine that it will be worth your time and investment. If the deal ends up being not as profitable as you hoped, be patient and trust that an even better deal will come along soon. It’s far better to wait for a deal that fits your criteria than to try to force a deal to become profitable. If you try to mold an unprofitable deal into a solid investment, all you will have to show for your hard work is a lot of wasted time, money and effort. Remember that patience is a high virtue in real estate investments and hold out for that golden deal.
5. Don’t Waste Time with Speculation or Predictions
Checking out the temperature of real estate markets is both smart and helpful, but don’t rely on market speculation. When investing in real estate, you want to trust in the present information about an area, not what the area is projected to become at a later date. As we all know, the real estate market can be as fickle as The Bachelorette. Variables influence the market constantly which can change areas from hot to not at the drop of a hat. To be successful in your real estate deals, you will want to live in the now and don’t search for markets which are rumored to be “on the verge of turning around.” The biggest temptation to resist here is FOMO: the fear of missing out. There’s no need to give in to this fear – there are plenty of good deals in areas which have a history of solid real estate returns. Be confident in your analysis of an area and property and move forward with the best deals.
Now that you know how to keep emotional investment in-check, you can make some phenomenal returns with your real estate investments! Do Hard Money is here to help you get started on the road to financial freedom.
All you have to do is click on this link to schedule a time to chat with one of our investment associates. They can help you learn all about the fix and flip process, including finding lucrative deals. To speak with an REI expert right away, give us a call at 801-948-9774.
You can also get pre-qualified for funding for your next REI deal – just click in the yellow ‘GET PRE-QUALIFIED’ box on the right. You’ll be well on the way to earning thousands in profit in no time! Schedule your appointment today!