Financial Literacy

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First of all don’t forget to read yesterday’s blog and EMAIL me your advice. Winner will be announced at Behind Closed Doors, (you don’t have to be there to qualify).
Replies are coming in but only 2 have been in any way creative so far. So get writing!!

Anyway on to financial literacy. It seems that as the market has slowed every man and his dog is ringing or emailing me hoping I might buy their latest deal. Now I don’t mind that at all as in many cases the people think they have found a good deal and it might suit me. However the scary thing in most cases is that they don’t have enough financial information to actually have any idea whether it is a good deal or not. When the market gets harder we have to do more, not less. So trying to sell a deal to someone else when you don’t know what the RV is, or what the rental assessment is, or whether the work done on the property is legal etc., is just laziness.

I have recently made my first ever loss on a trade due to the market going a bit weird, (plus I bought emotionally ). But in this market I change what I am doing so that I stay safe. I am back to doing RV’s on virtually everything I look at, (about ten in the last week at a cost of 5 grand), and I haven’t bought any of them.

I spend more money on due diligence and expect better margins than normal because that is how you stay safe. So don’t give up and don’t look for a shortcut. When things get tough, most people bail out. This creates huge opportunity for you to get great deals by staying in the game and doing more training, going the extra mile, persevere, pursue the deals but make sure you KNOW everything about the deal before you try to pass it on.

I was reading some deals posted online today somewhere. They were around 500 to 600K buys and had some numbers for post reno or post trade profits. These deals on paper had 40 to 60K in them. In other words there was less than 10% gross margin on paper before you started. It would only take 1 tiny problem to put those deals into a major loss. I have had a client in this week who had a 60K paper profit turn into a 130K actual loss.

So don’t be lazy and don’t take unnecessary risks. Know your numbers, know your margins and if it doesn’t look like the deal of the century, pass on it!!!
This is the market to become a reluctant purchaser and a finder of exceptional deals only. Stay Safe