“Telling us to obey instinct is like telling us to obey ‘people.’ People say different things: so do instincts. Our instincts are at war … Each instinct, if you listen to it, will claim to be gratified at the expense of the rest.” – C.S. Lewis
Over thousands of years, humans honed a useful skill that helped them stay alive: the ability to instantly assess a given situation. In fact, there’s a good chance you walk this earth today because some ancestor 2,000 generations ago instantly recognized danger lurking in the shadows and fled to safety.
This same instant-assessment skill is rarely needed today … and may actually be working against you.
Take real estate investing …
You’re constantly on the prowl for deals. You drive by a property and, without slowing down so much that you make the guy behind you honk his horn, you instantly size up the likelihood that it is worth pursuing. Some real estate experts call this “driving for dollars.”
But what if you’re wrong? You could have just driven by a cashier’s check made out to you for $10,000 or $20,000 or more. A check that will eventually go into some other investor’s pocket, because your “instincts” for what makes a good deal told you to keep driving.
So forget about those instincts. In today’s real estate market, what you need is a logical, well-thought-out system to find and analyze the possibilities – an efficient method to vacuum the profit dollars from your town and into that cloth bag called your back pocket.
There are three critical factors for real estate investment success:
1. A robust lead-generation system
Beggars can’t be choosers. If you’re only seeing a deal now and then, you not only need that deal too much, you also have no basis for comparison. That means you won’t be an effective negotiator.
On the other hand, if you’re seeing a steady stream of leads, you start to get your “sea legs,” and can immediately spot an unusually good deal. And because you have confidence that there will be plenty more deals where that one came from, you’ll go into any negotiation with a calm, “take it or leave it” attitude.
2. Proper deal analysis
Forget the quickie rules-of-thumb that some gurus have popularized for analyzing deals. I’m not suggesting you work harder; I’m suggesting you put your computer to work by inputting some key numbers into the right program. Then let a refined analysis tool tell you whether you have a lousy, good, or great deal.
3. The awareness that what was a bad deal last year is not necessarily a bad deal today
Interest rates, the economy, factory closings and openings, plus a hundred other variables are constantly changing the investing landscape. Every town goes through market cycles. Knowing how to invest in each part of the cycle is necessary if you want your real estate profits to soar.
You need 21st-century investing SYSTEMS working for you, sifting and sorting deals until you know you have a real gold nugget on your hands.
I recommend that you set up systems for marketing, quick property analysis (including exit strategies), negotiation, and paperwork. Each individual system must be largely automated or easy to delegate. Once you have your systems properly established, you’ll be saving yourself time … and making more money than would have ever been possible without them.
For my real estate business, which moves at a fast rate (we’ve done 560 deals in just 10 years), I created what I call a “Customized Marketing System.” The focus is on being proactive – in other words, on making motivated buyers and sellers call you, instead of you chasing them down. This system largely runs itself, so you can focus your efforts in other areas. And it includes the effective use of direct marketing to find deals not yet on the market.
Direct marketing is one of the techniques used by one of my students – Michael Jake, from Colorado Springs, Colorado – to make over $1.2 MILLION in just 7 months. (That’s why I like to say that students of mine are not victims of market bubbles, they are bubble-market victors.)
Like everyone else out there, Michael’s been hearing a lot of “market bubble” talk. For the last couple of years, people have been telling him that his area is part of the “bubble,” and there are no good deals to be found.
Because there were very few deals in his market, everyone was (in Michael’s words) “fighting for scraps.” But by implementing direct marketing – a strategy that his competition was not using – he gave himself an enormous advantage. Michael was able to go directly to owners who were not yet aware that they were ready to sell.
Was direct mail Michael’s natural instinct? Of course not. Did it take some work? Sure. He had to learn how to find the correct mailing lists and then market to the names on those lists effectively. Was it worth the effort? Absolutely! $1.2 million in just seven months confirms what I have seen in my own experience time and again: Good systems work. They may take some time to set up, but once they’re running, they do the “hard work” for you.
So ignore the instincts that are telling you to run and hide from the bubble-market mayhem. With the right system, you too can become a bubble-market victor.[Ed. Note: You are invited to listen in while Dave Lindahl shares his secrets for using his “Chunker” strategy to create a constant stream of profits by investing in single-family homes. He’ll also discuss how to adjust your investment approach to fit your local market cycle.