New Quotes I Live My Life By

Anybody who knows me knows that I am big on self-improvement. I pick up a lot from the lessons of Freemasonry. I also listen to a lot of Podcasts. Some of them are light podcasts on historical topics, but a lot of them are  self-improvement (Art of Manliness, Tim Ferris Show, Art of Charm) and real estate education (Get Rich Education, Real Estate Guys, Bigger Pockets) and I pull a lot of platitudes from them that seem to stick. I posted about a bunch of them 2 years ago So, here are some of my more recently adopted maxims.

“Do the math and the math will tell you what to do.” Russel Gray of The Real Estate Guys

This is one that I get from the Real Estate Guys and also my good friend and mentor, Charles, who dropped some knowledge on me recently. This applies to any negotiation or deal, but I apply it to a BRRR (Buy, Rehab, Rent, Refinance) real estate strategy. When examining a deal, you have to plug numbers into your Bigger Pockets calculator (or other calculation device) to see how much to pay for the property for based on how much it will cost to do the rehab and how much you can safely pull out of it once the rehab is done. And don’t pay a penny more.

If you have taken the time to work all of these numbers out and you get to the bargaining table and the price goes beyond that point, you should just walk away.

Of course it’s not always that easy because there’s a lot of emotion involved, there’s the myth of sunken costs of time invested, and a whole host of distractions.

A good example of this was given to me by Charlie via anecdote. He was in a meeting with his client who was trying to sell his business. The client had carefully examined the books and the business, and had formulated a valuation of how much he thought the company was worth. When negotiations started, he saw his client getting caught up in the moment and was edging toward taking less money than his valuation. Charlie pulled his client aside and said (I paraphrase) “What about your calculations have changed from before this meeting to now?”

Boom.

His client was ignoring the math screaming out to him to walk and if not for Charlie’s wise counsel, would have walked away from the table feeling pretty bad about taking less than his company was worth.

“Overestimate your costs and underestimate your profit.” Charlie

I’m sure this concept was not coined by my mentor and Masonic Brother Charlie, but he put it  so succinctly that I felt I should use that phrasing. This is such a simple concept. Sometimes when analyzing a deal, it is so tempting to give your calculations slim enough margins to try to make the deal work on paper. “Oh, well, I can shave $4k off the budget if the roof ends up being fine for another couple of years,” or estimating that you will receive the high end of the rent range for that market. (I know, I’ve done this.)

Do not do that. Avoid this line of reasoning at all costs.

If you use conservative estimates for your deal and it’s still a good deal, then if the worst case scenario happens you are still profiting. And when the best case scenario happens, you are all the more in profit.

“Be Willing to Walk Away”

This one is hard for me. How do you just walk away from something that you really want? I’ve definitely made boneheaded concessions because I wanted something so bad. Then there’s the flip side. There’s something that you don’t want all that much, but are kind of interested in, so you make a super low, almost ludicrously low (but still somewhat reasonable) offer and when they push back you just walk away.

Then, as you’re walking away, they say either they’ll take your price or counter-back at what is still a screaming deal… for something that you could have lived without in the first place. So you got a great deal!

The point isn’t to offer on things you don’t want, but to go ahead and make the low ball offer on something that you only want at really low price even if you don’t think they’ll take it.

So, to apply this to something that you do want, you just have to convince yourself that you can do without it. That will give you leverage at the negotiating table.

“Don’t count on motivation; count on discipline.” – Jocko Willink

I was listening to the Tim Ferris podcast while hanging blinds in one of the rentals and the guest was a ex-Navy Seal Jocko Willink (who is a super-human, FYI). One of the people who wrote into the show with questions asked how he stays “motivated.” To which he responded:

“Don’t count of motivation, count on discipline.”

And this totally rocked my world because we always see things about getting motivated and staying motivated, but “not being motivated” is just an excuse to be lazy or put off something hard or that you don’t want to do, but need to. It needs to get done, so you need discipline to hunker down and do it.

 

 

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