SHOULD I DO THIS DEAL?
This is a question that has come up among the investor circles I’ve been a part of. A coaching student, who was doing an analysis on a deal he was considering buying even approached me and asked the same thing. I obliged and entertained his query: “Should I do this deal?”
This inspired me to list down guiding principles for deciding whether to move forward on doing a deal, especially if you often find yourself feeling undecided like the coaching student I met. The outline I made below will help you find the problem you’re dealing with, and ultimately help you answer the question above.
Refer to the pointers below. Take notes!
- Do the numbers make sense?
This assumes you are working with accurate numbers based on variables like the Purchase price, rehab, ARV, financing costs, and so on. Meanwhile, you should also take into account other factors such as Market Conditions, Pulse, Inventory, and Days on Market. This will help you “tell the story” of how you constructed your numerical rationale in taking the deal in the first place.
- Does the deal “excite” me?
Financially? Probably, or else, you wouldn’t be considering a deal in the first place. But what about creatively and strategically? Bet you didn’t think of that, did you?
As entrepreneurs, it’s critical for us to be aligned with what we are doing and be enthusiastic about them. We should always say “Hell yes” to projects we take on. We shouldn’t resort to faking our excitement; we should find something to look forward to and think of the goal we’ll reach once we do the deal. If not, we will typically find ourselves burned out, or more likely lose our focus and edge, both in our present and future endeavors.
- Is this deal viable for me now?
Meaning: Do I have the mindset, time, a legitimate financing source, and team to complete the rehab? If you’re unsure of any of the points mentioned, remember that you should motivate yourself and not talk yourself out of a deal. It is ALMOST always feasible to raise money and leverage skillets to get things done when the desire is strong enough.
- What happens if we answer YES to 1-3 and we don’t do the deal?
This is when we have to take a good hard look in the mirror and ask ourselves the simple question: “WHY NOT?”
When a deal makes sense, investors typically back out due to fear. And when we are making decisions but still have that negative feeling in our gut, this usually means we haven’t been doing the work to equip our mindset and skillset to seize a once in a lifetime opportunity.
If we’re struggling with doing the work and taking advantage of the opportunity in front of us, go back to point #2 and find out WHY we are not excited with our current investment opportunity. Are our intentions not sincere and are we faking enthusiasm with this deal we’re handling? Once we pinpoint what’s wrong, it will make our life a tad bit easier.
Are you finished reading the points but still feel like the problem of indecision still persists? Then I’m afraid to tell you that you may be in the wrong business. If you feel that way and are looking for additional guidance, you can always private message me. We can discuss and see if you just need to get a few skillset issues worked out to help you strike the deal you’ve been eyeing. I hope that by the end of our conversation, you’ll have the confidence to move forward.