Spreadsheets, spreadsheets, spreadsheets...
Naturally, I opened up Excel and started creating spreadsheets to help me with the numbers side of things. I was following several people in the community and looking at the kinds of deals they were posting about, and was working back from their numbers, to understand the formula to then build out my spreadsheet some more. I wanted a process where I could arrive at the max offer price for a property, based on filling in the pieces on the revaluation, refurb cost, rental potential etc. As I was networking with more people, I was becoming more aware that the refurb cost and the revaluation number was hard for me to arrive at with confidence. Due to my inexperience on the refurb side of things, as well as the uncertainty around how exit options would look I decided to take a step back. What would realistically happen is that I would end up putting all the money I had into one BRR or Flip, I’d fall over and learn lots of mistakes, I’d have my money tied up for 6-9 months and I’d be unsure on how things would turn out down the line. This for me (shock that I have an accounting background) would be too much risk. I decided to take a step back, have the mentality of stick to what you know, and continue learning by networking and listening.
I was having a number of calls with sourcers, and was thinking that if they could help me find a property that exactly fitted the criteria of what I was after then this would be great. I was also looking at platforms that existed where there were sourcers who were listing deals, and investors who could assess the listings and then commit to making contact with the sourcer. This sounded great, however, when I was assessing these deals, as well as other strategies like R2R and R2SA, I wasn’t getting enough confidence from the due diligence process to want to commit some money
In addition to the numbers, it’s also very important to consider the sourcers as people. People are often the biggest risk, and it can sometimes be difficult to know who you can trust. If a person submits a mortgage application with a lender, there is a set criteria in place. The overall objective is to assess the risk so they can then adjust what they have to offer so they’re managing that risk. Within property, our processes when networking and deciding whether to work with or hire others isn’t the same. One question is whether it should be the same as the mortgage application process, or should it be similar, or is it just okay to do our own thing and decide for ourselves what we think is acceptable, and then see if things work out. Most of the time, they should work out right?