1. FEAR: to fail. The most successful people fall fast. DO NOT overanalyze. Your attitude needs to be engaged, not interested. Stop thinking negatively. Ask yourself this question: “If you knew you wouldn’t fail, what would you do?” And now go and do it.
2. OVER ESTIMATED VALUE: HomeGain Zillow
Find the ARV (after retail value) by running comparisons in the area you want to shop. Get the intermediate compensation and minus 10% of the fudge factor.
3. ARRANGEMENT UNDER ESTIMATE: You need a price list. Use a REHAB ESTIMATOR to estimate repair costs. (I’ll be doing a separate article on this topic, so be sure to check back.)
4. OWNERSHIP COSTS UNDER ESTIMATION: Mortgage, Insurance, Taxes (monthly payment), Public Services, Closing Costs (purchase and sale) and Advertising. Please note 6 months if you don’t buy it at 70%.
5. NOT ESTABLISHING YOUR POWER TEAM: OPT (Other People’s Time), OPM (Other People’s Money), and OPK (Other People’s Knowledge). You need to have an accountant, attorney, title company, real estate agent, property inspector, and handyman on your team.
6. DO NOT ESTABLISH PURCHASE CRITERIA: 60-70% of ARVs is a safe criterion. Or use this calculation: ARV – Repairs – B/S/H (Costs to buy/sell/hold) – Profit (What profit do you want to make?) = MPO (Maximum Profitable Bid)
7. YOU DON’T MAKE ENOUGH OFFERS OR NO OFFERS: Call 10 people a day and make at least 5 offers a week. This will ensure that you make at least 1-2 deals per month.
8. NO WRITTEN GOALS OR BUSINESS PLAN: What are your goals for 2007? What do you want to get? How do you plan to do it? Write it down and look at it every day.
9. NOT INVESTING IN MYSELF: Personal Development and Education. Read books, listen to CDs and attend seminars. You need to do at least half an hour of personal development every day.
10. YOU HAVEN’T BUILT AN ALLIANCE: Build a good relationship with other investors and people in the business.