Stay Out of Desperation Mode to be a Successful Investor
Insight Weekend Investor

Stay Out of Desperation Mode to be a Successful Investor

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Among the many things I’ve learned in my 10-plus years as a real estate investor in Dallas is that desperation creates regrets, and motivation creates results. That is at the root of the concept of acting like a buyer versus thinking like a professional buyer—or looking to buy versus recognizing and acting on a good deal.

Let’s say you haven’t bought a house this week, or you haven’t found a great deal this month and the month is getting ready to close. And you’re getting desperate because you haven’t bought that property that you thought you were going to buy this month.

If you are an investor who hasn’t bought a house per your plan, that can easily put you in desperation mode and that will lead to some major regrets. That is where the phrase “desperation creates regrets” comes in, unlike the case of the individual investor whose focus is being a great buyer.

Being motivated to become a great buyer is what is going to create the results you desire.

Let’s talk a little more about these two different modes for real estate investors: desperation mode—simply trying to find a property, an investment deal—versus motivation mode, which is centered more on being a great buyer and a great investor.

Desperation—the ‘ugly’ mode

Desperation mode is the ugly mode, so let’s talk about it first. Admittedly, it is never a good place to be. And I also have to admit that I’ve been in this place myself.

There are times in our business where the deals are plenty, and there are times for a real estate investor when the opportunities to buy discounted properties are few and far between. It is times like those that you find yourself in that desperation mode.

I can speak from experience in saying that when you’re in this desperation mode looking for a deal and you have removed your professional homebuyer’s hat, you will tend to make hasty decisions. You will overpay for a house simply because of your desperation for a deal—any deal. You’re going to overlook or underestimate repairs because you are focused on buying a house versus being a professional buyer.

I have countless examples from the experiences of my peers and colleagues—and myself—where a property was purchased when it shouldn’t have been because we were simply trying to buy … something. What was thought to be a deal ultimately wasn’t a deal. This is very common in our industry. It’s what I call the “lumpy” nature of our business.

Here are the takeaways:

  1. For every deal you don’t purchase, you get that much closer to a good deal.
  2. Don’t make bad deals by telling yourself they’re good deals or try to create a deal when there is no deal.
  3. Not every deal is going to be a good deal.

You’ve got to recognize these three key points each time a deal presents itself. Ultimately each time you walk away from those bad deals you are just one step closer, or one day closer, to what is a good deal.

Motivation mode—where an investor wants to be

Let’s talk about what it means to be a buyer, what it is to be in motivation mode. The role of buyer is where you always want to be as a real estate investor. You’ve got to stay and remain in the motivation mode to keep you focused on your skills as a buyer.

When you’re being a buyer—an investor—you should always be in that mode. You should always be ready, prepared and skillful when an opportunity does come along. Not only will you be able to recognize and validate it as an investment opportunity; but you’ll also be able to execute, purchase and close, ultimately benefiting from the outcome.

You are a problem-solver and solution-provider

The key for you as a real estate investor is to stay in “buyer mode.” Stay anchored in the fact you are a problem-solver and a solution-provider for distressed sellers who are selling properties to you at a discount. When you are a problem-solver you are capable of helping others no matter what type of problem they are having that is causing their need to get out of their house quickly.

Stay grounded in the fact your value is as a seller, and you’ll stay in that buying mode. For example, I had some friends who were simply just aware that I am a real estate investor and a professional homebuyer. Never once had I sought out purchasing a home from them. I made them aware of what I do—my skills and what type of problems I help people solve—and that was it.

These friends and our relationship ultimately resulted in my acquiring two properties from simply being a buyer and letting somebody know I’m a skilled buyer. I purchased one of the properties from one of their family members. I still hold the property today as a rental property. And then they had a friend who was in a troubling situation and I was able to buy that property and ultimately sell it as a wholesaler finance.

These were properties I wasn’t looking for; I was simply being a buyer. The deals came to me in a natural way, created from the situations I found myself in.

How to stay in buyer’s mode

There are a few ways to make sure you stay in a buyer’s mode.

  1. Advertising

Make sure you are advertising constantly and consistently. Advertising is the key to maintaining your buyer mode. So, when the opportunities come your way, you will have the leverage to stay a successful investor and not desperately seek out deals that will eventually fail. 

  1. Quality over quantity

Stay grounded in the fact that in our real estate investor business, it is quality over quantity. There are others who constantly brag about how many houses or deals they have purchased in a week or a month or a year. But it’s not the quantity of houses or the quantity of deals that is most important. Rather, it’s the quality of those deals and how much you achieve from those deals. You’re buying against your minimum deal standard. What’s important to you? Is it the ROI, cash flow or profit margin? Whatever the deal, your ability to purchase properties that match up with your deal standards is what matters. This is the measure of quality in your real estate investing, not quantity.

  1. Stay grounded in offering solutions

You offer solutions to sellers versus depending upon them to provide the solutions for you. That is not their role. You must stay the problem-solver and solution-provider. When you stay grounded as a solution-provider you will stay out of the desperation mode.

As you can see, there is a definite distinction between desperation mode and motivation mode. Motivation mode is centered more on being a great buyer, being motivated to be a great professional buyer and a great investor. You’ll be surprised at the goals you achieve when you are being a buyer versus simply looking to buy.

You can access Kevin’s complete podcast here:

http://www.blogtalkradio.com/kevinguz/2016/10/21/looking-to-buy-versus-being-a-buyer

About the Author

Kevin Guz is a Dallas, Texas-based residential real estate investor with more than 10 years of investing experience. He owns a HomeVestors (or “We Buy Ugly Houses”) franchise as well as the Clear Key companies, which focus on residential real estate wholesaling, rental property management and self-storage leasing. He also is a licensed real estate agent in the state of Texas. He enjoys sharing his ongoing personal experiences, perspectives and learnings from his start as a part-time or “weekend investor” and full-time corporate professional through his ultimate transition to a full-time real estate investor and business owner. You can listen to his podcasts at http://www.blogtalkradio.com/kevinguz.