Common real estate investing advice says, “if you want to buy more properties, you need to analyze more deals and make more offers.” While that may seem to make sense on the surface to mainstream investors, we Thoughtful Real Estate Entrepreneurs see it very differently. In this episode, Jeff explains why entrepreneurs don’t believe in “finding” deals, but instead believe in “creating” deals, and why analyzing deals in spreadsheets should only come much later in the process, after truly understanding the Seller. Lastly, Jeff shares what real estate entrepreneurs SHOULD be focused on: talking to more Sellers.
One thing I see and hear a lot in groups and forums and discussions in among real estate investors, and sometimes people even ask me this directly, is sort of this question like, how many deals you analyze in a week, bro. It’s like a point of pride kind of thing. Like, you know, how many reps did you just do on the benchpress? And I have for a long time just found that to be a funny question. It took me a while to put my finger on, like, why does this question feel so wrong? To me? Why does it feel like a total disconnect with the way that I think about things? So I put a lot of thought into that. And in this episode, I want to talk with you about why I could care less how many deals you are analyzing, or offers you’re making. And instead, I want to share with you what I think you should be tracking, that does have a much more meaningful correlation with what we’re trying to accomplish as thoughtful real estate entrepreneurs. So let’s cue up that theme song. We’ll jump right in. Welcome to racking up rentals, a show about how regular people, those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting We Buy Houses signs are just looking for quote, motivated sellers to make lowball offers to. You see, we are people oriented dealmakers, we sit down directly with sellers to work out Win Win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the thoughtful real estate entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio. Hey, thank you for joining me for another episode of racking up rentals. This is Episode 113. Which means the secret formula for our show notes page is thoughtful our E comm slash e 113. Please do us a big favor by hitting the subscribe button in your podcast app. It really helps not only you make sure you don’t miss any shows, but helps other fellow thoughtful real estate entrepreneurs to find this show. honored with today’s episode. So a typical scenario in the real estate investing world, especially as shown in you know, some podcasts and Facebook groups and things like that kind of plays out like this. Investor says I’m just not I’m not having success yet. I can’t seem to buy anything. And, you know, consultant guru whatever says, Well, let me ask you this, how many deals are you analyzing? And how many offers are you making? That’s the key. If you want to do buy more real estate, you need to I analyze more deals and make more offers. And I can understand why someone would think that. But I don’t think that. In fact, I think kind of the opposite. I really disagree with that. And in this episode, I want to talk about why because I think that as we talk about why and sort of look at some of the fundamental underlying ideas behind this, it’s actually really important thing for us to be talking about. So just as a side note, of course, in this show, we talk about buying properties off market. And to some degree, this debate, maybe you’d say or this conversation about how many deals you should be analyzing offers you should be making is sort of predicated on the assumption that you’re looking at properties that are on the market. And of course, we are not looking at properties that are on the market, we are talking to off market seller. So just want you to have that in your mind, as a bit of context as we dive into this. So to unpack this topic, we really need to start with a fundamental concept that I have referenced on this show many times before I even did one specific episode about it. And that is the difference between an investor mentality and an entrepreneurial mentality. So let me give you the quick explanation of that because it plays into everything we’re going to talk about. an investor’s mentality says, I have gathered resources. Now I am evaluating different vehicles and I’m going to find and select the right vehicle into which to place those resources as an investment. Instead, an entrepreneur thinks of it differently. An entrepreneur says, I am going to go out and I am going to use my eyes and ears of opportunity to create opportunities. And then once I know what resources are needed to execute on that opportunity, I will then go gather those resources and we will carry out the opportunity. So it’s a very different mentality. Investors say I have resources first. Now let me find someplace to stick them. Entrepreneurs say I’m going to go create opportunity, then I’ll worry about coming up with the resources needed. So let’s, let’s dive into this a little bit deeper. And investors mentality says, deals are found. I mean, we literally use that language. Often, when when we talk to real estate investors, they’re like, where I’m out there trying to find deals. So that means if you’re out there trying to find deals, and I really want to emphasize that word to find. That means you have to look a lot, you have to look in a lot of places, you have to look for a long time, because you’re trying to find something becomes a bit of a volume, kind of a game at that point, the more you look, the more things you are likely to find. And investor thinks that it’s really a numbers game, right? Because if you want to find more stuff, you need to look more places and more time and have you know more secrets for finding those things. If you just look at enough, you will find one if you want to buy more, you need to find more deals. So I don’t like that word find though, as a relates to an entrepreneurs, because entrepreneurs Don’t try to find deals, entrepreneurs create deals, entrepreneurs believe that deals are created through vision and through understanding of bigger picture and through understanding what is possible that not everybody else understands. So if the key word for an investor is find the key word for an entrepreneur is create. And in order to do that, you have to be able to see what is possible if you want to be a creator of opportunities. So let’s talk about more about this idea of why deals are not found. Because I think this is just so important. And when you think about finding, every time I hear somebody say this, I need to find some deals, or I’m working hard to find deals, I can’t find deals. Here’s what I picture, I mean, quite literally in my mind, I picture some buddy, who’s got a metal detector. And they’re like walking around on a beach, using the metal detector at 530 in the morning, looking for stuff, looking for stuff maybe that’s been left behind or has been lost or washed ashore or whatever. And they’re looking for it as if it’s right there. It’s just not obvious. But if I have better tools to find it, it will be there. So I’ve got this metal detector, and I’m here before everybody else is. And so you know, the the advice would be like, Oh, you haven’t found any, you know, valuable coins yet? Well, you just need to it’s a numbers game. Look at more beaches. Do it for longer get there earlier in the day, spend more time doing it. But find the word find implies that we all know. And we all agree on what a deal is. And that is just a matter of locating it before someone else can. It’s like a contest to locate it first. So think about the guy with the metal detector. Right? We pretty much all universally know what a gold necklace is. If there’s a gold necklace sitting on the ground, and there are 10 people look at it. everybody’s like, yep, that’s a gold necklace. But deals are not like that. deals are not these things, everybody. Everybody just simply looks and goes. Yep, obviously that’s a deal. Why we all see the same thing? No, no, we don’t all see the same thing. And especially as entrepreneurs, we want to see different things. So if your mentality is that you’re going to go find deals, and you have to find them because before other people find them, then you have a base assumption that a deal is easily identifiable, and that everybody can identify it. That’s your first problem. Because a deal is not so easily defined. It’s not so universally identifiable. It is not so much that we all agree on exactly what a deal is. Now an investor can look at a property and not see anything in it. Another investor can look at the property and not see anything in it. But an entrepreneur could look at that property and see different things because their mentality is more of one of creating opportunity, rather than finding locating or discovering opportunity. So then an investor can look at a property and not see anything, but you invite two entrepreneurs to the table and not only do they see something they each see two different things. Here’s the second major problem with having a mentality of find finding locating deals. Finding removes any element of the people side of the equation, right? Finding implies. You know what I’m walking around the world I’m looking around, and I looked down and there’s a flyer for a listing said laying on the ground and the information, which is words and numbers on this page, this PDF, this printout of this flyer of this listing, that’s all I need to know, finding removes any element of the people side of the equation. Investors, typically people with an investor mentality, I don’t see how the people side of things plays into the equation at all. They’re thinking in terms of inventory, right investors think, inventory. If I’m going to make money on this duplex, I have to acquire the inventory of the duplex. If I can acquire that inventory through a wholesale transaction through an auction through a foreclosure proceeding through a bandit sign through an MLS listing, it doesn’t matter, as long as I get the inventory. However, entrepreneurs don’t think about it like that at all. Entrepreneurs know that the seller themselves plays a huge role in what can be created, let me just give you a dead simple example. If you were talking to the owner of a piece of property, let’s just call it a single family home, that rents for $1,000 a month, and you can buy it for $125,000. Let’s just say, a math person, an investor can look at that and say, well, it’s not quite the 1% rule. But you know with with this and that I bet we can probably make this work. But the entrepreneur knows that the key to whether that deal makes sense, has everything to do with the seller and how they perceive their situation. If the seller is feeling like they need to defer capital gains as they sell this property, and that’s going to open a door for seller financing. That means that the entrepreneur sees a completely completely different picture of what can be created, the entrepreneur is looking at the zoning, seeing what else is allowable, what else is permissible in this type of zone, looking at other ways to increase income by building an accessory dwelling unit or turning, you know, the duplex into a four Plex or whatever might be possible. But the entrepreneur is looking at this as an opportunity, a canvas upon which they can create in that the seller themselves is a massive ingredient in what can be created on that Canvas. You see an investor sees negotiation as how you get the inventory, it’s what you have to do to get yourself in the inventory that you need. The entrepreneur, on the other hand, sees negotiation as part of the actual thing that they are buying. negotiation for the entrepreneur is not just the path, it’s not just the highway, that leads to the destination of owning the piece of real estate. The negotiation is part of the destination itself, not just a means to getting the sticks in the bricks and the dirt. The entrepreneur sees the negotiation as part of the actual purchase, and not just the way to get there. So here’s a simple truth to kind of wrap up this these last couple points. If you show a deal, to a group of 10 investors, they will all likely more or less see the same thing. You show a deal to 10 entrepreneurs, and those 10 entrepreneurs will see 10 different opportunities that could be created. So let’s circle back to the idea of analyzing and making offers. What exactly is analyzing a property? Well, it’s basically building spreadsheets, right hands Building Performance, it’s maybe either creating a spreadsheet template for yourself, it’s going on to some analysis, software, or whatever. But it’s, it’s basically putting a whole bunch of numbers into a computer, and then letting the computer do some calculations for you. And how is this analysis done? If you are a traditional investor, it’s done with great sense of urgency. It’s done with a great sense of speed, because you don’t want to avoid being beat out. Now, if you are analyzing a lot of deals, let me ask you this, what exactly are you analyzing? Well, you’re analyzing numbers, you’re analyzing data. And where’s that data coming from? This is data that’s been provided to you. In other words, you’re taking somebody else’s perspective of what this is, and even somebody else’s perspective, perhaps of what it could be. And you’re analyzing their perspective of what it is and maybe what it could be. But are you expecting that spreadsheet That printout that results on the page after you hit the button that says submit, to tell you if there is a deal here that you should make an offer on? Or are you expecting that spreadsheet that print out to tell you what could be created? And if you should make an offer on that you should do it fast. Now, if you if you’re gonna make an offer on something, and you feel like you need to do it fast. Why? Why do you feel like you need to do it fast, because everybody else is also analyzing this property. And when they do all those people who have analyzed it, they’re seeing the same thing as you are. Because they’re just using the information provided to them. They’re not thinking about what could be possible. They’re not applying their own unique, entrepreneurial, creative set of lenses about what could be that isn’t here yet. They’re just crunching the numbers the same way you are. And you have to beat them to it. If somebody sent me a listing, and then they asked me shortly after like, Hey, have you analyzed that deal I sent you yet? My response would be, what is there to analyze? I haven’t talked to the people who were involved with this deal yet. I have no idea. If there is opportunity here that I could create in this picture. I don’t know yet. I mean, you sent me a one page PDF with a few words, a bunch of numbers on it. I don’t know what could be created here, I need to talk to the people involved. I need to get a perspective on other parts of this property related to things like zoning and density and all sorts of other stuff like that. And I really need to talk to the people to understand how they fit into the picture. And only once I’ve done all that, well, I even begin to have a sense for what could be created on this canvas that you call a deal. But if you send me a one page flyer that’s got some numbers on it, and say, Hey, put this in your magic spreadsheet, and tell me if this is a deal worth doing. That’s not how I work. That’s not how I can even conceive of thinking about it. So let’s get to kind of a key takeaway of this. Let’s bring all of this together into the point that I’m hoping you will take away from this and that you will ponder a little bit because now let’s be honest, if you’re listening to this podcast, you you’re already probably one of the weird ones, right? In the greater real estate investing industry. I am like, I’m a chief in the weird ones category. Now, you’re probably already one of the weird ones if you’re listening to me. But by taking on this perspective, I’m sharing with you today. Oh, you are definitely becoming, you know, like a leading member of the weird ones. We’re not the normal people who are looking at things this way. So let me get to the takeaway here. That’s gonna help make you even weirder and weirder like me, if you were comfortable being that way. If you are a thoughtful real estate entrepreneur, analyzing a deal comes after you have engaged the seller. Like what actually when I say that out loud, I just practically want to smack my forehead because it’s so obvious to me. But I know that it’s only obvious to me because I am one of these weird ones. This is not how people normally think for thoughtful real estate entrepreneurs, analyzing a deal comes after you have engaged the seller. No spreadsheets are allowed before insights. I feel like I should make a T shirt that no spreadsheets before insights, you need to understand who you’re working with, you need to have gotten the full picture of what’s going on in this whole scenario. Before you can even have a sense of what you could create in that scenario, yourself. So analyzing a deal comes after you’ve engaged the seller. So if we go back to the very beginning here, of this episode, you’re not buying enough real estate, the the investor complaints I’m not I just can’t seem to buy properties. I’m not having any luck. My advice to you don’t analyze more deals. Don’t make more offers. Here it is. Talk to more owners of property that you’d like to buy. It’s as simple as that. Talk to more owners of property you’d like to buy. Now, I like to make fun of sometimes the idea that people say oh, it’s just a numbers game. He’s got to get out there and, you know, make a whole bunch of offers. Well, I don’t believe in that. But I do believe that if you talk to 100 property owners of Property you’d like to buy, versus two, you are going to have much greater chance of, of seeing some opportunities somewhere in those 100 conversations and you would in somewhere in the two conversations. So for more conversations will come more opportunities that you see that you could create. But do us all a favor, keep the dang Excel on your laptop, keep the laptop closed, until you’ve talked to the people till you’ve understood the situation until you’ve gained the insights about them and what they’re trying to accomplish. And the bigger picture of the property and everything that it represents. Think of it as a canvas, upon which you could paint an amazing picture. The people are part of the ingredients, the properties, part of the ingredients, the structures, part of the ingredients, but all of it comes together, what could you create, in that picture, then open up a laptop, and analyze create your spreadsheets that reflect the ideas you have about what could be created, then make proposals to those sellers that are structured in a way that would allow you to create the creations that you have conceived from understanding the bigger picture. And at the same time, rest easily knowing that not everybody else who has driven by or seen this property, even if they were working on quote analyzing it would see what you are seeing. That is it for today’s episode of racking up rental. So again, show notes are thoughtful our e.com slash e 113. Please do us a big favor by hitting the subscribe button in your podcast app and take a second to rate and review the show. I super super appreciate that. And I see every one of them with my own eyes. I read them. I’m very grateful. Hey, did you know we have a Facebook group for thoughtful real estate entrepreneurs as well? We do. It’s called rental portfolio wealth builders. We’d love to have you join us there just head on over to Facebook and search for rental portfolio wealth builders. Or you want the secret shortcut just type in group dot thoughtful ar e comm into your browser. And we’ll take you right there. If you liked this episode, please take a screenshot. post that screenshot to Instagram and tag us we’re at thoughtful real estate. Hey, I’ll see you in the next episode. Until then, this is Jeff from the thoughtful real estate entrepreneur signing off. Thanks for listening to racking up rentals where we build long term wealth by being a win win deal makers. Remember solve the person to unlock the deal and solve the financing to unlock the profits