Real Estate Articles

Take My Advice! (or SOMEONE’S, at least…) | By: Multiple Speaker(s)

Take My Advice! (or SOMEONE’S, at least…)
By Vena Jones-Cox

Coaching people is a very interesting undertaking.

When I first started a decade ago, I figured it would be as easy as, you ask question. I answer question. You do whatever I told you to do. You get desired result, and are forever thankful.

Hah.

It turns out that advice-giving is hard work, made harder by the fact that the givee very often 1) doesn’t ask advice until it’s too late; 2) doesn’t quite understand the full scope of the question they’re asking, and 3) sometimes does exactly the opposite of the thing they’re advised to do.

For instance, I am often asked questions to the effect of, “I found someone who’s willing to let me take over their payments. How do I write up the paperwork?”

Seems like an easy, smart, and obvious inquiry, and yes, the answer takes about 2 minutes. However, of the asker has PAID ME to give them advice, as each of you has, I feel always feel obligated to explore what I feel should be the REAL question: SHOULD you take over the payments at all? So the 2 minute answer becomes a 10 minute interview by me:

What’s the property worth?
What do they owe?
Is it just a first mortgage, or is there a second mortgage or HELOC, as well?
Do you know the above because the seller told you so, or because you’ve gotten a title search?
What’s the payment? Does it include taxes and insurance? Do you know that because the seller told you so, or because you’ve looked at the payment coupons or mortgage?
Are the payments current? Do you know that because the seller told you so, or because….?
What’s the interest rate? Is it fixed, or adjustable? DO you know that because the seller told you so, or because…?
How much longer does the loan have to run? Do you know that because the seller told you so, or because…?
What’s your exit strategy?
What will the property rent for?
And so on and so on. It VERY often turns out that “How do I do the paperwork” is the wrong question altogether. The real question should have been, “How in the world am I going to make money on this property when it has no equity, and the PITI payments plus the maintenance and vacancy costs are higher than I could ever get for rent?”

And the funny thing is, this hypothetical question-asker, who thinks they paid me to answer inquiries, often gets frustrated with me because, in my mind, what they really paid me for was to know what questions they should be asking in the first place.

Which leads right to the next problem: I give good advice that gets ignored, and almost always to the detriment of the advisee. I cannot tell you how many times I’ve reviewed deals with high-level coaching students—the ones who have my cell phone number and who I know well, at least in the sense of understanding their personalities, goals, skill level, and resources—and have had that advice roundly ignored. In almost all cases, this takes the form of the student doing a deal I told them not to do, and in almost all cases, the excuse is, “Well, I just wanted to get a deal under my belt. Even if I don’t make any money, it will be a good experience”.

Yeah, right.

I’m never going to tell you not to do a deal for some random reason. I’m going to tell you NOT to do a deal because:

It’s not a good deal at all, and you can’t NOT lose money on it
It’s so marginal, and you’re so inexperienced, that it’s very unlikely to work
It’s a kind of deal (such as a major rehab) that you simply don’t have the skills or resources—yet—to handle
It’s a deal that, for one reason or another, is so complex (“Well, the mother died, and her estate was never probated, and she had seven children, one of whom also died and one of whom is mentally incompetent and in a halfway house, and I’m working with one of the other 7 children, and what I want to do is just buy her share and then figure out how to get the other 6 shares…”) that it will take up weeks or months of your time, have less than a 50/50 chance of actually working, and result in not enough profit for the hassle if it does work. It amuses me to know that while some of you think I’m exaggerating this example, and there are at least 2 of you who think I’m talking about you, because you’ve brought deals like this to me.
I’ve helplessly watched at least half a dozen people who’ve paid me 5 figures to tell them what to do, do exactly the opposite. And, just as I predicted, lose money on the deal (not to mention waste the money they paid me!). And I’ve watched dozens of others decide that, even with 22 years experience and hundreds of deals under my belt, they can probably find an easier/better/faster/cheaper/but just as good way to do something than what I’ve told them to do…for instance, using handwriting FONTS on envelopes, as opposed to actually handwriting them. Or doing kitchen table closings on subject to deals, rather than actually getting a title search. Or hiring contractors by the hour rather than by the job. Or, well, I could go on and on.

But as frustrating as the above is, what’s worse is when people pay me to give them advice, and then DON’T ASK FOR IT. Seriously, it happens all the time. I get an email that starts,

“Dear Vena, I just bought a stripped 4 family in the warzone in Detroit with 4 efficiency units for $200,000, and what I was wondering is, do you have a good roofer?”

WHAT???

Come on, people. “I didn’t want to bother you with any questions” is a stupid statement when you’ve PAID to bother me with questions. I looked back in my inbox for the past 2 weeks, and I’ve gotten fewer than a dozen questions from Inner Circle members during that time, 7 of which were from just 2 of you combined, and 2 of which were along the lines of, “can I change my email address to x?”

No, I can’t tell you exactly what a property at 123 Easy Street in Boston is worth. But I can direct you to places where you can get that value. And no, I don’t know what’s wrong with that foundation based on your verbal description of the crack and the blurry cell phone picture you took in the dark. But I can tell you that foundation problems are expensive, unattractive to wholesale buyers, and probably something you want to avoid for your first rehab. But ya gotta ask, and ya gotta take my advice when you get it.

Please.

Reprinted with permission of Vena Jones-Cox. To get more free articles and tips, subscribe at www.TheRealEstateGoddess.com


www.ACREIA.org  (Akron Canton Real Estate Investors Association, Inc.) does not give legal, tax, economic, or investment advice. ACREIA disclaims all liability for the action or inaction taken or not taken as a result of communications from or to its members, officers, directors, employees and contractors. Each person should consult their own counsel, accountant and other advisors as to legal, tax, economic, investment, and related matters concerning Real Estate and other investments.   

Your email will never be shared or sold to other members, vendors or any other third party without your consent.


Contact Us:

Akron Canton Real Estate Investors Association, Inc.

P.O. Box 176
Kent, OH 44240
(330) 858-0456

Proud Affiliate Member of Think Realty

Follow Us


  • Copyright 2019 © Akron Canton Real Estate Investors Association, Inc.  All rights reserved. | This REIA Website is powered by: Real Estate Promo