During my first few years as a real estate investor, I found that one of the biggest time-wasters I had to deal with was my research process.
Why? Because in my mind, in order to feel comfortable sending out an offer on any property, I had to know everything there was to know (this was my first mistake). As a result, I used to spend a ton of time making sure that I understood every possible thing about a property before making an offer. I would leave no stone unturned.
Well… an abundance of caution isn't a bad thing per se, but I eventually figured out that this approach was hurting me.
You see – in order for me to be profitable in my business… I actually had to close a deal every once in a while (I know, sounds crazy right?).
Well… in order to close a deal, I had to get some accepted offers.
…for every ONE accepted offer I got, I usually had to send out a lot of offers, and I had to do this on an ongoing basis (not one offer per week… but more like a DOZEN offers per week).
…if I wanted to crank out this kind of volume all by myself, it wasn't a good use of my time to spend several hours researching each property before I felt “comfortable” enough to send out one offer. The math just didn't add up! If I wanted ANY hope of getting anywhere in this business, something had to change.
Let me tell you from experience that when you're offering somebody 10% – 30% of their property's market value (like I do), a lot of them are going to say “No.” That's just part of the deal when you're fishing for motivated sellers and offering them virtually nothing for their property. A general lack of acceptance shouldn't take anybody by surprise.
Once I came to this realization, I knew that I had to cut the fat out of my research process. I just didn't have an hour or more to spend researching every property I came across! If I didn't make some drastic changes, I wasn't going to survive as a real estate investor.
After a lot of fine-tuning and experimentation, I was able to whittle down my research process to what I considered to be the most important factors. These were the essential pieces of information that needed to be known in order for me to determine:
- Whether Or Not To Make An Offer
- How Much To Offer
This list of “bare essentials,” i.e. – the checklist that I followed to research each property, is outlined in the video below (Hint: View this video in FULL SCREEN in order to see all the nitty-gritty details).
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Now… is this process perfect? No.
Does it get to the point VERY quickly and allow me to send out 10x more offers as a result? Yes.
The reason I feel comfortable with gathering ONLY the bare essential information, is that I have a purchase contract that gives me a “back door”. In order to send out dozens of offers simultaneously and not be locked into each one, there must be a way to make non-committal offers (think of it as more of a “letter of intent”), all while being very clear about this fact and get the seller's consent on this.
By doing this, it has allowed me to get much further in my acquisition process without having to invest countless hours of my time before the seller makes a reciprocal commitment back to me. With this approach, I can make offers on each property BEFORE I know every last detail about it.
“Analysis is paralysis. I move on a deal when I know 70% of everything. More than that takes too long and less is too risky.”
…so you see, we don't need perfection – we just need enough information to make a reasonably educated offer.
From my perspective (knowing how much time can be wasted in the research process), this approach is the only thing that makes sense to me. Once I get an acceptance, then I can justify investing more of my time into a deal… but only if I know that I've got a serious seller on the line. My goal is to never spend more than 15 minutes gathering the basic data on any individual property until I've got this assurance. This basic data is very important and helpful, but anything beyond this tends to be overkill, especially when you have no idea whether or not a property owner has any intention of working with you.
Let me reiterate – I'm not saying that YOU need to research your properties this way. I am telling you that this is my opinion, which has been formed after several years of experience and sending out thousands of offers to virtually ever kind of seller in the market.
If you're looking for a “bare essentials” due diligence worksheet just like the one I use, you can download it here: