The True Cost of Finding Epic Deals
In the latest episode of the Freedom Warrior Podcast, I provide some insight into what I believe is the true cost of finding investing opportunities.
Too often, many of us think if we know the theory, if we understand the mechanics, then that in itself will get us there. But I believe that’s only part of the journey.
I delve into a personal story from my own wealth creating journey and discuss the emphasis on the process and the importance of relationship-building along the way.
The Effort Behind Securing a Good Deal
I’ve felt that the journey of building capital over recent years has been one which hasn’t come easily to me. I’ve never had a particularly high income, but I’ve been very vigilant about building my capital and then converting that hard-earned capital, or a small percentage of it, into annuities or investments that will deliver strong, predictable cash flow.
After 2019, I said, I think I’m done with buying more property. I think I’m done with developments. I’ve got enough, and I just want to focus solely on using the playground of alternative investments to grow my wealth further.
Then, out of the blue, my beloved husband turned around and said, “I’ve got more time on my hands, I’m working less, how about we do another development?” And I remember initially thinking about not being sure because they are a lot of work to do.
All these thoughts went through my head, but in the end, his enthusiasm won, and I thought, maybe doing the odd development here and there as we get older could be something that could be pretty fun.
Over the last 10-15 years, I’ve led the charge in our household on the investing front. I haven’t always got it right, but I guess my husband’s kind of been focused on his business, and he’s lovingly encouraged me to make decisions and take the lead. So I thought, well, wouldn’t it be lovely to start doing some things in the investing space together.
I started to look probably about four months ago. I started actively looking for a deal, and obviously, the market is scorching hot right now. Good deals have always been on the ground because they’re good deals, but it’s ten times worse in a market like ours.
The point that I want to really emphasise and drive home because it’s been a reminder over the last four months is how much work is involved in getting to the starting gates of securing a good deal. There are many people out there trying to tell you what their theories are on wealth building and what you should and shouldn’t be doing, and there are some really good people out there who know their stuff.
From my perspective, the idea of building capital through traditional property investing makes sense, particularly if you don’t have amazing income or you’re in a situation where you can’t afford to have investments or carry investments that cause a massive cash drain. Where the break in a lot of this stuff occurs is, thinking that if I know the theory that I can easily put it into practice.
One of my greatest discoveries over the last 12 years was the recognition that finding deals is probably one of the biggest parts of the journey. Knowledge is fairly useless to you if you don’t actually put it into practice. There have been plenty of times in the past where I’ve spent the money and educated myself on a particular idea or a strategy, and then I’ve just completely floundered with, OK, well, what next? How do I actually put that into place? How do I find these deals?
I want to emphasise that the journey of becoming a great investor is, in part, wisdom and knowledge. There’s another part which is about finding the deal. People underestimate the real cost of finding great deals. It isn’t just about the time, it’s about your ability to do good due diligence to calculate and quantify the risk; to understand with a high degree of detail what your actual return is going to be; how much headspace, energy, and relationship building need to go into securing the deal and then managing the deal once you’ve secured it.
Working with Buyer’s Agents
I thought I would share my experience of not using a buyer’s agent in this instance and trying to do it myself. Here’s my view: I think buyer’s agents are awesome. There are some epic buyers agents out there. I feel, though, that to some degree, the process they would go through is going to be very similar to mine.
You would work with the buyer’s agent if you literally have zero time, interest, or inclination in having a say on what you ultimately buy. For me, I care deeply about what I buy. More importantly, part of the reason I want to do it myself is because I want to build relationships.
One of the flaws I see with the buyer’s agent model is they find you a deal, and it’s not replicable. This means, you pay a fairly steep fee for one deal, but you don’t learn anything, and you certainly don’t build relationships that can serve you over the long term.
So for those of you who have the bandwidth to take on some of what I’m sharing with you, I highly recommend it. The way to view investing is, it’s not about finding the next deal. It’s not about finding the one deal that will be the silver bullet to get you to financial freedom. It’s about the process of building all the elements, understanding the artistry around wealth building, and a big part of that is understanding the process and building the relationships.
Enquiring & Shortlisting Deals
I spent countless evenings just trawling the net and making enquiries on things that I thought could potentially be good sites. In the current market, unfortunately, what happens is, people don’t even come back to you. They have way too many people banging down the doors. And effectively, you know you’re putting your feelers out on dozens and dozens of properties. And then you are doing the due diligence and following up on the shortlist of ones you think could be viable.
The first part of this is, you’ve got to put your feelers out and put your net wide for as many deals as possible. Will all of those deals come to fruition? Hell no, but what I’m trying to say is that you have to cast the net wide in terms of just making as many enquiries as you feel you can, and then you need a way of shortlisting.
For me, the process of shortlisting always comes back to a little bit of mathematics and anecdotal evidence. One of the things I always ask is, could I live there? I see myself as representing a reasonable taste of living somewhere that’s not a slum area, and it’s not your total high-end blue-chip, either. It’s where the bulk of the population wants to live, and therefore it’s congruent with where I would consider doing developments and investing, so running the numbers is always the starting point.
I can’t even tell you the deal that I cut with my husband. I would make the enquiries, shortlist deals, and then flick them to him to run through the feasibility calculator we had. It wasn’t a bad experience because, if I’m really honest, I am an accountant by training and I recognise and understand the importance of detail, but it’s not my nature to be particularly detailed. I’m much more a big picture, concepts, relationships kind of girl, so we started off going, this is actually a good arrangement! There’s no question that he’s meticulous in terms of dotting his i’s and crossing his t’s, and that’s his nature.
Once we shortlisted maybe half a dozen deals, then came the tricky part. Frankly, you may have some deals that stand out as being better than others, but again, you’ve got to be prepared to put the time in to connect with and build relationships with the agents or the owners that are marketing these deals.
The Importance of Building Relationships
Some of you may have heard me speak about this before, but I think being authentic and not trying to talk a big game is important. Find people who understand what you’re trying to achieve, who are sympathetic to what you can and can’t do, and who are going to be really honest about the pros and cons, and let you know if there are any things to be aware of, like maybe the cracks in the cement things like that. Maybe some agents would just gloss over, and this is where you’ll start to notice that the more agents you speak to, you’ll just get a feel of like, yeah, I really like that person, and I could do business with them.
Even if it results in you not securing a deal, if you’re on someone’s radar and you are honest and authentic when you deal with them, I think that in the future, if opportunities come up that are in alignment with what you’re looking for, you’re more likely to get the first bite of the cherry.
If you think about it, what a buyer’s agent is doing is building relationships and trying to get opportunities before either they’re marketed to the masses or who are genuine about negotiating a fair price and saving the vendor a whole lot of headache and hassle. So you may only be buying one property every two to five years, depending on your circumstance, but I definitely would say, please don’t underestimate the relationship-building component of it.
We’re four months in, and we have secured what I believe to be an epic project, and we’re now at the point where we’re starting to negotiate with builders, and that’s another can of worms. People forget that in an environment like the one that we have, the good builders are up to their eyeballs in work. I’ve certainly spoken to some builders that I would have loved to have had work on this project for us, but they’re booked out until 2024! So this is where, again, relationships matter.
I’ve decided to work with and engage a relatively expensive architect because I trust his judgement: I know that he’s got my back. In turn, he will help leverage his network of builders who will do a great job to help us win this component of the process.
Being Active in the Investment Process
Investing has to be something that you are genuinely interested in. If you’re at the point where you need to build capital, you need to really have your head in the game. Although you can engage people to shortcut the process, things like buyers agents and so forth, you still want to be super active about the decision making process side of things.
What a buyer’s agent should be doing is pulling together all the due diligence and putting properties in front of you, and helping you make an informed decision before you get to that point – though you should already have a pretty clear idea of which market you want to invest in and why.
If I look at the alternative investing side of the work that I do, what I’m trying to do is shortcut that for people. I’ve pulled together all of the epic A-grade players that I have worked with over the last 12 or so years, and I’ve created a buffet of opportunities that my Mastermind Members can just cherry-pick from if and when they’re ready. I don’t get paid based on anything they do, but the idea is I’m trying to help them fast-track that component of the process.
Do not underestimate the value of the time, energy, and headspace that it takes to take something from an idea through to understanding, theory, action plan and then executing that plan. It does take time, and for those of you who are serious about building life-changing wealth in the shortest possible time, it’s crucial that you give respect to that process. You understand it, and you find the right voices to help you remove friction on that journey.
The idea isn’t necessarily that you and I may work together, because not everyone is fit for the work that I do in terms of the work in my business, but what I hope is that the information that I share is actually valuable to you on your journey.
If you’ve got questions about wealth building and the property investing game or if you want to focus on specific topics, what I’m going to encourage you to do is get in touch today.
I’m looking for ideas, questions, things that you think would be worthwhile talking about with the background context that the Freedom Warrior podcast is really about helping you on your wealth-building journey for life, rather than finding the next hot spot or the next deal.
Alternatively, if you’re interested in understanding how to create wealth through alternative strategies, please check out my programs, where I help you catapult your investment income and blend strategies to shave decades off your timeline to financial freedom.
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