Establish Your Buying Principles So You Don't Lose It All

Dan Austin: [0:02] Welcome to the collecting keys Friday focus. Hey there. Welcome back to another episode of the collecting keys Friday focus where Mike or I like to just share some of our thoughts at the end of the week. Maybe it's something we're working on or just something we observed and we thought would be valuable for our listeners out there. I'm going to be your host today, Dan Austin, aka investor man Dan. And I do think I have quite a relevant topic today. As as we've been sitting back from our purchase here over at the Collecting Keys podcast, Mike and I have been able to observe some fractures in the system, maybe some fractures in people's business models as things sort of unravel for folks in our market, other investors in our market. And really what it speaks to is how important it is to have a set of guiding investing principles that help you hedge against risk. It's easy to make money in upward market. But how do you reduce the reduce the losses you make or increase the ability for you to continue to operate during a market shift like we're experienced during a downward facing market. Because you can still make money, but you can't lose it all because you got too risky. Now Mike and I are always concerned in our business with overleveraging ourselves. And so we will make we will make decisions based on a set of principles that ensure we can continue to operate regardless of what happens with our last deal. Meaning one deal isn't going to break us and none of our deals that we do will break us because we do know the importance of being able operate, not just during the good times, but the bad times. And I'll share some examples with you.

Dan Austin: [1:41] Mike and I right now, we're trying to bring all of our capital back to us that that's possible. We took a small loss on a, on a flip. We did. We didn't go as high in on the flip as we would have liked. We also took an offer that was very we're we're secure with. We could have taken a higher offer, but the buyer, was a lot stronger and had a lot more willingness to close. So we didn't make a profit. In fact, lost a few thousand bucks, but we got 96, 97% of our capital back from that deal, which is great. We're happy with that. We we've done we've done the same thing where we could have taken down more flips and we could have been a lot, had a lot more money from those flip over the past couple of years, but we chose not to carry a lot of inventory because we didn't want to over leverage ourselves. We wanted to make sure that we could manage during a time like this. We still have one last property in our inventory that we're getting ready to offload. And even if we had to sell that thing, which we won't, even if we had to sell that thing at a, at a major loss, it's not going to take us out. But if we had 10 properties like that, 20 properties like that in our inventory, yeah, it would take us out. And so you have to, as as an investor, you have to have those guiding principles.

Dan Austin: [2:47] And and sometimes it feels like you're gambling, to be honest, which is probably why a lot of us like to invest. This is exciting. It's a way to make money. And sometimes you you win a little bit more on the back end, but you can't win if you're not playing and you can't get in the game if you're, if you're overleveraging yourself. And like I said, it does not feel good in the moment. Mike and I were actually just joking this week. Mike made a comment about how much money we've actually probably left on the table, like hundreds of thousands of dollars in profit that we've left on the table by being conservative. And my rebuttal to that was, yeah, but look at those folks around us that weren't that way. They are desperately clawing to stop the bleeding. While we're sitting here from a pretty strong position, we're pretty strong as a business with capital. We're pretty, pretty well positioned to continue to invest and continue to take advantage of great opportunities. No, we love, we love buying holds real estate. That's what we do. We do flip. We do wholesale that's to continue to, those are to continue to create opportunity for us though. And it's easy to think that. Hey, if I just, if I just buy this flips, it's a great opportunity. I can make $75 instead of $20 on a wholesale fee. That's great. But you do that too many times in a row and you start sitting on properties, you start over leveraging yourself, especially if you're taking other people's money, you get yourself into a bad, bad position.

Dan Austin: [4:08] And then when you are taking other people's money, you get them in a bad position. And you sold them on giving you their money, because you are such a great investor. That does not feel good. So I could just summarize this as a quick episode. I would say, hey, if you felt like you missed some opportunity this last year, because you didn't pull the trigger on something, but you are in a good strong position and continue to invest, congratulations. That is awesome. If you are just starting out, or you are not sure what to do next, first thing you should do is, is have a set of principles. What are you going to do when you get faced with the opportunity to make a little extra money with a little bit more risk? Where is your risk tolerance? Are you going to bet at all? Or are you more interested in continuing to be able to operate in a market like today? Cause a lot of, a lot of folks I talked to out there, they're waiting for today. They were waiting to start investing for today, which is when the market's crashing, which we all can, we can all agree it's not crashing, but it is shifting and it's changing. So you have to be somewhat conservative in your feelings that you can keep operating. Cause I bet you right now, 90% of the competitors in my home market where we're at will not be here this time next year because of the decisions they made during the height of the market.

Dan Austin: [5:20] That that was my Friday focus. Those are my thoughts. Please go out, subscribe to our episodes. Downloads are great for us, and share them with people that you think would love to to to hear Mike and I talk about our world in real estate. You can follow me on Instagram, investormandan. You can follow Mike as well at mikeinvests. And if you would like to learn more about what we are doing in real estate, you can go ahead and learn from us at the instantinvestorprogram.com, or just reach out to either Mike or I, DM us on Instagram. We're happy to share things with you and share with you how we're operating our business. Thanks for listening to this collecting keys Friday focus. Be sure to subscribe wherever you listen to your podcasts.