ing and education. They are going to do a lot of different things. They may even seek out a formal mentor to give them the new ideas, the skills, the talents and the resources to get through that challenge. Those are the characteristics of a re- sponder. The responder moves forward; the reactor will fall backward. I’ll give you a quick tip that applies to this: Be persistent and consistent with your advertising. It cannot be negotiable. It’s not something to pull back on, or abandon. When the going gets tough and the deals get fewer and farther between, you have to keep your advertising going, and you can’t let up when it comes to investing your time and money and sourcing those deals. SCENARIO NO. 2 THE TROUBLED REHAB Another example that you will
ultimately come across is the troubled rehab. For the reactors, if that rehab project gets tough and it starts going sideways, they will end up cutting corners to save money. Or perhaps, they just keep throwing more money at the problem. Maybe the rehab is more expensive, or maybe the house needs a roof that was never anticipated, or maybe it’s taking much longer than it was supposed to, or maybe a contractor is not working out as had been hoped or planned. The reactors are going to be- have in negative ways that probably will only compound a negative outcome. On the other hand, the responders are going to take a calculated action. Maybe they are going to replace that nonperforming contractor. Or may- be they see they are going to have to reduce their profit margin. “OK, so it
needs a new roof. Well, luckily I bought it correctly, so I have enough room in my numbers to be able to replace that roof, and I will be fine. I may not make as much, but I will still make a profit on the project.” Or maybe those responders are going to change their exit strategy: • “I’ll switch gears and make this a fix-and-flip and sell it full retail.” • “Maybe this will just be a ‘wholetail’ deal where I will sell the home on the retail market, but it won’t be fully rehabbed.” • “Maybe I will wholesale it as-is. I am going to stop right now and not compound the problem. I will sell it off with the work that has been accom- plished at a much lower rate to a cash investor, and he can finish the project.” • Or maybe it becomes a rental. • Or maybe the responders sim- ply stay the course, overcome the obstacle and ultimately produce the results they are looking for. I’ll give you another quick tip based on my own experience for that time when you do come across that chal- lenging rehab project. Maybe you find yourself in the scenario where you paid for a house and you know immediately after you close on it that it is going to be a challenge. Never try to rehab your way out of that bad buy. You are going to have to make some quick decisions, though. “Wholetail” it, wholesale it, keep it as a buy-and-hold as a rental perhaps, but do not throw more money at it and try to rehab your way out of it. You are guaranteed to find yourself with a troubled rehab project. SCENARIO NO. 1 GETTING STARTED I saved this scenario for last, because it’s important. Let’s determine whether you are a responder or reactor when it comes to just plain getting started as an investor. Are you sitting on the sidelines right now? Or did you dive straight in and become that part-time investor you want to be?
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