Manage episode 278360614 series 123306
To protect himself against a worst case scenario, Shane Garza from Shane the House Buyer had built in a $10,000 contingency plan to replace an aging septic system. But replacing the septic system in a 1962 house is actually not the worst scenario you can find yourself in when you skip the due diligence. Imagine having no septic at all, including no tanks, no way to hook up to a city sewer, and soil tests that prohibit you from putting in a septic system.
After concluding that the only way to fix the problem was to purchase the house next door for $200,000, Shane received a little mercy from another investor. Shane talks about the lessons learned from this septic debacle, including why local networks and local hard money lenders can help you avoid these pitfalls.
He recommends that newer investors get in the back seat and go along for the ride until they feel comfortable. Use those local relationships to find mentors who will steer you away from expensive mistakes. And whatever you do, don’t skip the seller’s disclosure statement from the original seller.
Shane experienced what we like to call “deal bias”. That’s when you’re so sold on a deal that you can’t see the warning signs flashing in front of your face. Today, he’s written up a list of questions that he and his partners have to answer to prevent their emotions from crowding out common sense. If you want a copy of his questions, you can text the word BAD to 313131 for a copy of my mind map for this whole series.
—With the voice of experience, Shane shares questions every wholesaler should ask before signing on the dotted line.
—The big, huge expenses that will sink a house’s profit, including Shane’s own expensive lesson.
—How deal bias will cloud your judgement and what you can do to overcome it.