Decision Making for Successful Real Estate Investing

"Once you make a decision, the universe conspires to make it happen." ~ Ralph Waldo Emerson

"Nothing is more difficult, and therefore more precious, than to be able to decide." ~ Napoleon Bonaparte

How many times have you or someone you know been gripped by fear and indecision, which ruined an opportunity for you in business? If you're like most real estate investors and business owners out there, this has happened quite a few times and will continue to happen if you don't do something about it. My University Professor described it to us as "Analysis Paralysis" or the inability to make an investment decision because of the sheer quantity of information to be taken into account, as described by MSN Encarta. You spend so much time trying to analyze data and make sure you know everything about the investment that you end up doing nothing. This is opportunity cost and there are real dollars lost here. Here's the secret about successful business people and real estate investors. They NEVER know all of the data or information before making a decision. Sure there may be times that they know most of the information but successful investors make a decision with only 20%-30% of the information at any time. You make an educated decision and you move on to the next decision. The cost of analysis paralysis is too high and the cost of making a few "not exactly correct" decisions is too low. You may be reading this and asking yourself, this is great but how do I get from where I am to where I need to be?

Start out small in your quest to being an ultra-effective decision maker. We are ingrained with the belief in school and other institutions that we can't make mistakes and that we should avoid them at all costs. Fear of making a mistake is what leads to our inability to make effective decisions. One book that I recommend for learning simple ways to make effective decisions is the 4 Hour Work Week by Tim Ferris. This book is so much more than that but it has some great tips for decision making, some of which I'll share with you here. Start with the simple decisions in your life. What are some simple decisions that you make on a daily basis that not only waste time but help to propagate your inability to make quick decisions? The one I see most is the decision on what to eat. Whether it's at a restaurant or at home, many people cannot make a quick decision. They look over the menu for 10, 15, sometimes 20 minutes or more to make a decision on what to eat. How hard can this be? If you can't make a quick effective decision on what to eat, how do you ever expect to make an effective investment decision? I have found the process of forcing yourself to make a quick decision on what to eat one of the most helpful ways to get started in effective decision making. This may seem simple but if you find yourself vacillating on decisions, this will help. Another fear that grips otherwise savvy investors is doubt over the "what ifs'"

If you plan on asking "what if" about everything you can think of before making a decision, plan on not making many effective decisions. There are more variables in most investment decisions than we can hope to plan for. What you have to do is find out what is relevant information and what is just noise. Relevant information in a Detroit Real Estate Investment decision is knowing the price of the house, the condition of the house, how much it costs to fix the house, and what the value of the house is, etc. Noise is "what if a tenant trashes my house?", "what if the house gets vandalized?", "what if it takes an extra month to get my house rented?", "what if a meteor hits my house?", you get the idea. I'm not saying you shouldn't plan to succeed and mitigate risks with your investment but you should be working your system or someone else's system that has been successful doing the same thing. You also need to DECIDE two things about these "what if" questions. What is the likelihood that it will happen and what is the impact if it does happen? In most cases you will find that the combination of the likelihood of it not happening and the impact being small make these "what if" questions not even relevant.

My advice is to make effective, quick, well educated decisions. I don't want you to run out and start making rash decisions but keep in mind you don't need to have 100% of the information to make a good decision. Start out small and once you find that the world doesn't end when you make a decision without all of the information, move up to your bigger decisions and flourish.

Successfully Yours,

Jared Pomranky

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