I love fantasy football. In a lot of ways, it’s a really fun excuse to keep up with what’s going on with more than just my team but with the whole league. It also gives me a feeling like I’m actually a part of the game, and a little bit of competition with the guys is always a good time, too. But I was thinking the other day about how real estate investing is actually a lot like fantasy football and how your annual draft might actually be able to teach you a lesson or two about flipping houses.
Always Do Your Research
First of all, if you go into a fantasy football draft without first researching your players, you’re going to be in a lot of trouble. Your star quarterback from last year might have been injured in the off-season. If you weren’t paying attention, you would probably pick him just because he was great for you before and no one else is going for it.
House flipping is exactly the same. If you fail to do your research on a flip, you’re risking major problems. For example, you might find a great deal on a property that actually doesn’t need much rehab work. And, when you flipped a house in that neighborhood last year, the market values were really good. However, if you don’t do your research on the local market now, you might not find out that there’s a huge highway set to go in right next door with a lot of new noise but no new access points. Suddenly, you’re looking at buying in a market that’s set to fall – bad move. Always do your research on every aspect of a flip before you commit.
You Have a Limited Roster – And Not Everyone’s a Quarterback
Now, look at your flip properties as players on your roster. In fantasy football, you have a limited roster and you can’t keep adding players after you’ve filled it. The same is true for your real estate investing business. You can only take on so many flips before you can’t efficiently and confidently manage them all. Grow your business slowly and deliberately, and if you’re starting to feel like you’re taking on too many properties, it’s probably time to either hire more help or slow down and scale back (if your current flips are successful, I recommend going with more help).
Moreover, not every flip is going to make you half a million dollars or more. Some of them are going to be easy, fast flips that aren’t quite as profitable. You can think of flips like these as your kicker. You don’t always go for them, and they won’t get you rich, but they’ll save you in a pinch and will always make you at least some money.
Don’t Stick with a Loser
Finally, if you get Eli or Payton Manning on your roster, you’re probably going to be pretty excited. If they keep performing poorly and don’t get you the results you want, don’t hold onto them just because they’re popular and have done well in the past.
Holding onto a popular player who’s losing you points is a bad idea in fantasy football, and it’s a bad idea in house flipping, too. If you have a house that “should” be selling for a great market value, but it just keeps sitting on the market with no interest, it’s time to let it go and drop your price. If you don’t, you’ll just be hanging onto a losing proposition, and that’s always bad news in the world of real estate investing. Next time you look at your fantasy football draft, think about how it might be a lot like your flipping business and how you can improve both with these lessons.