Editor’s Note: Welcome to the companion article to Episode 3 of the MHP_IRL podcast! The purpose of this article is to expand your podcast listening experience with additional content. Companion articles will unpack larger concepts that we talk about during each episode that will give you practical and most importantly, actionable advice that you can apply to your MHP investing journey.
“I’m going to completely lose my shirt, what did I get myself into”
I stared up at the ceiling, and said it outloud into the darkness. My wife was fast asleep next to me, blissfully unaware of the panic that sat in my chest like a 1,000 pound anvil. Anxiety ate away at me and made sleep impossible. “She’s going to hate me, I’ve failed us” I thought nervously. Here I was, only on my second MHP deal, and I had to sit her down and explain that I’m about to lose all of our money.
Ian and I had just spent the last few weeks weaving our way through a massive water issue at our newly closed deal. At first, the water leak didn’t intimidate us. “Expect the unexpected!” we thought at the time, not realizing how naive we really were to the massively complex issue that would unfold before us.
But here I was, I spent the day (and many days before that) making phone call after phone call that all got me to the same conclusion..
You’re completely screwed.
Even though nobody said it outright, I sensed exactly what they were thinking every time I spoke to someone else about the water repairs. “Sorry can’t help you, and boy I’m sure glad I’m not you guys right now!”...
It’s 2021 now, and at the time of writing this I’m more than 3 years removed from that terrible sleepless night. But writing these companion articles has given me a lot to reflect on from those early years.
Allow me to set the scene for you...
Shortly after we closed on our second MHP deal, Ian and I realized that we had a water issue. We just didn’t realize at the time how BIG of an issue this was going to turn out to be. With every turn, the issue got worse and worse, and the repair bill seemed to grow exponentially with each new piece of information we discovered.
Even though this was our second deal, it was really the first time that we were closing on a park without an experienced park owner on our team. We did everything right, checked every box on the due diligence list, but somehow, we missed something. And that something turned out to be a $100,000+ water system repair.
To make matters worse, not a single plumber in the area wanted to touch our problem. It was too complicated, the blueprints for the original system were non-existent, and the system was a mess.
I go into great detail about the water issue in this episode of the podcast, if you’re interested in learning just how bad it was (hint: it was really friggin bad).
In this article, I share with you some of the takeaway lessons from our due diligence nightmare.
Everything still turned out fine
Yes, the water issue was a struggle. Partly because the nature of the problem itself was extensive, but also partly because Ian and I were still so inexperienced at the time. It was only our second deal, and we hadn’t had enough experience as park owners yet to know how good deals can go bad.
But, at the end of the day, the sky didn’t fall. And I am sitting here, from the comfort of perspective 3 years later, to tell you that I did NOT lose my shirt (nor do I lose a wink of sleep over the issue today).
What I learned from being in the trenches on this nightmare is that every single problem that you encounter does have a solution.
Some problems require more time, energy, and sheer force of will than others. But there IS a solution somewhere along the line.
If you learn to be absolutely relentless in your problem-solving and creativity you will always find a way to come out of a bad situation in one piece.
Today, Ian and I are well aware that there’s a possibility that we’re missing something during our due diligence process, that there may be some unforeseen issue that arises. But we are prepared for that eventuality, and we don’t let it stop us from closing deals and making money.
Fear will hold you back more than anything else
The real estate market is full of competition, this is probably even more true today than when this episode was recorded in 2018. Understanding how to quickly and efficiently analyze deals has to be a skill you hone incredibly quickly in this industry.
And once you’ve found that diamond in the rough, you’ve got to execute. Before a more fearless investor comes along and snaps up your opportunity.
This situation taught me to walk hand in hand with fear daily as a business owner. To make it as familiar to me as my morning cup of coffee.
Because there is no such thing as overcoming fear, you simply learn to quiet the voice and trust your instincts.
I am here to tell you today that any action that you don’t take because of fear is going to cost you so much more in lost profits than any mistake that you might make.
In this industry it’s called analysis paralysis and it’s very real. Don’t let yourself get caught in the trap. You’re never going to have every bit of information you need to execute flawlessly. The more comfortable that you get with that unknown, the better off you are.
Do your homework. Lean into the fear. Execute your decisions.
Anything that can go wrong, will
Otherwise known as Murphy’s Law--there’s a reason that mathematicians tout this logic as sound, eventually everything can and will break down. It’s not a fact that we can hide from in life, and MHP investing is certainly no different.
In your own investing journey, you will save yourself time, energy, and sleepless nights if you just accept this now to be true. And in my opinion, you can actually find some comfort in this statement as an investor.
It means that no matter how prepared you are (or like in our case, how sound your due diligence is) eventually, you’re going to run into problems. And it’s not a reflection on YOU. It doesn’t mean you’re a failure. What matters most is how you handle the struggle.
Are you able to keep your head about you? Examine every angle, and decide on a plan to fix your problem?
If you can keep this perspective as you move throughout your investing journey, you’ll be better equipped to stop the panic when a situation arises.
Remember investors, due diligence is a necessary process, but it is by no means a hard science. There is no way for you to see everything that can possibly go wrong on a deal. I encourage you to get out there, get in the trenches, and allow yourself to be banged up a bit. You’re going to learn so much more along the way, and take it from me, you’re going to come out okay!
Check out the MHP_IRL podcast for more stories about my personal investing journey with my company Archimedes Group.