Are you familiar with rent rates in your area?
d.
Do you have strategies to increase the profitability of a given property?
e.
Can you create an accurate pro forma for a best case, realistic case, worst case, and nightmare case scenario?
f.
Do your numbers have padding and reserve accounts built in?
6)
Negotiation Skills (score 1 to 10)—Great negotiation skills can make the difference between an average deal and a spectacular deal. Negotiating is the key to getting a no-money-down deal, equity on day
Money people deal
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one, or excellent terms.
a.
When negotiating, do you focus on a win-win scenario or a win-lose scenario?
b. Do you learn the motivation of the vendor when negotiating?
c.
Are you able to properly present a terms deal and get it accepted?
d.
Do you formally study negotiating and recognize it as a skill that requires constant improvement?
e.
When negotiating, do you “give and take” as circumstances change? Do you offer strategic trades to get what you want?
7)
Closing Skills (score 1 to 10)—Closing is a skill that can make the difference between a profitable deal done and no deal done.
a. Do you operate with short, written-down deadlines?
b. Do have a hard or soft closing style?
c. Do you always make a point of asking for the business?
d.
Do you follow up with team members to ensure they’re finishing important tasks?
e.
How do you handle objections? Are you able to create win-win scenarios for everyone?
Action Step: After you have evaluated the seven skill sets required to play Money, People, Deal, organize the skill sets from strongest (scores closest to ten) to weakest (scores closest to one) and determine your strengths and weaknesses. Your top three strengths should be your greatest skills that you bring to your team and your three weaknesses should be the skills that you delegate to other team members. Remember, no one is perfect, and we can’t be excellent at all seven skill sets—it’s impossible. Focus on your strengths and delegate in the area of your weaknesses to run your business efficiently.
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Chapter 5
Risk Tolerance:
How Do You
Personally
Define Risk?
I
n life, there is no such thing as a guarantee. Everything we do always has an element of risk, even everyday actions like driving to work or
crossing the street.
I googled the definition of risk, and this definition came up from thefreedictionary.com:
risk (rsk)
n.
1. The possibility of suffering harm or loss; danger.
2. A factor, thing, element, or course involving uncertain danger; a hazard: “the usual risks of the desert: rattlesnakes, the heat, and lack of water” (Frank Clancy).
3.
a. The danger or probability of loss to an insurer.
b. The amount that an insurance company stands to lose.
4.
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a. The variability of returns from an investment.
b. The chance of nonpayment of a debt.
All of the definitions above involve some form of loss, hazard, suffering, and an element of variability, probability, or chance. What I find intriguing about risk is that every single person I meet has a different subjective definition. Often, when I am discussing risk with another investor, I will ask what their personal definition of risk is. More often than not, investors will define risk as the chance or probability that they lose on an investment. This common definition is sufficient, but I find it to be an unsophisticated definition because it does not address control.
Robert Kiyosaki, author of the Rich Dad Poor Dad series of books, says that intelligence is the ability to make distinctions. The more distinctions we can make, the more intelligent we are. For example, there are over 7,500 variations of apples in the world. When it comes to apples, I am unintelligent and can only name a few variations: Red Delicious, Granny Smith, crab apples, and Macintosh. A person who can name one hundred variations of apples is much more intelligent than I am on the subject of apples. When I hear a person’s definition of risk, I can immediately find out what their sophistication level is when it comes to business and investing.
My personal definition of risk has changed many times throughout my life. I used to believe in luck, and now I do not. All I believe in is actions performed and numbers. Life and business are a numbers game; if you can produce the volume and hit the numbers, you will succeed every time. There is no luck.
My definition of risk is an inventory of the elements that are under your control compared with an inventory of elements that are out of your control.
Ask yourself, Am I comfortable with my degree of control? If you are comfortable, then you may proceed with the risk. If you are not comfortable with the degree of control, then do not proceed.
My definition of risk has two primary distinctions that the average definition does not:
Risk Tolerance: How Do You Personally Define Risk?
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1)
My
