Mobile Home Park Mastery: Episode 220

Guarding Against Paralysis By Analysis

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It’s hard to make important life decisions. But it’s even worse to avoid them. In buying a mobile home park, at some point in the diligence cycle you will have to make the choice to go forward or not. Many buyers can’t get these steps completed because they won’t stop second-guessing their decisions or agreeing that they have even completed their calculations. This is called “paralysis by analysis” – basically avoiding making decisions using the excuse that you are still working on the answer until the opportunity passes. In this episode of Mobile Home Park Mastery podcast we’re going to drill down on the sources of this indecision and putting together a framework to help bring it to an end.

Episode 220: Guarding Against Paralysis By Analysis Transcript

There's an old term called paralysis by analysis. It really means procrastination against making decisions. This is Frank Rolfe, Mobile Home Park Mastery Podcast. We're going to be talking all about the concept of paralysis by analysis, what it is, what's really going on, and then how to fix it.

Let's first start with what it is. When you have paralysis by analysis, what you do is you keep overanalyzing everything. You run the numbers, you run them again, you run them again, you run them 55 more times, thinking somehow, through the exercise of running the numbers, something will change. Maybe you missed something, maybe there's something that you forgot and will suddenly come to mind and make those numbers leap forward with greater amount of net income. What the problem is, is in all the time you spend running or re-running numbers and pondering life, and reading up on things online, eventually, the opportunity passes. Because you see, we all face time urgency in life. "Time kills deals" is one of my favorite expressions, and it means if you don't act now, somebody else will, they will take that deal away from you. When you're constantly second-guessing yourself, you just can't make decisions. And if you can't make decisions, you can't move forward ever in buying a mobile home park.

Also, what happens when you have paralysis by analysis is you let one part of your psyche get the best of you. All of us have different things going on in our brains at any one time. We have that risk-taking part of us, the pessimistic part of us, the impulsive part of us, you can't just let one dominate. It needs to be more of a democracy, you need to have a vote of all the different fractions of your brain and what they think you should be doing. But when you get in that paralysis by analysis, you're letting just one part of your anatomy take over, and that's basically fear. And that fear will ruin you because that fear will cause you to miss opportunities constantly. When you look back years later, you'll say, "Gosh, I should have bought that mobile home park." What stopped you? Well, simple, you let the fear dominate your thinking. You had other aspects you should have considered, other ways you could have maybe said, "You know what fair, you are not the sole decision-maker," but yet you didn't do it.

So what can you do? What can you fear? What are you really fearing? Let's first focus on that. Let's see how great those fears really should be. The first one is fear of your own knowledge, your ability to make a good decision. Well, that's reasonable enough. Certainly, any of us would be a fool to invest ours after tax money and things we don't know anything about. I think there's a word for that; it's called gambling. Any moron can go into Las Vegas, and they can game on anything they want, from blackjack to roulette. They can put money in the penny slots, it doesn't matter. There's no education involved at all. All you have to know how to do is how to insert the money and pull the handle, how to go ahead and tap on the table and put down chips and get some cards. And it's reflected in how people do. Almost everyone I know who ever gamble's loses. There are a few people out there who may claim they made money. But I would assert that if you took all the money they spent gambling and then subtracted that from whatever they supposedly won, they'd all be in pretty much the negative column. So that fear is correct. All right, yes, you do need to be educated. We'll talk about more in a moment.

What else is holding you back? What other fears do you have? Well, many people have this fear of sticking their neck out. They don't like to take risk. Probably it ties back to a childhood where maybe they were criticized constantly by their parents, or others who said, "Oh, that was so stupid. How could you have done that?" But the problem is you only live once and you're in charge of your life, and you can't let other people and your fear what they would say hold you back from doing great stuff. You all heard about businesses called "purple cows" where people think outside the box. Many of the things we have today, such as FedEx, started off as a purple cow. Fred Smith, when he started FedEx, everyone thought he was a complete idiot. But he did it anyway because he thought it was a great idea. And in the end, obviously he proved to be correct. But to make advancement, you have to stick out your neck. There's an old saying, "Behold the turtle to make progress. It has to stick its neck out." Well, we're all like turtles. We have to get out there and risk something, do something in order to attain success. That's just the way it works.

Another thing we fear is just peer pressure itself. Many listening to this have neighbors and McMansion neighborhoods. You tell them, "Oh no mobile home parks, that's stupid. You'd be crazy to buy one of those things. No, you need to go ahead and buy stock, stock in all these great new companies and Bitcoin." Right? "I hear Tesla's going to go to 50,000." The problem those people are dead wrong. And if you listen to them, you'll do about as well as they will, which is typically not that good. So don't let people put you down for doing something like buying a mobile home park. That's how it was what about my first mobile home park. Every single neighbor I had down in Dallas told me it was the dumbest idea they had ever heard. One person told me "Well, you'll probably be murdered in your first week." And I said, "How do you figure that?" "Oh, you know, it's kind of like owning a convenience store on the wrong side of town. You'll probably get some kind of gunfight in the first day or two." That's why when I got my concealed handgun license, this person had me so spooked that I was doomed. But you've got to break out of all those fears, those fears are not going to get you anywhere.

So how do you break out of your fears? Well, number one, yes, get educated. Go to our boot camp, read a course. And if you don't want to spend any money at all, at least read everything, we've got free a or you can find online. But learn what you're doing before you do it. Learn how mobile home park works. Learn about the infrastructures, and the density and locations. Learn about the values, understand what a parking home is. Maybe go to a mobile home dealership and look in a few homes. Drive through a lot of mobile home parks, maybe get out and park and walk around some. Talk to some owners if you like. But yes, you do need to get educated, there is absolutely nothing you can do that will help you break through your paralysis by analysis more than having faith in yourself. Having that education is definitely the first step in gaining that faith in yourself. But there's much, much more.

Number two, you've got to understand the basic laws of risk and reward. All of us take risk every day. When you back your car out of the driveway, you're taking a terrible risk. Driving your car gives you one of the highest likelihoods of getting killed. So if you can't stand the fear of getting killed, well, then you can't drive a car. But yet you do. And why do you do that? Well, you understand the risk, and you understand the reward that if you can't drive your car, you basically can't be a part of society. And you mitigate that risk by making sure you have air in your tires, your brakes work and being a good attentive driver, and being a defensive driver.

Now, Sam Zell is a master of understanding risk versus reward. He's also the largest owner of mobile home parks in the United States. He tells everyone, you should always do things that have high reward and low risk. And you should never do things that have high risk and low reward. And then you should always ponder very carefully those things that have high risk and high reward. So you have to understand that it's okay to take risk, as long as the reward is commensurate with the amount of risk that you are taking. It is perfectly reasonable and understandable for you to invest in something that you believe has a very, very good chance of changing your financial future. And at the same time, it's a terrible idea to invest in something that has very little chance of success, that has very, very high risks. You need to understand that paradigm and where to place each deal you do into that to make sure there is a healthy balance in risk and reward.

Another thing that I find to be the most important for both myself and others to outdo and get out of that whole trap of paralysis by analysis, is doing what I call the best case, worst case, realistic case study of any deal. Now, what does that mean? Well, you look at your best case, that means what would happen if the deal went brilliantly perfectly, you hit every single budget that you had. And you say, How good would that be? And you say, Oh, wow, that would be really, really good. Then you look at your worst case scenario. This would be if nothing went your way. Now you can't go too far off the extreme. You can't say well, the day after I buy it a tornado wipes the park out. No, as big a pessimist as I am even I admit, that's probably not fair. But if you say, Well, my goal is I'm going to fill 20 Lots, then let's just imagine what if you filled none. Maybe you say well, I'm going to go ahead and raise the rent $50. But then let's just say we go to a major depression and you get cold feet. And yeah, well, I just raise it $20. What happens in those cases? Can you still cover your debt? If the answer is yes, and you don't have negative cash flow, okay. Now I'm feeling better. Then I look at my realistic case, your realistic case falls somewhere between your best case and your worst case. Not everything you wanted to have go your way did, but at the same time, some of it did. And if you look at the rest of the realistic case, are you happy with that? And if you can truly say to yourself, "I can survive the worst case. I will be ecstatic with the best case and I'll be very happy with the realistic case," well, then I think you can proceed because you very, very well bracketed what the outcomes will be and that should hopefully reduce your fear.

Finally, what is your gut instinct? We all have gut instinct. In primitive times, the times of cavemen and cavewomen, we had this instinct of fight or flight. Every time a person approached you or an animal, you were able to figure out, "Uh-oh, this could be a life ending moment. And I better run or wow, that might be dinner, and I'll maybe try and fight and grab that antelope or whatever the animal might be." But we all have since the beginning of time, this instinctive nature of making good decisions or to avoid making bad decisions. If you do the proper due diligence on any mobile home park, you will at some point in the movie form that feeling, is it a good feeling? Or is it a bad feeling? And if you have that good feeling, and that is a feeling built on education, and understanding risk and reward, and understanding your best, worst and realistic case scenarios, then it's okay to proceed. The bottom line is you have to trust yourself.

So my answer to the question of how you get out of paralysis by analysis is very simple. You have to learn to trust yourself. You have to have faith in your decisions that you can make good decisions, and as a result, those good decisions will help you carry through to that final moment of starting the closing documents. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.