It is a new week -at least to our calendar. The metro area of Raleigh is clothed in a blanket of ice and a small amount of snow. This has been going on for two days. People have wrecked their vehicles, stocked up on staples, and marshaled for the equivalent of Iwo Jima. We were told that the collective memory holds this moment of pain ten or so years back where the entire city shut down for nine days due to ice. So, people freak out in a big way and clear the shelves of milk and bread and other staples.
The wild thing is that we walked to a nearby movie theater yesterday and watched The Big Short. It was open, and we saw quite a few cars on our little jaunt to the theater. Walking there (about a mile from our house) was a little cold and we were glad for Navy Pea Coats and stocking caps -not to mention the good old BOX BEND hoodie. But the walk back was warm enough that coats were unbuttoned, and stocking caps pocketed. The city had started to warm up, or the wind had died down. Or both.
Now comes the slush and the salt residue.
Which is better? To put down sand and gain traction? Or to put down salt and clear the roads? At first blush the salt or salt brine solution looks like it is the better solution. The roads become clear. The sand approach looks like an inferior solution because it only gives traction. However, things are not always what they appear.
On one hand, the salt solution ends up pitting and breaking up the concrete if not rinsed off in adequate time. As children growing up in the Midwest, we could always tell the line of demarcation between Minnesota and North Dakota by the front quarter panels of the cars. No matter the season, the Minnesota cars seemed to suffer continuously from rusting quarter panels. This was the salt or brine that the state used on the road in winter playing a game of hide and seek, or slap and tickle, in the deeper recesses of the wheel wells. The North Dakota cars were rust free for the most part. But, one did see a good quantity of cars in the ditches in North Dakota winters because the sand was at a surface level only. The sand could and would be tracked off or removed from the surface by cars, trucks, wind, rain or snow.
The Minnesota peeps seemed to be saying, "Our roads are clear -unlike the cave men and women living across the state line in North Dakota." The North Dakota contingency seemed to be saying, "Our cars look good because we don't use a caustic chemical to clear our roads like those Minnesota cretins." Followed by a superior, "We use snow plows and then sand, there ya know." Each state holding fast to that hometown or home-state bias that everyone seems to have. Side note: We once had a friend in LA say to us, "There is no better place. Sun, sand, chicks... why would you want to live anywhere else?" Our unspoken response, having lived in Oxnard, CA for a season, was, "Crime, smog, taxes, traffic... why would anyone live there?" Different strokes for different folks. (Cue the ghost of Gary Coleman.)
The point of all this weak metaphorical business being that we are vying currently for a couple of different properties ranging from lots to renovation candidates. On one hand the turn-around may be quick, but the profits are low. On the other, the turn-around may be long, but the profits are high. Then there are the ones that are spit-balling, they're a guess, or the finger in the wind to gauge direction. Those types suck because the whole process is reduced to a best guess scenario. How do Midwestern boys or girls, or any boys and girls make the right decision?
Well, it is like so much slush or salt. Underneath all that crap is the road one wants to be on. The decision on how to get to that road is first one of analysis of a few items that we can quantify:
Resources -Do we have the funds to see the project through? Can we handle any contingencies? Are we prepared for two days of crap instead of one?
Risk -Can we stomach or handle the worst case scenario? Moreover, have we laid out the worst cast scenario? What if that renovation is a a teardown because of all the garbage we are not seeing or detecting? What if the whole project is a failure and doesn't sell? What if we run out of cash? (Remember, profitability doesn't make or kill businesses. Cash flow does.)
Time -What kind of daylight are we burning on this thing? When we are done, will we be ahead of the alternative move?
So our best free advice is that anyone interested in this business takes a snow day or two to break through all the slush and salt and crap on the road. Do some analysis of which solutions are viable and, of those, which ones make the most sense for the resources, risk tolerance and time at hand. Do a matrix of possibilities. Ask Neo to plug you in and work through the realities of this world before trying to jump to the next one. This matrix should go so far as to list out contingencies in terms of time and resources. It should include the calculations on ROI and the hard line approach of erring on the side of conservatism, instead of going all liberal and la-la-land on the returns. "Worst case scenario,"should be a part of the lexicon.
Then it is time to pick the poison of success or failure. The results may not be improved by doing all this work, but the chances are pretty good that the road will at least provide traction, and at most be clear (even if it is just for a little while). The thing is, a choice needs to be made. Paralysis by analysis is like repeated applications of salt brine directly to the car. Forget the road, pal, the car will be gone in short order. You'll be hoofing it... waiting for that wind to die down and things to warm up.
Please check out our main site: WWW.BOXBEND.COM
This site is for informational purposes only. We do not guarantee anyone's performance in the house flipping, or transformation, or investment arena of real estate. Invest in your own ideas and projects at your own risk.