004: How to Minimize Losses [Podcast]

This a strategy session! We’ll look at how things can take an unexpected turn, how to minimize the potential for things to go wrong, and what to do to keep your cool when they do.

Strategy at DiscreetInvestors.com

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Introduction: As you know, investing is risky. There are no promises or guarantees, ever.

Loss Mitigation deals with the ability to see the risks before they happen, but how do we reduce risk for investors?

Here are 7 things I think are vital to reducing the risk as investors:

  1. Low LTV
  2. 1st vs. 2nd Position
  3. The right borrower
  4. Control all rehab money
  5. Insurance – Force-Placed
  6. Diversity – Smaller, Outside of one town, Short term vs. Long term
  7. Trusts – critically important!  Separates you & the borrower from the property

But what if something goes wrong?

  • Don’t freak out
  • Take Action!!
  • Get clear on your options:
  • Honey vs. Vinegar Work with borrower, sometimes –
  • Know your rights this allows you to move forward: (Foreclosure, bring a 1st mtg current? LEARN/Know your options)
  • Be flexible with what you’ll accept – Don’t be a schmuck and let them walk all over you
  • Get Creative! You made a seemingly good investment. But sometimes things DO happen.  Need to be ready for them to rear their ugly head,
  • Talk to 4 people: Get help from other trusted opinions
  1. Realtors/Appraiser – Get a value, average days on market for this kind of property
  2. Title company – get clear on the liens/judgements
  3. Contractors to see (if any) rehab is needed, how much, how long.
  4. Other investors in your market to bounce ideas off of.

Summary: Clarity is POWER. But getting clear isn’t the only thing you need to do. Remember – you’re investing and need to minimize losses – use the people/tools/knowledge available to you.

Rehabber tip: Finding the right balance between saving money and building more value is always a challenge. Bathrooms are an area of improvement that CAN reap rewards when you’re selling.

Listener Questions: The first question is from Pamela a real estate agent in South Carolina: She asks, “What is the criteria for getting an investor to invest in an individual who buy’s and flip homes? I have a few clients who need money for their projects.”

This second question is from Raymond. He writes, “I’ve read your post and I am interested. My financial background is not too spectacular but I have learned to manage and would like earn more money to become debt free. What books and resources can you refer me to?”  Here’s a list of excellent books that I highly recommend (Yes, some 0f these are affiliate links):

Now, I’ve got a couple of questions for you: 

  1. Whats your biggest fear when it comes to investing?
  2. Have you had to take a property back?  Did it end up as a good thing, or did you still loose money on it?

To answer these, please scroll down to the comments section


Finally, I’m excited to have my very first interview, and I’ll be interviewing attorney Lynda Sands. She focuses on Trusts here in Southern California and is someone that I’ve started to do business with. Lynda’s knowledge and experience is a fantastic resource for investors and homeowners interested in asset protection for their properties and families.  I look forward to the interview,  and we’re definitely going to give you some great take-aways!  Make sure you tune in. In the meantime, you can learn a little more about Lynda at assetsentrylegal.com.

Plus, I’ll have a few tips on how you can start investing to earn some quick capital of your own!

I’d also be honored and very grateful if you would rate my podcast on iTunes. Its a tremendous help in the visibility of this podcast. People who haven’t heard it can discover it. I’ll have a link in the show notes.


If you’d like to comment on this episode, please scroll down to the comments section. I would love to hear from you— feel free to leave a comment, ask a question, or tell me your thoughts.

Thanks again for listening, and – Keep Moving Forward, my friends! 🙂