Ep 77: There’s no such thing as pencils down

I was speaking with my mentor, Chris Powers, who is a familiar guest on my podcasts. We discussed the concept of pencils down, which in real estate means you’re pausing operations on things like new deals or development. I mentioned that it’s hard to make good deals in this environment, and we’re thinking about going pencils down for the time being. Chris told me why pencils down is the most BS term in the world.

The market doesn’t always allow you to constantly buy deals, refinance, and make money. The last two years have been incredible, everybody has been making money, but now things are getting hard. Interest rates are up, prices aren’t budging, and people are getting discouraged. But successful real estate investors, the ones who make money in the long run and build a firm that lasts decades, fight through both the good times and the bad times.

Stop complaining, and take pencils down out of your vocabulary. Understand that things will slow down, but you need to stay aggressive. We need to constantly underwrite deals and do the work to find deals while other groups get defeated and go pencils down. When other groups take their head out of the game and stop doing business, we’re going to get going.

After talking with Chris, I called my acquisitions team and said let’s turn it up a notch. The last six months have been extremely slow, but we’re going to keep underwriting and get offers in front of brokers to see what we can track down and buy. Sometimes real estate is fun with everybody finding good deals, and other times it’s a slog, but the best investors work hard year in and year out, making offers and finding deals.

I’m also going to use this opportunity to fine-tune the service inside the business, invest in our facilities, and make the company more efficient. When the deals slow, we can still increase the value of our operations. Successful people will avoid going pencils down, they’ll power through and keep things flowing, knowing that the market will always be cyclical.

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About Me

I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship.