I started investing in real estate back in 2011. Since then, I’ve learned a ton of ways to make money and LOSE money in real estate. After selling some properties, I now have 2 rentals left in my portfolio, both of which I’m trying to sell to cash out after 1-2 years. One of them is probably going to make me $20k, the other cost me $10k (I hate that sucker). Now, I work full-time on engineering 3 to 5 wholesale deals a month (I believe in quality over quantity).
I love every bit of my life because I get to wake up at the time I want to, and go to bed when I know I’ve exhausted every bit of my energy for the day. More importantly, I work out every day (usually cheat once a week!), so that I could keep the momentum going. When you’re an entrepreneur, you need the physical power and strength to fight the fear and stress that come along every day.
Honestly, I could tell you everything I know and everything I’ve learned from other successful real estate investors (think people who have done over 3,500 deals in the last 8 years). The reality is that I will never know for sure what will happen in the future. Neither do they. I have many ways to mitigate the risks, but that assumes I can account for every single event that could possibly happen in the world, the country, and the markets I invest in. Globalization, for better or worse, is going to throw a wrench in the entire system, and it ain’t gonna be pretty.
Having said that, some investors are obviously doing better than others, so not all is lost. I account for all the common risks to real estate investing, and make decisions after extensive due diligence and research. Am I perfect? No. But would I make more informed decisions than 99% of the world who hasn’t invested in real estate before? Hopefully.
When I first started though, things were rough. I mean the inner stuff: I was afraid, gutless, and just plain stupid. I mean, I had some money saved up, but who would know what to do right off the bat? I wanted to be financially secured, but I had all these stuff holding me back.
And after being in the field for a few years, I realized that I had to blast through a few mental cobwebs, i.e. psychological barriers that stop me from taking enough action to generate good results and make money in real estate. Aka, complete B.S. I tell myself which really are just excuses. There are a few common excuses for people not taking action and invest in real estate, even though we say we want to. Let’s review them (WARNING: painful stuff ahead!):
You may say, “There are so many courses and articles and magazines on real estate investing, I just don’t have time to read all of them!” And unfortunately you are right. I was reading Personal Real Estate Investor Magazine yesterday, and almost wanted to pull my own hair out (although I have really thin baby hair…but that’s a story for another day!). There’s just so much information out there and so many ads telling me what I should do! And, I don’t trust most of them really (at least not yet).
And you might think, “I really need to learn every single thing about being a landlord before I start investing in real estate.” But the problem is, most successful investors I know who have been investing for decades, are still learning even to this day! If you don’t pull the trigger after you get all the basic information down, you will never learn the real lessons. Theory is good, case studies are fantastic (we all love them don’t we?), but until you go out there, talk to people, and put your money on the line, you will not win.
Don’t get me wrong, getting educated is important. I’d spent tens of thousands of dollars on education outside of the formal school/college system. I agree that you should always invest in yourself first. But once you get to about 80%, just pull the trigger. You’ll find the last 20% in the field, not from books, forums, or even courses. And strangely, the last 20% is the psychology stuff, which accounts for 80% of your results. Man, the 80/20 rule again.
Fear Of Making The Wrong Decisions
So many people, including myself, have enormous doubt about our ability to make good decisions. Let’s face it, who has ever taught us how to make good decisions? Not in school that’s for sure – we were supposed to answer questions! Our parents? Maybe…but sometimes they haven’t gone through the same things that we’re going through. Your significant other? Forget it, just focus on making her happy. So the self-doubt is totally understandable.
But if you let this from stopping you to find your dream, you’re really just a wimp! What’s the worst that could happen? Look bad in front of your friends and family? Well, have we ever managed to do something in the perfect way the first time? NO! So why do you think this would be different? In fact, if it’s any comforting at all, I’ll give you the permission to fail, to look bad, and ultimately, to give yourself a chance. The world isn’t giving it to you, so earn it yourself.
Take the risks man. Or accept the circumstances you’re in now. Either way it’s fine, but just choose one. The gray area in the middle is the most dangerous because it occupies your mind and prevents you from enjoying what you have in front of you.
I’m Afraid Of Losing Money
Don’t worry, you’re already losing money by just having money sit in your bank. Don’t get me wrong, I agree with you that you gotta have some cash saved up for the rainy days. And I recently learned that depends on how aggressive you want to be in building your portfolio, you may need to have up to $100,000 in your bank. But other than that, inflation is chewing up your hard earned money every single minute of your life. We’re getting 1% interest on our money in the banks these days, even If you put your money into a property in a solid and nice neighborhood for a 5% ROI, you’re much better off in the long run (in most cases). Fear feels real especially after the global financial crisis, I get that. But the only way you could win is to put yourself out there and find the opportunities and bargains that others are too afraid to notice.
Oh but trust me, you are going to lose money. Maybe some “real estate gurus” want to convince you otherwise, but I just want to be honest with you and prepare you mentally. But as long as you make more money than you lose, you’ll be okay in the long run J Remember, this is a marathon, not a sprint (think stock trading).
Hanging On To Your Old Self
I’ve had my fair share of quarterly life crisis. Identity meltdown felt so real – what am I going to do for the rest of my life?! Am I doing as well as I could potentially be? My income is pretty sad for someone at my age. No, I’d better stick to what I’ve been doing because I’m good at it.
But the fact is, you don’t have to be great at everything – and there’s a good chance you’re not. I know, I know, you’re really good at your profession, and you make a lot of money from it. You’re the “go-to guy” in your office, and that feels good.
But now that you’re in this nefarious realm of real estate investing, you suddenly feel like you’re losing your footing, and you don’t know anything at all. Start from scratch? Ugh…
The uncertainty definitely is the worst, it kills your soul. Do I KNOW it’s going to work? What if this is all just part of a scam trying to separate me from my hard earned money? I’m sick of getting ripped off by financial professionals. I better go back to my own profession, at least I know what I’m going to do tomorrow.
The problem is that if you were happy where you were, you wouldn’t be reading this at all! As humans we always want to grow, psychologically and financially. Progress is happiness. And the only way you can do it is to stop clinging on to your old identity as the “expert” in your profession, but open yourself up to new possibilities, and enjoy the rewards that come to those who are brave enough to learn new things.
Get Rid of Your Excuses
What do you do when no one is looking?
Nobody is going to force you to take action if you don’t want to.
You can feel guilty because you’re not where you want to be, or you can do something today to move your life forward and stop feeling sorry for yourself.
Only you, and you alone, can change your financial situation. Not the government, not the economy, and certainly not anyone else.
I don’t have all the solutions to your problems. Maybe you shouldn’t even listen to me at all because of various reasons. After all, who am I to tell you what to do with your life?
But, if deep down inside, there’s a glimmer of hope that you could do whatever it takes to succeed, and you find truth in what I said, I challenge you to run with it.
Cast away the excuses. Close your eyes, and visualize what it would be like when you finally get into the investing game and win.
There might be some bruises and scars, but it’s fun.
Some people might make fun of you.
Some people might scam you.
Some people might hate you.
It’s all good.
Just tell them, “I took the chance, and I have no regrets.”
And that’s how you’ll start making money in real estate.