Change is hard.
You’re stepping out of your comfort zone and there’s a lot of unknowns. It’s natural to have concerns and worry about a big change in your life.
The question is… are you going to let that fear get in the way?
Most of you who aren’t actively investing yet are working your normal day job and it’s steady, reliable, and routine.
Except, you want more.
More for yourself.
More for your family.
More for your future.
Real estate investing can be extremely profitable as you get more deals in your pipeline.
The best part is that more deals doesn’t mean you have to work more. In fact, it’s usually the opposite because with volume comes processes, a system, and a team. Once you have these 3 things in place, your business can be securing and closing on deals without you ever visiting the property.
Getting from “I want to do a deal but have no clue where to start” to “I’m doing 5 or more deals a month and am working 20 hours a week” can seem like a daunting task.
It can be enough to stop potential investors from ever meeting with a seller.
That shouldn’t be the case.
Let’s break down various fears that get in the way of your real estate investing success.
Fear of Failure
We’ll be honest here.
Not every deal will be a home run.
Not every deal will make you a profit.
It’s okay! Learn from your mistakes and do better next time. It also helps to learn as much as you can from other investors’ successes and failures.
Knowledge and experience help best here. Since you don’t have first-hand experience yet, focus on what other investors are doing in the area you want to invest in.
If you go to a REIA club meeting in your area, interact and ask the questions you want to know. Most people will be more than happy to share some of their experiences with you.
Don’t walk into this business thinking there won’t be ups and downs. Instead, learn as much as you can so you can be better prepared for anything that’s thrown your way.
Fear of the Unknown
This is a big one.
If you’re coming from a stable income that is very “safe”, it can be a tough leap into the self-employed world.
The good thing is that you don’t have to leave your normal job in order to get started in real estate investing.
Work your way in.
Sure, you’re going to be putting in hours after you’re home from work, but that’s part of the transition.
Get a few deals done to build up a cash reserve to last you while you’re getting ready to leave your normal job and moving to investing full-time.
With real estate investing, unless you have rentals bringing in monthly cash flow, you have to get used to the sporadic lump sum checks. This means planning out your budget and having enough reserve to last you ideally 6 months between deals as you’re getting started.
Fear of Losing Money on a Deal
Again, it could happen. Especially if you don’t properly budget on a rehab deal.
It’s critical for you to know how to properly analyze a deal so you know what you can offer and still make a profit.
Some deals will be thinner than others, but if you can build up the amount of deals you’re doing, the impact you feel will be less when you have a deal go wrong.
With rentals, you have to account for vacancies. If you only have 1-2 rental properties, having a few months with no tenant can put you into negative cash flow temporarily.
Screening for the right tenant can be helpful so that your vacancy rate is reduced.
For rehabs, pricing out what every repair and upgrade will cost (including labor) will be important. Give yourself a buffer in your budget for repairs you miss or that end up being more expensive.
Most investors also use some type of financing so that all of their cash isn’t tied up in real estate. Using other people’s money gives you flexibility.
Fear of Overpaying
Making your first offer can be terrifying.
Are you offering too much? Too little?
Research comps in the area and drive through the neighborhood so you know generally how the particular property compares to the rest of the comps.
Get comps that are recent, in the same neighborhood, and are about the same size.
Is there anything to make the value go up or down? Think about the size of the lot, the location of the lot, square footage, if it’s been well maintained, if it has a pool, etc.
If you’re really worried about your offer, be honest with the seller and let them know you’d like to add a termination option in the contract so that you aren’t tied to the contract.
Don’t submit an offer that you can’t follow through on and close unless you have an option in the contract to terminate.
As you go on more appointments and get to know the neighborhoods better, knowing what you should offer will get easier.
Don’t Let Fear Win
As you get a few deals done, you’ll become more familiar with what works and what doesn’t work. Your fears will go away as you gain confidence in yourself.
If you’re ready to start doing deals but need a mentor to guide you along the way, you should check out the Investor Machine. It’s FlipNerd’s coaching program set up with training videos, group coaching calls, a network of other real estate investors, and you get access to the systems we use every day.