Real estate investing is like anything else – if it were easy everyone would do it. So let’s avoid some bad habits that form when you are first starting out and trying to figure out what the hell to do!
Bad Habits of Newbie Real Estate Investors
Being Afraid to Fail:
Let’s just put it out there now – there is no perfect deal. Stop looking for it! There will be some kind of risk when investing in real estate (or anything for that matter).
Accepting risk in any investment endeavor is the first step in truly being open to the venture. The key is to identify the risks and only take on situations where the risk is acceptable.
What is considered acceptable risk?
That is a question you have to answer for yourself as everyone’s financial situations are different.
However, I can give you this one tip to go by: take on risk just shy of the point that will knock you out of the game if you are wrong.
We want to be aggressive enough to have success, but at the same time not knock ourselves out of the game if we happen to get unlucky or get it wrong.
For example, if you only have the capital to do one deal then look for situations that don’t put more than that on the line.
It’s one thing to lose your investment. It is a whole different thing to lose it and go in the hole. Something like that will prevent you from trying again in the near future.
Success Tip: Only pursue properties that show positive cash flow. Use the property calculator to run the numbers on properties and see! Download it here: Calculator
Having No Goal/Direction:
Seems so simple, but I find a lot of newbie real estate investors are all over the board. Many want to wholesale so they can raise some capital and maybe do a flip after that or grab a rental if one comes across their desk.
So which is it?
The first question you need to answer is – why am I investing in real estate?
Are you looking to build passive income through rental properties? Maybe you want to flip to create income to fund your life and business?
Whatever it is, figure it out first before chasing after any deals. Ever hear the term “like a chicken with its head off.” Well, that is basically what your real estate investing will look like without any clear direction and goals.
Staying in “Learning Mode” Indefinitely
When first starting out it is important to learn as much as you can from books (I like this book, wink wink), podcasts and other investors.
Absolutely network and glean what you can from other investors at Real Estate Associations Meetings (REIA) and meetups.
However, there comes a point where reading another book or picking another experience investor’s brain won’t add much more value. You need to get in there a do it yourself.
This isn’t to say that we are not forever learning in real estate investing. I know I still am! There is nothing like live action though. In the end, experience is the best teacher.
You must take action to succeed! I know too many people that have been coming to my meetups for more than a year now and are still “learning” before they do a deal. Sadly, many of them will probably never do one.
No one will ever accuse me of being a big risk taker, but I still went ahead and acquired my first rental property before I really knew the ins and outs of real estate investing. Heck, I didn’t even use a property calculator on my first deal as I didn’t know to factor in costs for maintenance!
I still ended up doing pretty well in real estate, despite not waiting till I knew “everything” about investing.
Take action. Be prudent, but take action!
Be sure to download the property calculator so you can run the numbers and buy right!
If you enjoy my rental property investing tips, then you will love the book:
I walk you step-by-step through finding, buying and renting out a property. The book is your personal mentor!