Like anything else in life the biggest obstacle to our progress is often ourselves. Most people progress through these psychological stages of real estate investing, but some get stuck.
This is something I have talked about in the past and thought worth revisiting.
Psychological Stages of Investing in Real Estate
1. Nervous Beginner
This is when you are yet to do your first deal or maybe you have even done a deal with a mentor and are on to doing one by yourself.
You have decided that investing in rental properties is the right investment for you. You are excited about it, you have done a bunch of research and studied up. You just need to pull the trigger on a deal.
Your biggest fear: What if I make a mistake and lose money?
In the beginning you will worry about every detail and each decision. Don’t get me wrong, you always need to pay attention to details of a deal. But don’t let them drive you crazy.
Once you have done the research and understand what a good deal looks like, then pull the trigger, don’t overthink it. If the information fits the model of a good deal then decide and keep it moving.
It is much easier to learn the information on what a good rental property deal is than it is to find one. Trust me, when you find a good deal you will know because it’ll look like what you have seen from the education you have done and real the life examples you’ve been shown.
I can promise you one thing though; no matter how much research and analysis you do…
You will likely freak out when you do your first deal. You will walk away from the closing table thinking, what did I just do – was this a mistake? It’s just human nature.
So stop hesitating – find a good deal and pull the damn trigger so you can move on from the feelings associated with this stage.
2. The Big Picture Thinker
At this point you have a deal or two under your belt and have internalized what the power of rental property investing can do for your investments and your lifestyle.
You see the potential and want to scale it up in order to attain that picture in your mind. You are ready to press on and acquire several properties much faster than you did the first one or two.
This is where you need to take a moment and think about what scaling means. Though you have a couple deals under your belt, there are still things to learn and experience. Many of those things have to do with scaling.
You want to setup a plan and system when you have just a few properties so it’s ready made for when you hit that acquisition avalanche. It’s that moment when you go from owning a few small multi-units to all of a sudden you find yourself doing a deal on a 25 unit building.
When you already have your system and team in place, then all you need to do is apply it as opposed to scrambling for help in order to maintain and manager this new larger number of units.
3. The Veteran
This is the point that everyone wants to be at when they first decide to build out a rental property business, and yes it is a business, treat it that way if you plan on having success regardless of the number of properties.
Have you ever heard of the 10,000 hour rule? It basically states that you need to practice something for 10,000 hours to become an expert at it.
Whether it’s been 10,000 hours or not, the point is you have enough deals under your belt that you have seen most everything that can pop-up when acquiring or owning a rental property.
If there is one thing you take away from this post, let it be this:
Experience is the best teacher
You will never see and know everything that can happen in real estate, but you sure can see a lot of it and that will serve you well in deals going forward.
The only way to become a veteran is to go out there and do deals. If you are still a nervous beginner, now you know the key – so get going!
Start by running properties through the rental calculator to see if they will cash flow.
The ScaredyCatGuide Rental Property Calculator is free to use!