Mortgages & Creative Financing

How to Uncover Amazing Deals by Simply Changing Your Mindset

Expertise: Business Management, Mortgages & Creative Financing, Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate Deal Analysis & Advice, Commercial Real Estate, Personal Development, Real Estate News & Commentary
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The idea of having a Scarcity Mindset versus one of Abundance has been written and talked about for centuries. These opposing viewpoints have been covered quite well in books, such as Killing Sacred Cows by Garrett B. Gunderson. But I was probably first introduced to the Scarcity Mindset from Stephen Covey’s book, The 7 Habits of Highly Effective People.

Here’s an excerpt from Covey’s description of the Scarcity Mindset:

“Most people are deeply scripted in what I call the Scarcity Mentality. They see life as having only so much, as though there were only one pie out there. And if someone were to get a big piece of the pie, it would mean less for everybody else.

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Related: One Easy Change of Perspective Could Vastly Improve Your Real Estate Business

The Scarcity Mentality is the zero-sum paradigm of life. People with a Scarcity Mentality have a very difficult time sharing recognition and credit, power or profit – even with those who help in the production. They also have a very hard time being genuinely happy for the success of other people.”

This idea of not having enough pie to go around can be very destructive. This type of thinking can lead to folks trying to accumulate, or hoard, as many possessions as possible. They believe that in order to win, someone else has to lose.

How Do You Know if You Have a Scarcity Mindset?

You may have this type of mindset if you get jealous of others and their successes. You may be envious of other people’s possessions. You may be afraid of failure. You like to keep your money safe, and you are afraid to invest or take chances.

You may be interested in instant gratification, as you won’t think twice of putting something you can’t afford on a credit card. Or you may think that successful people are just plain lucky.

How Does a Scarcity Mindset Affect Your RE or Note Investing?

The majority of people seem to have this mindset; it’s very common.

When I started as a real estate investor, I had a scarcity mindset. I was competitive, and I thought that I had to find a good deal before the next guy stole it from me. I wasn't really networking or building relationships with other investors.

There are probably too many ways to describe the thoughts I once had, but here’s a few of them:

  • There aren’t any RE deals near where I live.
  • I can’t find any good, safe note deals.
  • The hedge funds are buying up all the good REOs and rehab deals.
  • The banks aren’t lending right now.
  • The guy at the real estate meeting with 100 houses is just lucky; it's easy for him.
  • I’d rather put more money in my 401K instead of buying a note.
  • I’m keeping all my RE strategies to myself.
  • I’m afraid to quit my regular job and try RE investing full-time.

After I joined a national real estate group and founded my own group (RING – Real Estate Investor’s Networking Group), I was exposed to so many more ideas and an infinite number of ways to do different deals.

For example, in the old days, I would submit one agreement of sale on a property, much like a traditional realtor making one offer on a house. Later on, I started to make multiple types of offers (i.e. a high-subject to offer, a mid-level offer with owner financing or the owner carrying a second lien, or a lower bank financing offer, or an even lower cash offer). Keep in mind, the more offers you make, the more deals you get. Utilizing strategies for buying properties with zero money was a skill set that once learned, allowed for endless deal possibilities.

It was the relationship building and the sharing of these types of ideas that really helped me shift away from the Scarcity mindset more towards the Abundance mindset.

How Does This Compare to an Abundance Mindset?

You may have this type of mindset if you don’t worry about competition, as you are more inclined to collaborate with others. You can be genuinely happy for the success of other people. You may not be very fearful of failure because you see it as a learning opportunity (i.e. the hurry up and fail attitude).

Related: Viewing Investment Real Estate From Different Perspectives

Instead of assuming you can’t do something, you ask yourself how you can make it happen. With an Abundance Mindset, you may think more longterm. Instead of feeling the need to hoard material things, you may be more focused on how to utilize your resources and money.

How Does an Abundance Mindset Affect Your RE or Note Investing?

  • You are happy for someone you know who just closed on a killer multi-unit deal.
  • You’re willing to share your best investing ideas to help others (and you are humble enough to ask for help if you need it).
  • You take responsibility for your mistakes and don’t blame others. (Example: I dropped the ball recently on a duplex I own by not getting it inspected, and it’s 100% my fault.)
  • Instead of assuming that you can’t afford to buy a note or property, you would instead ask yourself, “How can I afford this?" Or, "How can I make this average deal a great deal?" For example, maybe you can access your IRA account, or maybe you can access a HELOC to an investment that will cash flow enough to cover both the HELOC payment and a new car payment.
  • Maybe you focus on socially conscious investing and serving more people through your investments. For example, renting out a property to recovering veterans or setting up a drug and alcohol recovery house.
  • Instead of thinking others are just plain lucky, you realize that you can make your own luck.
  • You don’t compete or compare yourself with others. You believe in “Coopetition,” cooperating with competitors.

As you can see, the possibilities are limitless when you live in a world of Abundance. With this mindset, I’ve never had a problem finding a good deal because I realized that all I have to do is create one (e.g. maybe a good deal is based on terms, instead of price).

Maybe it’s time for you to work with others to achieve something that you couldn’t do alone. Then you can focus on win-win strategies.

So, what does your new world of Abundance look like? Which of these mindsets has been driving your business?

Leave me a comment below!

Since 2007, Dave Van Horn has served as president and CEO of PPR Note Co., a $150MM+ company managing funds that buy, sell, and hold residential mortgages nat...
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    Mark Ferguson
    Replied over 5 years ago
    Awesome article Dave! I complete agree and I used to have a scarcity attitude as well. I used to not want to give up any secrets and always made excuses for why others were successful and I wasn’t as successful. Then I realized all that held me back big time.
    Dave Van Horn
    Replied over 5 years ago
    Hi Mark, I understand where you’re coming from. It took me awhile to figure out that the more ideas I shared, the more ideas were shared with me in return. I pretty much worked alone in the beginning too, but I soon realized that mentality was keeping me from growing or learning something new. Thanks for your comment! Dave
    Tim Gordon
    Replied over 5 years ago
    Great subject, wish it were discussed more here!
    Dave Van Horn
    Replied over 5 years ago
    Thanks for the positive feedback Tim! I agree, the topic of mindset and investing philosophy is more important than many people realize.
    Jonathan
    Replied over 5 years ago
    This article showed me that I went back to a scarcity mindset after suffering innumerable losses and how that has affected not just my real estate career, but my life as well. I appreciate this post, it brought me back from the darkness.
    Dave Van Horn
    Replied over 5 years ago
    Hi Jonathan, thanks for the positive feedback! I’ve had losses too. In the beginning, I lost money in projects that I shouldn’t have been in. I blamed the project, but at the end of the day, it was my responsibility. I should’ve known better. All the best, Dave
    JerryW.
    Replied over 5 years ago
    Hey Dave, Thanks for the article. It is easy to forget that team can do way more than individual, and everyone on the team can win at once.
    Dave Van Horn
    Replied over 5 years ago
    Hi Jerry, Thanks for reading! I agree. Not too many people become successful all on their own. Best, Dave
    Richard Guzman
    Replied over 5 years ago
    A very interesting article that opened my eyes and made me realize numerous points you suggested. I would like to consider myself in having an abundance mindset due to the fact of personally being in the stock market and being successful in that field. I am happy to hear about peers of mine who make deals in a new cannabis stock or health/bank sector ETF that has proven me wrong with profit and yet I still always try to help friends, co-workers and family members in any financial related question they may have. Why am I different about real estate market? I seem to think twice about every deal I see and keeping looking for more without any action. I am always hesitant on credit purchases. Your last sentence is powerful as it truly are words to live by – thank you! “Maybe it’s time for you to work with others to achieve something that you couldn’t do alone. Then you can focus on win-win strategies”.
    Dave Van Horn
    Replied over 5 years ago
    Hi Richard, It’s always best to invest in something you know. For example, I started doing stock options; I studied your field for a while coming from the Real Estate world that I was well versed in. Although I didn’t go it alone—I was getting educated, had a mentor, was networking, etc.—I was and am more comfortable with the real estate side. Best, Dave
    Melodee Lucido
    Replied over 5 years ago
    Dave, This is an article that needed to be written!!! I wish you could post this in every forum once weekly. I see so much of the lack and limitation mentality in the forums. It’s sad to see because when we band together we are stronger. The title was intriguing to me and then I was pleasantly surprised when I read the post. Thank you for such a great this. Best of Success to you
    Dave Van Horn
    Replied over 5 years ago
    Hi Melodee, thank you very much for the positive feedback!
    Cody Bacon
    Replied over 5 years ago
    Dave, Great article! This is definitely something I am currently implementing into my life.
    Dave Van Horn
    Replied over 5 years ago
    Hi Cody, me too! I’m a work in progress. There’s always more room to improve. All the best, Dave
    Cody Bacon
    Replied over 5 years ago
    Dave, Great article! This is definitely something I am currently implementing into my life.
    AJ Paniagua
    Replied over 5 years ago
    Excellent article! The scarcity mindset is certainly one that cripples new investors because they have already given up before even getting started. It is great that this article helps to identify it and provide a path to get out of it.
    AJ Paniagua
    Replied over 5 years ago
    Excellent article! The scarcity mindset is certainly one that cripples new investors because they have already given up before even getting started. It is great that this article helps to identify it and provide a path to get out of it.
    Dave Van Horn Fund Manager from Berwyn, PA
    Replied over 5 years ago
    I agree AJ, thanks for the positive feedback!
    Shaun
    Replied over 5 years ago
    We all will battle some of the scarcity tendencies here and there. It isn’t always easy or natural for us to think there is more than enough of something for everyone or that giving up something for another won’t just mean we have less. I try to live that way though. I rejoice in my colleagues success and try to help them if they are struggling. In the past I went up to a former co-worker and shook her hand and congratulated her on getting a promotion we both interviewed for, and it was honest as she was a friend and someone I thought would do a good job in the position.
    Frankie Woods Investor from Albuquerque, NM
    Replied over 5 years ago
    Dave, good stuff! This type of thinking is good for all aspects of life! It just makes you an overall better person IMHO!
    David Pickard Rental Property Investor from Bloomfield, NJ
    Replied about 5 years ago
    Excellent article and wonderful book. The 7 habits have definitely made me look at life through a different lens. When we move from independence to interdependence is when we can make real success happen.
    David Kuruvilla from Yonkers, New York
    Replied almost 5 years ago
    This is a great article.
    Paulo Silva Real Estate Investor from Portugal
    Replied over 3 years ago
    Amazing article (and amazing books)! I’m definitely going to revisit this so I can remind myself of the mindset! Thank you Dave
    Tomitaka Sodeyama from Grand Forks, North Dakota
    Replied over 3 years ago
    Thank you for a great article. Dr. Covey’s 7 habits are my favorite book. Yet I haven’t read nor practice those. This article reminds me that there are many people proofed that the idea is working. I will make deals.