Real Estate Investors: Do You Exhibit These 5 Irrational Behaviors?

Real Estate Investors: Do You Exhibit These 5 Irrational Behaviors?

2 min read
Chris Clothier

Chris Clothier began building his rental portfolio in 2003 as a successful entrepreneur looking to diversify his investments. He quickly gravitated toward passive investing, establishing a portfolio of over 50 single family homes in Memphis, Tenn. As an original client of his family’s firm Memphis Invest (now REI Nation), Chris experienced firsthand what a passive investor endures when purchasing out of state. In 2007, Chris moved his company and family back to Tennessee, wound down his brokering company, and joined REI Nation as a partner and director of sales and marketing.

Experience
Since joining REI Nation, the business has grown into the premier turnkey investment company in the country and a standard bearer for best practices in the industry, managing over 6,000 investment properties for 2,000 passive clients. In addition to managing the development and implementation of sales and marketing processes, Chris serves as an ambassador for the company, working with the team to help potential investors define their purpose for investing in real estate and educating peer companies on best practices.

REI Nation clients’ portfolios hold a value of close to $800 million in single family assets in seven cities. The company has been featured as a six-straight year honoree in Inc. magazine’s list of the 500/5,000 “Fastest Growing Companies in America.”

In 2019, Chris’ team assisted 600 investors with purchasing just under 1,000 fully-renovated and occupied turnkey homes. Chris led the re-brand of his family’s company on January 1, 2020, from Memphis Invest to REI Nation.

Chris is also an experienced real estate speaker and addresses small and large audiences of real estate investors and business professionals nationwide several times each year, including IMN single family conferences, the PM Grow property management conference, and the Ignite conference in Las Vegas each December.

Chris continues to hold a sizable single-family rental portfolio in both Tennessee and Texas. Along with his family, he owns several commercial buildings in the greater Memphis area.

When not working with the team at REI Nation, Chris is busy raising five kids, operating a racing company in Memphis, and serving as CEO for The Cancer Kickers Soccer Club, a Memphis-based 501c3 providing comfort and care for kids battling childhood cancers.

Founded in 2017 by Chris and Michelle Clothier, the non-profit organization focuses on providing a team environment for kids to find encouragement and strength in their battle. The company worked with over 500 children from six countries in 2019.

Press
Chris has been featured in stories published in Money Magazine, The New York Times, The Wall Street Journal, and DN News, as well as the Memphis Business Journal. In 2018, McGraw-Hill Publishing purchased Chris’ manuscript, The Turnkey Revolution, and worked with Chris to publish his first book in May 2018.

Chris also publishes two weekly blogs at ChrisClothier.com and REINation.com. Chris has also published articles on the BiggerPockets Blog since 2009.

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I had some fun with this week’s article by recording a video. I am so used to simply writing, so I wanted to change up my own routine a bit. Take a look at the video, and then be sure and connect below in the comments. I would love to hear some of your own irrational behaviors (hint: these are mine!), as well as your thoughts on how we can avoid them!

5 Irrational Behaviors to Avoid When Real Estate Investing

1. Anchoring

Anchoring is when we rely heavily on the familiar to make decisions with which we are unfamiliar. We anchor to what we know, rather than seek advice or education. It just seems easier to do, rather than admit we need a little help.

2. Loss Aversion

Loss aversion describes the reasoning we use to justify riskier investments and strategies when they cost less money out of pocket. Our aversion to losing money leads us to choose riskier options that cost less because when we lose, we feel “less bad” about the loss.

The smarter decision may be to choose the investment that costs more dollars, but comes with less risk.

3. Gamblers’ Fallacy

How often do we make decisions and rationalize those decisions by citing some random occurrence or chain of events?

Related: You Haven’t Learned Anything Until You’ve Changed Your Behavior

This is called gamblers’ fallacy and includes our amazing ability to put a whole lot of weight behind something that was completely random and should not even be considered when making investment decisions.

4. Confirmation Bias

Have you ever ignored a piece of information that went against the decision you wanted to make? Do you consider that information or do you ignore it?

If you ignore it, that is a great example of confirmation bias. All of us are perfectly able to ignore data and information that tells us we are making a bad decision while we look for any information that confirms what we want to do!

5. Herd Behavior

This one should be fairly self-explanatory. DO NOT FOLLOW THE HERD! Everyone else doing something, buying somewhere, hiring a coach, buying a piece of collateral or program… these are not reasons for you to do the same.

Related: The Number One Irrational Behavior of Real Estate Investors

Do not be influenced by others, but when seeking advice from other investors, be aware that what works for one does not always work for another. Make your decisions based on you!

Hopefully you enjoyed the 12 minute video with the quick explanation of the 5 irrational behaviors that real estate investors exhibit, and I would love to converse below on your thoughts!

What irrational behaviors do you find yourself exhibiting? Do you share any of mine?

Let’s talk — leave a comment!

I had some fun with this week’s article by recording a video. I am so used to simply writing, so I wanted to change up my own routine a bit. […]