Two Kinds of Real Estate Mistakes (The Kind You Want & The Kind You Don’t)
Recently I started reading a book called Antifragile by Nassim Taleb.
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I haven’t finished yet, but it seems like his main point is that a complex system that is ever reaching for perfection is extremely fragile, while smaller, decentralized, flexible systems will be more likely to withstand outside stress (hence the antifragile part. )
And I think for the rest of the book he’s trying to apply this principal to all aspects of life.
What really resonated with me, however, is that the smaller systems which are exposed to more stresses and problems – and latter overcoming them – tend to become stronger later on.
And I think this can be related to people who want to get into real estate.
Getting Started with Real Estate
When people want to first get started in real estate, inevitably a lot of advice ranging from, “you should become a wholesaler,” or “house hack,” or “flip a house you are living in” and so forth.
Some of these actions can be quite simple or quite complicated. It is never set.
And sometimes people will end up lurking the Forums, reading books, and even taking seminars to build their skills before taking the first step.
And some would even say, “Hey, just do it and fail! You’d learn a ton from it!”
So in relating that book, Antifragile, to new real estate investors, I don’t believe that new investors need to study up on everything about real estate, whether from books, websites, and mentors.
It is very difficult to learn those years of complex real estate knowledge into your head without actually experiencing the situation. The need to know it all can cloud your judgment and keep you from taking action. Your fragility will be your inaction due to your need to analyze every single thing.
With that being said, I don’t necessarily believe you should dive in to doing everything either. The key in antifragility is that you are facing stresses and problems that don’t collapse the system. In other words, take risks that you can afford to take.
Avoiding Mistakes in Real Estate
Don’t invest your entire life saving into a new rehab project you have no idea whether it might work. Don’t kill your entire marketing budget sending out mailers without getting some experience in talking to sellers. Don’t become a landlord and get a mortgage if you have no more cash reserves in the bank. You can’t afford to make those mistakes.
But, you should afford to make some mistakes: tiny ones.
Don’t overreach in the beginning. Every time you make a mistake, you can learn from it and build your experience that way. But if you are losing everything on the first and second try, you lose your chance to make mistakes and get stronger.
A real estate investor needs to take risks, but he or she should only start with small risks. Start small and you will stay in the game longer, even if it means you lose out on some profits.
So what do you say, newbies?
Are you ready to go out there and start making tiny mistakes?