Real Estate Investing Basics

4 Steps to Take the Leap of Faith & Start Investing Now

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This is the second post in the series “Real Estate Investing for Women.” This series is dedicated to providing inspiration for women, especially 9 to 5-ers, to move toward real estate investing. Click here to read my first post: “How I Learned to ‘Have It All’ as a Working Mom (Hint: I Ditched My 9-5).”

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Look, I get it. We live in an information-overload world. We listen to hundreds of podcasts and read numerous stories about how people started in real estate and wonder, "Which strategy is the best? Which market is the best? Which is the best stage of the market cycle to invest?"

Fear of failure resulting in hesitance to invest affects male and female investors alike. There’s even a name for it: analysis paralysis. But if you try to understand the science behind it, you will see why these questions are undermining your ability to get started.

Gretchen Rubin, author of The Happiness Project, talks about satisficers and maximizers: “Satisficers make a decision once their criteria are met; when they find the hotel or the pasta sauce that has the qualities they want, they’re satisfied.” On the other hand, “Maximizers want to make the best possible decision; even if they see a bicycle that meets their requirements, they can’t make a decision until they’ve examined every option.”

If you are stuck in analysis paralysis or “decision quicksand” (another term of Rubin’s), chances are you are a maximizer.

As a recovering maximizer, I can tell you that the adequate decision is better than the never-ending quest for the best decision. As tempting as it is to believe that the best strategy is out there, and the best deal exists and you can find it by just researching deeper, in reality the options in front of you are already great. You might never get to a point where you are able to figure out what the best option is for you.

We often tend to forget that the particular decision we are trying to make is just the first step. In the months that follow, we will encounter numerous other choices and turning points that will change our trajectory and make or break our success story. The current decision is not as important as you think.

Here is a step-by-step process to stop hesitating and move forward with your first deal. Follow these steps, and you’ll be on your way toward building a solid real estate portfolio. I have designed an acronym to help you remember and implement them: “A-B-L-E.”

Young woman looking over the City of London at sun set.

ABLE: 4 Steps to Get Started in Real Estate Investing

  1. Avatar: Use my 3 S’s to define your property avatar.

There are many ways to invest in real estate, and I will be cheering for you when you go buy your 1,000-unit apartment building. But most multifamily investors didn’t start that way. Most started in a way that allowed them to take lower risks first.

Here are my 3 S’s for defining your property avatar:

Small: Start with something small—for example, a 3-bed/1-bath single family row home in the city or a small ranch in the suburbs. A smaller investment is a great playground for a new investor. It allows you to learn from your mistakes while limiting your risk. Figuring out how to find a BRRRR-able property is like riding a bike. And it is much easier to learn how to ride a balance bike at first.

Simple: Find something simple. It may not be the best deal of your life, but it will help you get started with a lower-risk investment. Remember, this is your first deal—not your only deal. If you have no construction experience, I would recommend going with a cosmetic rehab. I know you're thinking, "Yes, but shells are better deals." I agree, however, they're also going to be a steep learning curve on working with contractors, permits, etc. To learn how to BRRRR, start with a simpler project and then move your way up to a more complicated one.

Scalable: I get emails every day from women who are just starting out. They want to know how to negotiate a FSBO, how they can do a "subject to" deal, how to buy a property with a cloudy title, etc. They're looking to find that pair of couture shoes at a discounted price. Guess what? You don't need those shoes—they're hard to walk in and give you a backache at the end of the day. What you need is that good pair of sneakers you can take your kids to the park in and that you can re-order online when they wear out, all without going through the hassle of hunting for the next deal. The property avatar would be something you can pick up again and again—not something you have to figure out every single time. This is the way to build a large portfolio without losing your mind and having to learn something from scratch on every single deal.

Related: The 7-Step Antidote to Cure the Silent Wealth-Killer Known as Analysis Paralysis

  1. Blinders: Now put your blinders on!

In listening to stories of people who have used creative ways to start their real estate careers off, you're forgetting that most investors actually start simply. They define what works for them and just go after it. It may not be a needle in the haystack that you find, and that's OK. Put your blinders on and ONLY focus on your avatar. This is going to be tough when someone comes to you with an amazing multifamily offering that people are jumping through hoops to put offers on. But remember, there is no such thing as the best deal—only what's best for you at the time!

Back view of strong motivated woman celebrating workout goals towards the sun. Morning healthy training success.

  1. Leap of Faith: Remember your “why,” and take a leap of faith.

The leap of faith begins with your “why.” For me, it was a need to be with my kids. This need was bigger than any analysis or excel spreadsheet I could make to convince myself otherwise. It was bigger than my six-figure income. It was bigger than the shame I thought I would feel if I failed at this and was known within my professional circle as a mom who “wasted” her career. It was VISCERAL. Every fiber of my being told me I had to be around my kids.

Taking a leap of faith begins with the conviction that your life cannot continue the way it is currently. With faith, you can make a change and be successful at it. As my coach would say, “Ask yourself, ‘What could go right?‘”

Learn how to quantify and mitigate risks

Quantitative risk management is the process of converting the impact of risk on the project into numerical terms. This numerical information is frequently used to determine the cost and time contingencies of the project.

Say you’re analyzing a BRRRR deal, and you are afraid your numbers are around $10K off. If your worst-case scenario becomes a reality, consider that $10K an investment in your education—you’re unlikely to make the same mistake again.

Here are two personal examples:

  1. I overpaid on my first investment property by $15K (I didn’t have a lot to invest at the time and it was a huge hit on my reserves), and I still built a multi-million-dollar, cash-flowing real estate portfolio. And guess what? I never made the same mistake again.
  2. We've had theft at a property; my contractor was surprised how well I took it. No fingers were pointed, and no sleep was lost. It is all part of the business and built into contingency. Lesson learned: I will change the locks on any property I acquire the very same day.

Here are some other excuses to putting off investing and how to get over them:

  • Excuse: I am not handy.
    • Solution: Hire a handyman!
  • Excuse: I don’t want to deal with midnight calls from tenants about a toilet.
  • Excuse: I am still confused as to what the best real estate strategy is.
    • Solution: Flipping, wholesaling, BRRRR, turnkey rentals—just decide on something already, and then put your blinders on. ANY strategy is better than NO strategy.
  • Excuse: The market will crash soon.
    • Solution: I know people who said that a few years ago. They've still not invested in a cash-flowing rental property. Passive rentals with a longer amortization schedule and a good cash-flow buffer can help get through a market downturn.
  • Excuse: A contractor will runaway with my money.
    • Solution: Don’t pay them too much up front!
  • Excuse: What if I go over my construction budget?
    • Solution: Build a contingency in your budget.

Related: Don’t Know Where to Begin as a Newbie Investor? Check Out These Resources First!

  1. Expectations: Manage your expectations.

I know it took everything you had in you to take that leap of faith. You finally felt relieved and proud that you made an offer on a property. However, it is important to remind yourself that not everything is in our control. The current market cycle is competitive and multiple people are putting offers on properties.

But once you take the leap of faith, it isn’t time to rest. It might take multiple tries before you get your first deal under contract. Manage your expectations. It is great to get excited about a deal, put an offer in, and start seeing yourself as an investor. But go in it knowing it might not work out on the first few tries.

Follow these four steps, and you are on your way to being “ABLE” to get out of your analysis paralysis and get your first deal under contract. I’ll be cheering for you!

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What is holding you back from investing in your first property, and what are you going to do to overcome it?

Post below in the comments section.

Palak Shah (BiggerPockets Podcast episode guest #368) is the founder and owner of Open Spaces Capital and
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    Tiffany Johnson Investor from Olympia, Washington
    Replied about 1 year ago
    Lots of excellent advice. Thanks for another great post!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Thanks for your comment Tiffany!
    Minerva Thomas from Boston, MA
    Replied about 1 year ago
    Great article! I have been using some of those excuses . I am on the process of learning, but I believe I am ready to take some risks and discover if I am ABLE to be an investor. Thanks!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Thanks Minerva Thomas and good luck!
    Erica Redcross
    Replied about 1 year ago
    I'm taking the leap now! I've spent the last 2 months seeing properties and honing my evaluation skills. I'm putting in my first offer for a small ranch that is very dated, but in an area with great schools nearby. It's an estate sale and my offer is $50k below asking because it is so dated, but I've got nothing to lose and everything to gain. I'm nervous, but also super-excited. For any of you out there who are letting fear hold you back, tell yourself that you can do this and get after it!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Thanks Erica Redcross and good luck to you!
    Ellen Diamond from Oakland, CA
    Replied about 1 year ago
    Thanks for the article. I was starting to wonder where the woman are on this community! I am already retired after a career as. Financial Advisor. , but I’ve always been interested in RE Investing and now I’m just going g to do it!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Hi Ellen Diamond - Yes, which is why I wanted to write this series!
    Jeannie H Armstrong Rental Property Investor from Mobile Al
    Replied about 1 year ago
    Excellent article. I have been analyzing myself to death. I found a decent property. 3br/2bath, brick, 1300 sf, good roof, asking price $54,000. Fairly decent high school. Can rent for 750/800. Needs some work, plus lots of trees (which I hate). I drove back, checked out pictures, comps and neighborhood. I passed on it because of the trees until i just realized trees can be cut down and/or cut back. Wish me the best...
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Hi J Arm - Great and good luck!
    Patricia Burch from Seaville, NJ
    Replied about 1 year ago
    This article really helped me cut through the decision quicksand. Thanks for your insights!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Patricia Burch - So glad it was helpful!
    Sarah Mainhart
    Replied about 1 year ago
    This is just the advice I needed today! Although I've been making offers on properties with the goal of flipping, I keep second guessing if this is the right strategy for me, but at the end of the day, the worst that could happen is that I learn that I'd rather buy and hold. By the way, Palak, it was so great to meet you on Saturday! Thanks for hosting the meet up! Can't wait for the next one!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Exactly Sarah Mainhart! Also, great meeting you as well and looking forward to seeing you next time :)
    Ruth Bell
    Replied about 1 year ago
    Hello Palak, thank you for the great article. Would it be possible for you to provide any recommendations for a good coach or mentor or organization for me to get started on this path? Your personal story has inspired me to give serious consideration to RE investing. Thank you.
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Ruth Bell - Please feel free to inbox me. I'd be happy to suggest some free and paid options depending on your goals.
    Sherry Houston from Milton, Ga
    Replied about 1 year ago
    Another great article!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Thank you Sherry Houston!
    Brigitte Collins from White Plains, New York
    Replied about 1 year ago
    Needed this!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Glad to hear it helped Brigette Collins.
    Erick Arias Realtor from Central Florida and South Florida
    Replied about 1 year ago
    Awesome post.
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Thanks Erick Arias!
    Cody Richard Wholesaler from Provo, UT
    Replied about 1 year ago
    Great advice Palak! Thanks for putting this out there!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Thanks for your comment Cody Richard!
    Shaquitta Robinson
    Replied about 1 year ago
    This is very inspiring. I’m taking my leap of faith as well! Thank you!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Great Shaquitta Robinson!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied about 1 year ago
    Very good article. You can't just keep learning forever. Sooner or later you need to take the leap
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Thanks for your comment Andrew Syrios!
    Arya Jackson from San Francisco, Bay Area
    Replied about 1 year ago
    I've been wanting to expand my knowledge on real estate investing, this is great advice! I've just signed up to be on Tellus Apps waitlist for investments, I'm super excited to be a part of their new venture!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Good luck to you Arya Jackson!
    Amber Reid
    Replied about 1 year ago
    I need to get my budget in order first. I am a 27 year old female and I feel like most people around me do not invest. So putting my blinders on is a must!
    Palak Shah Developer from Philadelphia, PA
    Replied about 1 year ago
    Good luck Amber Reid, you can do it!
    Shaun Keune from St Louis, Missouri
    Replied 11 days ago
    Really appreciated this post as I just opened my eyes to REI. The risk and fear is something so real, as with anything you do for the first time. Thanks for the valuable content, Palak!