Getting Past the Fear with Your First Deal

It was the last day of my due diligence period on my first deal.  The deal was substantially larger than I had anticipated and at the limit of what we could afford.  We had a HELOC and a loan from family in order to make it happen.  The deal was a pair of duplexes I had found on the MLS and were able to make a cash offer the day it came on the market.  The sellers wanted out because they were planning a 1031 into something larger.  We were inheriting tenants and 2 units were in need of complete rehabs.  I had ran all my numbers and on paper everything still looked good, but you wouldn't be able to tell that looking at the units.  I told myself that it was okay, that I had a plan and I had to trust my numbers.

This was it.  The last day I could back out without losing my $5000 in earnest money.  I only had one more item to verify - the septic system.  I knew about rehabs because my wife and I had spent the last couple years remodeling our own house and I was comfortable with that part of the deal.  I did not have any past experience with septic systems.  I was told that they were occasionally being pumped but couldn't seem to find out any more information until that day.  Finally, I had gotten in touch with the company that was being used to pump the tanks on the property.  To my surprise, they were being pumped every two weeks!  After numerous phone calls with the city and septic companies during my lunch break at work, I found myself at a crossroads.  I could not resolve this issue in one day.  I had waited too long and now I had to make a decision without all the facts. 

I will remember the moment for the rest of my life.  Too this day, it was still one of the most terrifying decisions I had to make.  I called my wife to get a clear perspective.  In the back of my mind I was replaying all the answers from the podcast:  "What seperates sucessful investors...?"  

For us, it was time to take the leap.  I felt trapped in the corporate world.  Even though I enjoyed my job, I knew I didn't want to be behind a cubicle until I was 65, wondering where time went.  I had my "why". Now it was time to take action.

Now I'm not advocating for wreckless investing or poor due diligence.  I have pages of lessons learned from mistakes on this deal.  Obviously, I could have been more thorough. The point I want to make is that every deal has its "unknowns".  We can build spreadsheets and run numbers.  We can do everything right in vetting a property but there is always something that is going to be missed.  I think this fear of the unknown is too much for many would-be investors.  Understand you are not alone.  We all felt that fear the first time.  Understand that you must get past the fear in order to achieve your goals in real estate.  Understand that it is worth it.

If you want to be successful in real estate, here are the steps:  Define your "why".  Set your goals.  Do your homework.  Then take action and buy your first deal.  When the time comes, if you are like me, fear will nearly overwhelm you.  Trust your numbers.  That's why you did your homework.  Next, ask yourself if this deal is going to help you reach your goals.  If so, then use your "why" to get past the fear and take the plunge.  Even if you make mistakes, the lessons you learn will help you improve the next time.  You don't want to look back one day and wonder what could have happened.  If your "why" is greater than your fear, you will be successful.