Is anyone else terrified?

22 Replies

Hi,

So, I read the Ultimate Beginner's Guide, and I'm reading blog posts and listening to podcasts, and making a list of books to buy, and all of it is overwhelming me to a fairly large degree.

Everyone talks about Analysis Paralysis, but I think it's really about FEAR.  I don't have a lot and I don't want to lose it.  I screwed up my credit when I was a kid and have worked my a** off to fix it as best I can, so it's too important to me to risk it now.

I'm afraid to ask for a mentor because I'm not sure I have anything to offer in this business that could be useful for someone, and I don't like the idea of some generous person taking me under his/her wing and guiding me and I can't return the favor.  I know I can do grunt work - painting, cleaning, hauling, etc. - but because of my job I don't have a lot of time to do that stuff.  So, I don't want to feel like I'm using someone.

I'm getting married in February, and while I have the full support of Future Wifey, I know that we have to keep all of this secret from her family because they are too judgmental and critical and any conversation with them ends in, "You shouldn't do that," and "why didn't you do this," etc., even when I know they have absolutely no idea what they're talking about.  (example: I'm an electrician, they know I'm an electrician, but her grandfather still tries to 'teach' me about wiring a house.)  But FW hates keeping things from them and if I ask her to do that it will stress her out every time she talks to any of them.

I can go right now to a real estate agent's office and say, "Hi, my name is Nick, and I want to invest in some property," and when he starts asking me questions, most of my answers will be either, "I don't know," or, "What does that mean?"  I can read the books and memorize the lingo, and I'm pretty adept at math so understanding formulas won't be a problem.  But I feel like when I listen to people talk about this stuff, I'm lost.  Even things I thought I knew, I apparently misunderstood.

Ugghhhh

But I guess all of that is ok, because I know I'm green right now, a newborn, I'm just screaming a little bit.  Maybe it's because I'm hungry ...

-Nick

Hi Nick,  I totally get where you are coming from. I myself am a newbie and when i started out about a year ago, i knew absolutely nothing about RE investing ( i mean NOTHING).
One year later, i know which direction i want to go in. In my case it is a slow process because of my time, but i am determine, tenacious, ambitious and because of BP more knowledgeable.  

I read the forums, listen to the podcast and contribute where i can, and ask questions.

I will get there, because i refuse to work for anyone for the rest of my life.

Good luck to you and you will get there.

Real estate isn't for everybody but if you educate yourself you can reduce risk considerably.  Some mentors will help you if they see you're eagor to learn and will actually listen to what they have to say.  Simply passing your knowledge on as you learn is a good way to repay this kind of mentor.

As far as knowing about real estate just imagine it's like your profession.  If you went in to bid on a job for electrical work you'd probably want to know what the issues were, what kind of supplies will it take to fix, cost of those supplies, how much time will be needed to get it right, how much money are you going to make, what are the potential surprises that might pop up...then you would make a bid making sure to account for possible surprises.  Obviously a house is a little different but for the most part if you live in a metro area you have lots of things to compare the houses to in close proximity....and as long as you "bid" on the house right you'll build enough cushion to make sure you are safe from any surprises.

GL!

Thank you Charmaine M. and Joshua Springer for your responses.  This is definitely for me, I'm just nervous.

Hi Nicholas,

I would suggest maybe meeting up with other BP members in your area, shaking some hands, listening to a lot of people talk, and maybe try to meet up with a local Realtor who owns and manages his/her own properties. Most residential Realtors do not bring a lot of value to an aspiring investor- you want someone who knows what they are doing, has done it before, and can help you do it. Ask them a million questions, have them run numbers on a few deals you think are good, get their recommendations.

Establish good criteria, ask questions until your uncertainties become "mostly certains." At that point you'll know as much as you can know and you'll be able to make the leap. Remember that nothing is 100% certain, and the first one is scary for everyone!
If you ask yourself "What's the worst that could happen?" and the answer is that you would break even on a deal, it may be worth it just for the experience. And you'll rarely hit a worst-case scenario if you have a good advisor!

@Adam Haman Thanks for the advice, I appreciate it.

I've been posting on here for less than twenty-four hours, and I have to say that the responses have been great.  You're all so enthusiastic for newcomers.  This is a fantastic community and I'm glad to be a part of it.

-Nick

@Nicholas DeLouisa Jr  Welcome to the community!

Real estate is a large arena and looking at it from a bird's eye view can be very overwhelming. I would suggest to learn one strategy from REI, master it and then expand. You mentioned that you are tight on cash and do not want to risk your credit, I would probably move towards wholesaling then. It's still going to take money, but there are ways to market and get your first deal with a little amount.

Real estate is a people business. We look for motivated sellers, and then we help find a solution to their problem. With this thought, you must begin to change your current mindset of your self-value and believe that you offer a value and you are a people-person. You offer an incredible amount of value through your hard-work, your honesty and it seems that you can write well, which means that you can communicate. 

Main thing with REI is to stay consistent, network and always be learning. You have a great start by joining the forums, so feel free to reach out and ask any questions that you may have.

Best of luck,

George 

Like Joshua Springer said, when you start out, it is like starting a new profession.  I am sure you mentored under someone when you first started doing electrical work.  Real Estate is a little bit different in that there are really NO absolutes, like in electrical work.  Real Estate is about PEOPLE and the relationships that are created along the way.

One area that a lot of people miss is talking to Property Managers.  PMs usually have a LOT of connections.  Let them know you do electrical work and that you are interested in starting to invest in Real Estate.  You may have to talk to a dozen to find one that is willing to help, but from my experience, most QUALITY PMs are always looking for a good electrician and that will help you with making RELATIONSHIPS.  8 of the houses I own is because my PM had an investor who wanted OUT and they contacted me about buying them out.  If you can get a few "side jobs" from a PM, and you do good work at a fair price, and they know you are looking to invest, you might get on their "leads" list for when one of their rentals comes up for sale.

Don't get over whelmed, stay excited and stay focused, and when it comes to in-laws, try to have a part humorous and part wisdom type of response.  For instance, when you tell them you are buying a rental house and they respond, "That will never work."  Just say, with all the politeness and class you can, "You know, you might be right.  But then again, you might be wrong too.  This is something that 'wifey' and I are excited about we want you to share in our excitement."

And here is a little story that will emphasize my point.  I was in college, in the very late 1970s and early 1980s.  We had an accounting professor try to give us some investing advise one day.  We all thought, how in the world could an accounting professor know anything about Stocks and Bonds.  He told us that there was this NEW Computer company just starting out and that we should buy some stock in it.  He said the name of the company was APPLE!  The room just busted up laughing as if we were in a comedy nightclub.  We said what a STUPID name for a computer, Apple.  Sounds pretty 'fruity' to us.  At the time, IBM was it in the computing world.  None of us bought Apple, but the professor did.  And you know the rest of the story..................!

Don't let anyone talk you out of something that you really want to do!  AND, listen to advice that is told you to try and HELP you.

If you don't currently own a home, my first move would be to buy a fixer upper.  Live in it for two years and sell for a tax free profit.  This is probably one of the most under utilized advantages of RE investing.  

Starting out with little $$ to invest I would steer clear of investing in Rentals.   The prospect of steady and continuous income stream is very tempting, but I feel new investors are making a horrible mistake by jumping into long term rentals with leverage.   A tremendous amount can change throughout the course of a 30 year mortgage.  That B neighborhood may turn into a C or a war zone.  We will undoubtedly have another recession or depression in the next 30 years.  The home is going to require major capitol expenditures that may pop up sooner than expected.  A nightmare tenant may set you back months in repairs, legal fees, and vacancy during the eviction process... The first 10 years of a 30 year amortization are nothing but interest payments essentially.  I could go on, and on, but just be sure to really think it through.  

I would/did start out as a RE agent, then flipping, and then moved some of my excess funds into rentals.  I feel this was probably one of the safer ways into RE investing.  

Before I ever did a flip I had been selling Real Estate for 4 years.  I knew all about contract law, inspections, finance, and the closing process in general.  Once the rehab was complete I knew how to properly market the property , and  didn't have to pay a listing agent to sell the property.   Even with all the experience I still didn't do great on the transaction, but I was on my way.  

Before I ever purchased a rental I had saved up enough from flips fund the purchase and rehab out of pocket.  I also had the experience of rehabbing to properly budget.  

If you want to play it safe that would be my recommended path. 

One of the easier strategies that also helps with money is to buy a duplex and rent half and live in the other. 

Hey @Nicholas DeLouisa Jr
Trust me, it is a scary road, I'm in that same road now, but it's just like learning to do a new job once you start doing it it'll be easier. That's how I'm looking at things.. You want to know what even scarier, you turning 65 and finding out there's not social security for you and your pension will not be enough when you're ready to retire. I'm always looking ahead and I'm not going to depend on no one but myself to provide for my future and that of my family. Don't let the negativity get the best of you. Keep going, keep studying and take action. That's what I'm doing right now.. Welcome to real estate investing and best of luck to you bud!

@Ed Lee   , @Mike M  , @George Makakaufaki   , @Walt Payne   , @Saul Urena   ,

Thank you all so much for your input, especially your encouragement.

To respond to some of the comments: 

- I don't own a home, but I also don't pay rent, property taxes, or utilities (long story), so I might be in a bit of a unique position when it comes to purchasing a property. For example, Walt, you said buy a duplex and live in half of it. Well, I suppose I could buy a duplex and rent out both parts, or a three- or quad-plex, or anything else since I have no mortgage or rent to make each month. The issue is that the size of the mortgage for which I will qualify, based on my salary, will only buy a SFH, duplex, etc., in a suburban war zone (which I lovingly refer to as 'class eff me').

- Ed, you mentioned flipping.  My goodness, that frightens me so bad I feel like I might relive my beef flavored Ramen noodles (we call it rebeefing).  I understand that I DON'T understand the process of flipping beyond "buy, rehab, sell."  One of the reasons it seems so scary to me is that it's made to look so easy on television.  In twenty-two minutes they buy, rehab, and sell a property.  Ridiculous, I say!

- Ed you also mentioned that you were an agent for four years before you even tried to do your first deal.  I gave that idea some serious consideration.  My brother-in-law is NYPD and his coworker is also an agent, so I know it can be done to have a full time job and be a real estate agent on the side.  It's not off the table, I just don't know how I would go about it right now.

 - Saul you said don't let the negativity get the best of me.  When I first read that I bristled a bit.  I am more of a negative person, feeling like if I assume the worst I won't be disappointed when it happens and pleasantly surprised when it doesn't, however I didn't see anything in my post that was inherently negative.  It was more about fear.  But I reread the comment a few times and I think I do see what you mean.  The fear in and of itself isn't the negative.  The negative is succumbing to the fear.  And you're right, I think I was heading down that road.

I want to thank you all so much for your kindness and acceptance.  You may see your brief contributions as small and nearly insignificant, but as someone who needs a bit of hand-holding at times, I just want you to know it is appreciated.  I look forward to developing my relationships on this site.

-Nick

I got my undergraduate degree in computer science (programming). I landed my first internship during my last few months of my senior year. We used to have a weekly department luncheon in the conference room where myself, all the other programmers and the department head would sit around the large conference table. It would always be a group conversation with the department head asking questions and the individual programmers providing answers, assisting each other in providing answers and, frankly I'm not really sure, but bouncing other computer type stuff ideas off one another. 

Yes, I was an OK programmer and I could understand how to complete a task, but I was nowhere on the level of my coworkers even though I had just about completed a 4 year degree of intensive study. They could talk in depth about how different languages interfaced and all kinds of other software and hardware issues I was absolutely clueless about. Long story short, instead of asking questions, I kept my head buried in my sandwich and just hoped nobody asked me any questions. A few months later, I quit never to program again except the occasional webpage. 

I knew that business wasn't for me. Even though I could do my job, I felt absolutely lost the rest of the time. The big difference between you and I is that I would never have gone online to a forum to read posts about programming issues. I really wasn't interested. I only entered that field of work because I thought it would be financially rewarding. So, I'm not saying real estate isn't for you because I don't know why you want to pursue this business, but maybe that is something you need to seriously think about. Unlike your future in-laws, lots of people here will tell you keep at it, study more, read more, network more, take your time etc. However, I (and many others) have a very successful business that essentially buys property from people who realize this business isn't for them and they want out of it so badly, they take huge discounts in sales price just to go to bed that night knowing they never have to deal with another house, sometimes even the one they live in, or tenant ever again. Yes, real estate can be unbelievably financially rewarding, but it can also take you way past negative very quickly. I know single family house investors that to this day, even though they have lots of rentals and a high equity net worth, still have lots of debt lingering from deals gone wrong in the past.

Of course, I'm playing devil's advocate here. I think in time, if you continue to study and apply yourself, you will figure it out, but I want you seriously consider both sides. Real estate has been a tough road and there have been many nights I've laid awake wondering how the hell I was ever going to come out of many deals. Funny thing though, no matter what happened, I always woke up the next day with my arms, my legs, my hands and eyes, my prior knowledge, a little more experience, another interesting and sometimes funny story and even when I lost money, things always worked out OK. 

Don't be so terrified about losing money. Doesn't sound like you have much anyway so what are you really so afraid of losing? You know the answer to bad credit? You just have to walk into the gas station and pay cash. You lose the luxury of swiping your card at the pump. I have perfect credit and I still can't get a bank loan so what else really is there? Other than my credit cards, I don't have much use for credit. Doesn't help my run faster or get discounts on groceries. Just a stupid number. And I tell you what, I REALLY wish I had horrible credit when I first got started. It would have forced me to do much better deals than what I did which was going down to the bank and borrowing money. That turned out to be a complete disaster - multiple times. The only disclosure a bank should really make you sign is one that clearly states "We are not here to help you make money. We only have our own self interest in mind 100% of the time. You never come first. Please step on the carpet at your own risk." 

Linger longer. Hang around other investors that are doing deals. There's nothing to be afraid of. And terrified? That is much to strong a word.

@Aaron Mazzrillo ,

Sorry I didn't respond for a few days.  I spent a lot of time thinking about what you said, whether or not this business is for me.

I tend to be as analytical as possible when making decisions, especially when there is emotion involved. So I really did give your advice some rational thought. What I came up with is this: I can't possibly know if REI is for me until I do a few deals. I know I have an interest. I know I talk to people about it until they don't want to hear it anymore. I know I'm reading through books with a sense of fascination. Beyond that, I really won't know until I'm in it.

Thanks for your response, I appreciate your thoughtful candor.

-Nick

Originally posted by @Nicholas DeLouisa Jr:

@Aaron Mazzrillo,

Sorry I didn't respond for a few days.  I spent a lot of time thinking about what you said, whether or not this business is for me.

I tend to be as analytical as possible when making decisions, especially when there is emotion involved. So I really did give your advice some rational thought. What I came up with is this: I can't possibly know if REI is for me until I do a few deals. I know I have an interest. I know I talk to people about it until they don't want to hear it anymore. I know I'm reading through books with a sense of fascination. Beyond that, I really won't know until I'm in it.

Thanks for your response, I appreciate your thoughtful candor.

-Nick

A good rule of thumb is: You don't know if you'll like it unless you give it a try. Good luck on your journey. I've had some bumpy roads, but I've thoroughly enjoyed even the bad times in real estate (at least when they are behind me). Any time you have questions, just reach out and I'll do my best to share my experiences with you.

Hey there Nick, if nothing else, don't feel alone. I'm in the same boat as you, only I'm an hvac guy versus an electrician. REI can seem overwhelming to anyone & I have definitely felt overwhelmed myself, since I found BP just a few weeks ago. But I look at it like this, 15 years ago, I was overwhelmed by hvac, just like you probably were when you first started out as an electrician apprentice. If we were both capable of mastering our trades, I am confident that we'll both soon master REI as well... And good luck to you!

You could start now in your 20's make some mistakes and maybe even lose money , or make money .  Or you could wait till you are in your 40's make some mistakes and maybe even lose money , or make money .

 I wish I started earlier 

I know exactly what your feeling. I don't doubt my ability to do work. But a full time job and a family can eat up your spare time - ironically the thing that attracts me to REI. I've been saving for a few years all the while thinking if only I had the money Id be on my way. Now when a deal comes around I feel terror. I believe the unknown if terrifying dangerous or benign.

I don't have any real advice but "Life's a dance. You learn as you go".

I wish you the best of luck.

Hello Nick,

Another newcomer to the game with no formal educational experience in the field, small job history, and the similar anxieties you've expressed yourself. What has uplifted my spirits however is the encouragement and support offered by the community as well as the wealth of resources available on this website. I have not encountered such a welcoming community to new members on a forum in awhile and am glad to be apart of it.

I'm still very green and biased with that instilled college can do spirit as a recent graduate, but I've managed to reconcile my nerves and fears by allowing them to drive me to learn and absorb as much as I can so that I can overcome them and walk confidently into my first investment. As long as they aren't paralyzing, maybe nerves and fear can be cognitively reframed as a good thing so long as you use them to motivate your pursuits and continued learning. It reminds me of an old adage that says something along the lines of you can't control what happens to you, but you can control how you respond to it. Adopting a growth mindset rather than a fixed one can also be a good perspective changer.

Best wishes to you on your pursuits and here's hoping we'll both be in much more confident states of mind in the next few years!

Nick,

Fear can be a great motivator.  Just as we let the fear of the unknown paralyze us, we can use the fear of the "known" to motivate us.  Personally, I visualize what will happen if I don't do the things that need to be done.  I picture the absolute worse life I could possibly live if I don't act. I make the vision as terrible as I can (poverty, homelessness, divorce, shame, etc.).  I use these things that I know will happen to keep me motivated toward not giving up.  

Used correctly, fear can work wonders.  

Your an electrician... and you think you don't have anything to offer a mentor?  Not only your electrical skills but I bet you could give referrals on which carpenters have quality work that you like to follow.  I'm sure you know some good guys in other trades too.  That is valuable knowledge.

There is a lot to know about real estate.  Think of educating yourself along the time line of learning a new career.  As a newbie electrician you couldn't go bid a job and wire a house after reading in your spare time for a month. You need to read many books.  Analysis paralysis is taking several years or never making a move, don't worry about that at this point.  Get in the forums and ask questions when ever you can't find an answer with a quick search.  Start a post of your own if you need to.  Do not be embarrassed about asking a question you think might be dumb.

In a couple months start analyzing deals for practice.  Post the details in the forums and see what people think of it.  They will pick it apart and find all the bits and pieces you didn't consider.  This is a great learning tool.

Find a local real estate investing meeting to go to.  You might get some business for your electrician business, and that business could just turn out to be your mentor.

Also I think the comment about negativity was in regards to your in-laws not you.  Don't let THEIR negativity or any other naysayers get you down.

@Nicholas DeLouisa Jr  

I truly understand how you feel. Let me take you back some years ago, with the magical power of imagination, to the point when you were first interested in becoming an electrician. Do you remember when you did not know a positive wire from a hole in the ground? And all of the pitfalls (crossing wires, not properly grounding the circuit, underpricing material, etc.) that you had not yet experienced. Do you see it in your mind? That feeling, to a greater extent, is what you are feeling right now pursuing RE. It is nothing new and we all go through it.

When you first learned your craft you had concerns, questions and was probably just itching to get your hands into something to see if you could just do it. In my opinion, you had greater risks to deal with being an electrician (electrocution, falling off of a ladder, house catching on fire, etc.) than being an real estate investor but you overcame those risks with blood, sweat, tears, knowledge and experience.

If you do choose to pursue RE then, in time, those fears and concerns will also be replaced with both knowledge and wisdom. In the end, follow your head and your heart.

I wish you Good Journey and hopfully you will choose the path that you can truly follow with all of your heart.

Amen.

@Oliver Insixiengmay , @Scott Martin , @Aaron Mazzrillo , @Matthew Paul , @Taylor Reichert , @Steven Rhodes , @Brant Richardson , @Gary Shaw ,

Thanks for all the encouraging comments and advice.  This post would be enormous if I addressed each of your individual points, so please know that I read them all and I'm incorporating their spirit into my own ethic.

Thanks again for caring enough to post.  And as @Steven Rhodes said, "Amen."

-Nick

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you