Investor · Boca Raton, FL · Member since 2019 · 1k+ posts · 160 votes
How many investors out there have let fear of losing money, stop them from taking a gamble on a property? Was it justified or did you end up regretting not making an offer?
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y
I think fear is something all investors experience until they are confident with their knowledge, have the experience, and proven and completed 1 deal. Once they do that the natural feeling is gone. Fear from that point forward is just mental and getting comfortable.
I think what helps is putting "Fear" into perspective. Go straight to the worst case scenario. What is the worst case? You screw up losing all your money, time, and energy you put into it. OK, do you still have your health and family? Can't be that bad then. Failures happen in life, just regroup and try again.
I don't take big risks in general. The risk is the first thing on my mind and I always structure my plan around that. I always go with what's the worst case and work from there. This way I am confident in the investment.
I am not a risk taker, but I wasn't worried about my real estate investments. I did the research and knew what I could rent the place for, vacancy rates, what I could afford for a mortgage, etc. Something will always come up, but knowing how to deal with it (and remembering to take a deep breathe) is key.
Fear, as with all human emotions, is a handy cap that needs to be overcome to be successful. Many of the most successful business indivulaes are sociopaths. This is a major business advantage.
The best method of overcoming emotions is knowledge. With knowledge comes confidence, confidence should overshadow emotions. It is important that business decisions be made without being handycaped by emotions.
Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
7y
This thread has me thinking of my friends who work on a horse farm. These puny little humans go around and assert their will over the massive horses to make their business work - it is what it is. Horses freak me out (so do birds for some reason) and damn if those horses can't sense that every time. So, I stay the hell away from them. While my one friend laughs at me and thinks in his mind I just need to get over it and "conquer" the situation, his wife says "nothing wrong with a healthy respect for a 600 lb animal".
Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
7y
Originally posted by @Account Closed:
Horses freak me out (so do birds for some reason) and damn if those horses can't sense that every time. So, I stay the hell away from them. While my one friend laughs at me and thinks in his mind I just need to get over it and "conquer" the situation, his wife says "nothing wrong with a healthy respect for a 600 lb animal".
LOL .......I like the expression "healthy respect" vs fear.
However, the nature of these fears is different. Animals (horses, dogs etc) can smell it because when we are afraid of something, our body produce a hormon of fear and these animals become aggressive toward it (they sense this fear)
Houses or any business can't sense our fear, so it's all in our head. As many mentioned here, only experience will conquere that fear. First time to dive in is always scary, second time you plan better and after that you calculate in your head what it takes to buy this or that. You won't need definions of cash flow, P&L, IRR etc........you'll add, multiply numbers in your head and know pretty accurate if it's too much risk for you to take.
If you're afraid of a dog, it's irrational. I was afraid of the dogs long time ago, so to conquer that fear, I've got a Rottweiler. Never afraid of the dogs again - I know how to train them.
Rental Property Investor · Creston, BC · Member since 2019 · 8 posts · 3 votes
7y
@Elliott Stern
That fear is a good thing to have if it makes you analyze the deal and encourages looking at every possible angle.
In the end it always comes down to diving in and there will Always be a certain amount of uncertainty. It’s impossible to have all the knowledge and there are many uncontrollable and unavoidable situations that can and do arise.
This is where the confidence part is important - knowing you are the type of zoo animal who will handle whatever comes. And you will.
I’ve been an investor for twenty years and have very rarely worked with partners so I’m often going ‘all in.’ On some deals I know they are almost a sure thing and I experience ease although my foot is always pushing the gas to the max to get it done.
Others are the most terrifying experiences. My first luxury home development, my first multi-family.. These are the ones that we learn the most on. We learn about ourselves, and we learn who our friends are and we grow.
But ya, going all in is unnerving. What I’ve found to be even more uncomfortable however is standing still.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
What do you think is the industry that takes the biggest risk every day? . . . . The gambling industry risks loosing hundreds of $millions every day. If you go to Las Vegas what does the casino have that you don't? . . . The odds are in their favor.
Every real estate investor no matter how experienced takes big risks with every deal. The difference between good and bad investors is the good ones make sure the odds are heavily in their favor.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
@Elliott Stern
If I am fearful I have not done my homework on a property. I do not fear losing a bid, I may fear overbidding. But with the correct research, that possibility disappears.
Real Estate Agent · Mansfield, OH · Member since 2016 · 37 posts · 27 votes
7y
@Elliott Stern One of the things I would point out is that you explain it as "taking a gamble on a property." If you feel like buying a property is a gamble, it's probably not a good decision to buy this property because you don't know enough about it. Obviously, there are always going to be unknowns when it comes to buying a house or investment property, but if it were me and I felt like it was a gamble, I would try to educate myself as much as possible. Learn as much as you can about the property you're looking (assuming it's made it through the general examination phase), hammer down on your numbers and stick to them, build in some contingency expenses into your budget to prepare for any unknowns that may arise. Knowledge helps to eliminate fear and reinforcing your knowledge in these areas should help account for some of that fear. And if the numbers don't work, they don't work. The more logical you are on the analysis and information side of things, the less emotional the process will be and the less fear you will have.