New Invester, trying to overcome fear

17 Replies

Originally posted by @Zac Davis:

Hello Bigger Pockets community!

I am very new to all real estate investing. I have a personal residence in Boise, ID and one rental property in Indianapolis, IN that I purchased as a credit partner with my father, whom is a member of a real estate investment company out of Utah. 

My wife and I rely on my income, however i don't want to work for someone else my whole life and when my dad joined the REIC i thought that was the way to go. 

He has 4 properties himself, but that has taken him 6 years to get, and I know its possible to grow a nice portfolio faster, so I think the REIC is holding him back. they mak it really easy on him but this is supposed to be his retirement and as of now its going to take too long. 

In my position I found BP and love it! I have ripped through as much information as possible and listen to the podcast as often as I can. I see this being my future but can also see myself standing on the outside dreaming rather than jumping in because I let the fear of losing get in the way. 

any advise is welcome, personal stories of how you all got over the fear for your first deal and so on. 

Thank you all, cant wait to get more involved in the community!

Welcome @Zac Davis !  The best way I know how is to listen to those that are where you want to be, and by taking action.  The first deal may not be perfect - in fact it probably won't be.  Are you looking to buy and hold right here in Boise?  Or out of state?

Jonna Webber, thanks for the response. 

I would love to buy and hold here in Boise. the out of state deal that I have is not ideal. it cash flows, but I feel like I'm giving away a lot of cash to the PM group I hired and they don't give me enough attention. But all that is set up through the REIC. its cool that I own the property, but for future deals I would like them to be a bit more hands on. I have listened to the podcast and read throughout BP, lots of people say to start in the area we know. 

I'm a very financially conservative person, and I alone support my small family. When it comes to this I have a problem with staying convinced, myself that its not irresponsible to take a chance.

thanks again for your response

I might be a bit out of the box, but I will share what I have learned over the years.  

First, there will NEVER be a "perfect deal" that gives you warm fuzzies with no second thoughts.  If there were, you would be a bad investor.  The fact that you are nervous and you are here making connections and asking for advice means you care about your next move and you want to do the best you can.  Congrats!!  Alot of people dive in and sink.  You don't seem like you are going to be one of them.

Second, you need to sit down and have some quiet time with yourself to really think about your risk tollerance.  You know you don't want to work for someone else.  You know you can grow a portfolio faster than your father.  You also know that something is terrifying you almost to the point of being frozen.  

How do you tackle that?  Make a journal for yourself about what makes you comfortable, what you are willing and able to risk, and what makes you break into a cold sweat of panic so you can stay away from those situations.  Put that away for a few days, then read it again - you will give yourself alot of insight and direction without realizing it.  Trust me, it works.

Are you possibly looking too far down the road and being overwhelmed and intimidated by the possibilities?  There are many, but you need to start small or you will drown yourself and freeze before you even start.  Research is great!  But you can spend so much time researching that you never take action.  Again, refer to the journal you are going to make for yourself and listen to what you have to say.

Third, only look at the immediate steps right in front of you that you are comfortable taking and put your long term blinders on for a little while.  Even if you think those immediate steps are too small or too slow, they are still steps within your comfort zone that will eventually get you where you want to be.  A few small, calculated steps are better than nothing, and even better than risking and losing it all by being too eager and ambitious.

After all, how would you eat an elephant?  One bite at a time.  :)

Zac, "all we have to fear, is fear itself" fear comes from a lack of education allowing more of the unknown to rule your thinking. 

You seem to be saying you really don't have money to lose! 

People don't really understand how banks operate, but experience and their understanding allows them to deposit their money into a checking or savings account, they understand their money is insured and safe. Not so in real estate or other areas of finance!

Go to my profile page and look on the right side for my blogs, read "How to develop a good BS Meter" that tells you why you need and education in the basics of real estate.

You will never paint a master piece with a paint by numbers set. 

What you need is confidence, lose the fear of the unknown to begin with. 

You need to ask "why" not "how", when you understand why, you will understand how.

You do eat an elephant one bite at a time, but no one wants to eat the whole elephant because there are parts of it you can't eat, you can't digest it all! If you try to eat the wrong parts of an elephant it will make you sick and you could die! Knowing why you need to eat what part will lead you to how you can eat it. 

Learn real estate before trying to learn how to deal in real estate. The basics are not hard to learn and it doesn't take that much time to grasp the understanding of why and how things are done.

Then you can select what area of real estate is best for you, but trying to do just one thing you'll be like the horse with blinders on passing by opportunities. 

Real estate is a social business, it's not like dealing with personal property widgets, you apply your knowledge to solve problems, not create them by inappropriate strategies that you try to make a situation fit into. 

After you understand the basics you will understand all the ideas posed in blogs, podcasts, how to books, step by step methods pushed on new investors, understand that these kinds of information is not an education, they are to enlighten you with ideas. Some are good ideas, many are bad ideas, only your BS Meter can help you.

Good luck :)      

Great post @Bill Gulley

I would only add that nothing beats experience.  You've purchased a primary residence and partnered in Indiana.  You are well ahead of the newbie crowd.  Keep getting out there and pulling triggers.  Make mistakes.  We all have.  You may not hit home runs every time, but if you're diligent and patient you will be successful.

Good luck!

Bill, why am I eating elephants? ;)

@Deborah McCarthy ,

Thanks for the Reply. Yes i need to realize that the deals available aren't going to be obvious and guaranteed. also i love what you said about the journal. I'm going to start that. I see this being very valuable. Thank you for the response!

@Bill Gulley ,

Overall, i understand that experience is what will help the most. the best thing for me to do now I think is to gain as much knowledge as i can and then start on a very small scale. the investments that i have made have basically fallen into my lap, so i have not learned as much as i could if i did it all on my own. i appreciate your response, and look foreword to learning from your posts.

Originally posted by @Larry T.:
Originally posted by @Zac Davis:

123

 Count to ten.

 Yeah i completely messed up on my first post, couldn't find a way to delete it and needed 3 characters....I'm new...

@Zac Davis Fear is a good thing.  There is a potential danger.   

Imagine riding a zip line.  You're really high up.  A fall could kill you.  You are harnessed in.  An expert made sure it was all connected right.  Still what if the line broke?  It's rated for 1,200 pounds.  You only way 175.  Besides lots of people rode the line already and they were fine.  Could something bad still happen?  You suppose there is a chance.  But that is true of driving too and you still do that.  Risk is a part of life.  What if you don't do it?  You'll be safe.  You'll drive again.  You're familiar with the risk of driving.  But you'll always wonder if you could have overcome your fears, what the thrill of overcoming them would have been.

Mitigate your risks with real estate.  You won't die.  If you're smart, your worst case scenario is you'll only be bruised financially.  Probably a lot less than paying a guru.  And the upside, the potential for success is well worth the mitigated risk.

@Larry T.

Thanks for the response. I like the risk analogy. i always think that if i knew what i know now back when i was 20  what it would be like. My wife gets really upset, and says just dont have the same regret when im 35.

Originally posted by @Zac Davis :

@Bill Gulley,

Overall, i understand that experience is what will help the most. the best thing for me to do now I think is to gain as much knowledge as i can and then start on a very small scale. the investments that i have made have basically fallen into my lap, so i have not learned as much as i could if i did it all on my own. i appreciate your response, and look foreword to learning from your posts.

 Zac, thanks for an idea to convey something about experience. By saying "experience is what will help the most".

Actually, I feel a bog or book coming on, better get @Ben Leybovich in here, he has a scholarly mind. 

I've always said it takes all three, a basic formal education, exposure to ideas and experience in doing. Now to say, which is most helpful. 

It pretty much depends on what we are to learn. Learning is conditioning our brain to act. 

Repetitive tasks, physical tasks are best learned by experience, doing things over and over again. The best way to learn how to steer a car around a corner is from experience of doing it, it becomes second nature that we don't even think about. Physical skills are best learned by practice, Ben practiced playing his instrument, this is experience. 

Knowledge without experience is just information. (Mark Twain), Knowledge and experience teaches wisdom. (Me). Experience without knowledge can be disaster. (Me again). That's because you can learn to do the wrong thing and continue gaining that experience. Experience must be guided by knowledge to be most effective then wisdom is gained. It's knowledge that keeps us from learning the wrong thing or way of doing something.

A wise person doesn't act without knowing, a foolish person does.

Unlike driving a car or building a machine or building a house, real estate requires mental skills not physical skills. The fear of public speaking is overcome by speaking in public, most of that is an attitude, not a physical ability, but the mind can certainly hinder physical aspects. 

I thought of this, in a flash so to speak, because I've bought real estate sight unseen, never touch foot on the property, did so on the phone sitting at my desk. I had no experience doing that the first time I did it. To calm my initial fears I spoke to the appraiser who had been on the property. 

What I had to rely on most was my knowledge, not only did I have no experience in buying in that manner, I had no experience in that market either. Through my knowledge I knew the math, the process, the exits that were available to me, but I had never tried it, totally without specific experience. 

If I were to rank these three aspects in order of yielding greater success, I'd say education was first, experience is second and ideas or strategies would be last.     

I put strategies last because a good education in the basics already teaches the strategies used by investors, the why and how, what remains are other ideas relating to situations. 

However, experience builds confidence too, getting out the and applying what you learn is needed to make things happen :)

There is a difference between knowledge, and perspective. The best teachers don't so much teach knowledge - they impart perspective, a feeling...

Knowledge is requisite, of course, but it can be very misleading without proper focus, that is perspective. 

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