I wanted to know what were some of your biggest fears or concerns when getting starting with R.E. investing.
My first concerns were; who do I turn to for help. Once I found a person already doing it, I picked their brains and felt more comfortable and went full speed ahead.
I was also scared of getting bad tenants and not knowing what to do about it
My biggest fear was not being able to get out of a property that I couldn't handle.
After a nice visit to the book store and a few training programs I feel A-okay!
I just wanted to get an insite of what you went through.
My single biggest fear was NOT doing it and not taking advantage of the opportunity in my life. My worst fear was that my fear would win, that I would end up in the same rut as everyone else because I backed down.
My fear was being old and helpless one day and being a burden on others. I want to leave something for my children so they will have it a little easier in life. My mother in law is 72 and has health problems and lives in a basement apartment. She lives on social security and a low paying job that she walks to. She struggles, as do so many others. I want to one day have security and not to depend on anybody.
I fear not finding my next deal too. I mean what if I just got lucky once? What if it was just some kind of mishap? It's kind of a ridiculous fear I know, but it lingers in the back of my head, especially since I have no other income.
But tell you what - what I fear even more than that is having to spend my life wasting away at some miserable 9-5'er. The fear of that is way greater and it keeps me motivated to keep pushing on.
My biggest fears were;
1. Somebody would always yank my chain (an employer)
2. I would never have the lifestyle that I dreamed about
3. I would really mess up, lose money and fail.
How did I overcome these?
1. I did 2 weekend seminars with an experienced investor.
2. I looked at a lot of deals (you can do that on this site and learn a lot)
3. I got into action, placed ads, signs, etc.
4. I got my team together (not employees) attorney, title co. a list of fellow investors/buyers
5. I read a book per week concerning investment, success psychology, business
6. I asked a lot of questions and still do. Leave all arrogance behind. None of us knew anything about re investing when we were born. It has to be acquired. Don't begrudge the money you spend on your education.
I'll be quiet now :lol:
i think every newbies biggest fear is making a mistake that will cost you dearly... and i also think that not getting in over my head has overcome that fear
You know I'm reading a great book right now about the whole fear of failing thing. It's Failing Forward by John Maxwell. It really puts failure into perspective.
I failed a lot and big when I first started in real estate, and it taught me more than I could have ever received through early success. Typically failing is one of our greatest fears, but the truth of the matter is that only through being open to failure and working through it will you ever truly succeed.
The book is full of quotes and stories that point to this fact, but here's a couple of my favorites.
"The average for entrepreneurs is 3.8 failures before they finally make it in business." 3.8 failures!!! If you have NOT failed yet, you better get started or you are not going to get to your success.
"The difference between average people and achieving people is their perception of and response to failure." Average people cower away from failure. They run and hide from it. Achieving people embrace it and focus on learning the lesson from it. The lesson that each failure or mistake holds is far more valuable than even the reward that the success would have brought you.
I totally disagree with the idea that you have to first fail before you can succeed. I don't even understand that philosophy.
There is no business that the typical person undertakes that has not been done literally tens of thousands (or even hundreds of thousands) of times successfully by others. To simply ignore the facts of the business and try to re-invent the wheel regarding a business is simply foolish.
Real estate is a very simple business. In fact, buying at a big discount will eliminate the vast majority of problems with real estate investing. Yet, the majority of newbies fail in a short period of time. Why is it necessary to fail? Why can't a newbie simply learn the basic business principles and succeed right from the start? Why do most newbies fail when the answers are simple and available?
I JUST DON'T GET IT!
Mike
BENEFICIAL TO FAIL? You're kidding us aren't you Charles? I can't believe that you think failing is a good thing.
C'mon Charles. Do you really think that you need to fail to know what to look for? Quite the contrary, I have not failed BECAUSE I know what to look for! You've got this one backwards.
I don't not need to have bad things happen to me to take them to heart. Isn't that the reason that you're on this forum...to learn from others? Surely, you don't have to make every mistake yourself! That would be ridiculous!
When I first joined my local REIA, there was a woman there that owned and managed about 50 rentals. She had been in business for 20 years. I became friends with her and considered every word she spoke to be worth its weight in gold.
Here's just a tiny example of a piece of information that she gave me that literally saved me thousands of dollars. She taught me MANY things about screening tenants. One of the things she told me was that you should always check the applicant's driver's license and make sure the picture on the license was actually the applicant (because tenant applicants who are criminals occassionally pretend to be someone else to pass the screening).
I didn't think to myself "I can ignore that piece of wisdom because I'll have to suffer this horror story myself before I can take it to heart". Just the opposite, I thought it was a great tip that would help me avoid making a costly mistake. I immediately started checking the driver's license of every applicant and have probably avoided 5-6 major problem tenants as a result. These problem tenants would undoubtedly have cost me thousands of dollars. All avoided because I learned this lesson from someone else.
Multiply that one example by 100 and you can see how the lessons of other successful investors are so valuable.
That is why I say that it is totally unnecessary and inexcusable to fail. With a lot of work and study, you can get it right the first time and every time!
Mike
I agree with both sides of this debate.
I think that it is very important to learn as much as possible before acting in order to minimize failure in your efforts.
While that is true, the fear of failure can often cause "Paralysis of Analysis" which is basically becoming too immersed in book knowledge and information and never actually acting on your knowledge.
One great tool to overcome this "Paralysis of Analysis" is to accept failure as a part of success, and actually embrace it as a piece of your journey. This belief will allow you to “Fail forward.”
In achieving success, you do not always fail, but often times you first make mistakes while learning. People often times confuse failure with mistakes.
I think failure is only truly realized when you quit. Otherwise you simply make mistakes and correct them on your ultimate path to success.
-Sean
I think that it is very important to learn as much as possible before acting in order to minimize failure in your efforts.
While that is true, the fear of failure can often cause "Paralysis of Analysis" which is basically becoming too immersed in book knowledge and information and never actually acting on your knowledge.
One great tool to overcome this "Paralysis of Analysis" is to accept failure as a part of success, and actually embrace it as a piece of your journey. This belief will allow you to “Fail forward.”
In achieving success, you do not always fail, but often times you first make mistakes while learning. People often times confuse failure with mistakes.
I think failure is only truly realized when you quit. Otherwise you simply make mistakes and correct them on your ultimate path to success.
-Sean
vacman,
well put. everything is just a mistake until you quit. then it's a failure. i'll send you a nickel next time i use it. :D
and one of my favorites, "luck is where opportunity meets preparation."
if you get "lucky," you might not have to use the saying on failure...
-dean
I have actually had this exact argument with one of my friends on multiple occasions.
First we have to recognize some semantics here. Failure, mistakes, errors, etc. can mean different things in different contexts. If you define a failure as a mistake, an error, or even a lack of success (even if its temporary), then I think I can safely say that you, Mike, along with everyone else, has failed before, no matter what your mentor taught you. Now if you define failure as a permanent state of a lack of success, then I think its arguable.
The fact is that you WILL make mistakes and you will fail, but by persevering through and learning from the mistake/failure you can develop yourself that much more. I think the point is that working through and learning from the mistake/failure is the key. As Paul Meyer puts it, "90% of all those who fail are not actually defeated. They simply quit."
Yes, it is good to learn everything you can, but there will most likely be a limit to your access to book or other's knowledge that can only be superceded by personal experiential knowledge.
Are you saying Mike that you have never failed in any single endeavor in real estate? You got every deal you were shooting for? You've never been burned by a contractor, or a seller, or a buyer, or a tenant? You've never fell short on a projected time frame or profit margin? You've always gotten exactly what you wanted? Have you never failed?
Now my question is not, did you work through those things and learn from them and adapt and become a better investor for them? My question is not, did you make the most of it and push through and in the long run make it a success. My question is have you ever faced failure. Have you had EVERY deal work out perfectly? Have you never made a mistake? Has it been that easy of a journey for you?
Lack of success (failure as defined by Merriam-Webster) in different degrees and expressions is an essential aspect to the journey of success. Not that you can't have success along the way, but you will have mistakes/lack of success/failure along the way also. It is unavoidable, and I think if you analyze your investment career, Mike, you will see that you've had some mistakes/failures. Now you may have adapted quickly and minimized the damage. You might have learned from others and avoided many pitfalls, but I think it would be naive of anyone to think that they won't experience mistakes and lacks of success in their career.
Mike, I think I understand your mentality because it seems very parallel to my friend's, but I think the disagreement here might just be more about the connotation of the words and not actually the concepts. I think your mentality is a very robust, adaptable style, and it prevents long term failure. I think it also prevents you from understanding that those short term mistakes that you adapt through quickly are still "failures." Most people don't put the diligence or discipline into it to fix those little mistakes quickly so they don't turn into big mistakes. But the fact remains that you will error, you will make mistakes, you will fail, the issue is, first, will you persevere through it and, second, will you learn from it? Now Mike you may have no decision process on will you persevere. You may immediately move on to learning from it and adapting to fix the problem immediately, but most people don't.
I think to have any measure of real success, you will in one measure or another face adversity, you will fall short, and hence you will experience failure. Now your perception of and response to that adversity, to that falling short, to that failure will determine if you will succeed or not. The key being to understand that you will fall short, and what you do when it happens will be the determining factor in your life.
I personally think failure holds more opportunity in life than any other experience possible. If you persevere through it, it will make you face more in life than anything else will. It will require you to dig deeper than you ever have. If you overcome it, you will be stronger than you ever could have been through easy success. I know this not from books or mentors. I know this from my own personal life.
Ryan,
I agree with you that we're getting caught up in semantics. Here is how I would define these terms:
Mistake - an error or fault resulting from defective judgement or knowledge
Failure - committing a series of mistakes that leads to a major setback, such as losing money on a deal or being forced out of business (even temporarily)
Ryan, yes, I have certainly made mistakes. However, because I studied hard and learned from other successful landlords, I have not made any serious mistakes (like paying retail for property or failing to deal properly with tenants, which are the two main causes of failure by new landlords)
My argument is not that I am perfect - FAR FROM IT. I have not succeeded because I am a genius or a great entrepreneur. Quite the contrary, I have succeeded because I followed in the footsteps of those successful investors who have gone before. Real estate has been around forever, therefore there is nothing really "new" in this business. Every mistake has already been made and every path to success has already been paved. My job is simply to duplicate what they did right and avoid their mistakes.
The fact is that the majority of new real estate investors fail (are forced out of business) in a short period of time. That is also true of every other type of business. My point is that this is entirely preventable IF the newbies would simply do their homework and learn the business. It is totally unnecessary to make major mistakes (like paying retail for an investment property), yet this is one of the most common and most devastating mistakes and it leads to failure. We see these mistakes repeated over and over in posts on this forum, even though the information on doing it right is perfectly clear and absolutely free.
I have never lost money in any of my real estate companies. Why should I? This isn't brain surgery. It is a simple business. If you follow proper business principles and stay disciplined, there is not much excuse for losing money.
I have not gotten every deal that I looked at. It is certainly not a mistake to not get every deal. In fact, that is one of the secrets to success in this business - don't fall in love with any property. It's all about the numbers for me. If I can't buy a property at my price, I don't buy it.
I have been burned by contractors, sellers, and tenants. Again, not a mistake. I did the proper due dillegence on these people and NOTHING I could have done would have prevented these people from burning me or predicted that they would do so. However, none of these incidents has caused my rentals to be unprofitable because I use real world expense numbers and these incidents are a normal and completely routine part of the business.
I don't want to give the wrong impression that I don't think I've made mistakes. So, here's an example of one of the mistakes I made.
One of the first properties I bought was a SFH house in a blue collar neighborhood. The previous landlord knew nothing about the business and allowed it to become a crackhouse. It was almost completely destroyed. EVERY door and window were broken. There were holes in all the walls. It was a mess.
I bought the house CHEAP and rehabbed it. During the rehab, I developed pride in the property (STUPID) and over-rehabbed it (STUPID). We put hand stained crown molding; NEW appliances; and even a dishwasher in the house (EXTREMELY STUPID). This was a serious mistake, but fortunately I bought the property right and this didn't result in negative cash flow (although it certainly resulted in lower cash flow than I should get). This was a lesson that I didn't get from books or other investors, although I certainly should have. This incident was entirely preventable if I had only done a better job of studying or learning from others.
Mike
I think the argument is primarily about semantics. I've done well in RE but I certainly haven't done so without making mistakes. I've lost money on deals but I expect a small percentage of deals to have problems. I think I make mistakes every day.
In my first development on my own and from scratch I had created a complicated spreadsheet to estimate construction costs. Every development (or deal) has it's own unique problems and my fancy spreadsheet underestimated costs by almost 1 million dollars. I ended up finding a way around the problem and made good money on the deal eventually but mistakes happen.
I think that one of the biggest differences between successful people and others is that successful people don't blame anyone else for their problems. If I get screwed by someone in a business deal, I don't start crying about what was done to me. I call that my mistake and make sure that no one has that opportunity again.
Sorry for the rambling post. I need sleep.
Good night and good luck.
Mike, I would agree that failure, as you defined it, is preventable with enough applied knowledge. Nonetheless many of us perish in business because we either do not learn enough knowledge or we don't apply it. Mistakes are unpreventable and are part of the process, and I think our failure definitely comes when we don't deal with and learn from our mistakes quickly enough.
Either way, I think its important to understand that even through mistakes and/or failure we can learn, adapt, and still succeed. The key is to persevere through it and to learn from it.
I, unfortunately, was one of those ignorant souls who bought my first couple houses for too much. I also made them too nice, and I, therefore, paid the price of my ignorance. I persevered through my mistakes/failures, learned from them, and can claim that I have only lost money on one house. I do hold these first experiences very dearly. They taught me more about life and about myself than all of my successes, but I definitely enjoy the successes quite a bit more. :D
Marvin,
The beauty of the "I've got to fail to learn" philosophy is that you don't need any knowledge at all to start. "Just Do It" is to mantra.
If you're going to fail a few times before you do it right, then I would just pick a house that you think is really great; pay retail for it; and then in a few months when the property has appreciated about $50,000, sell it for a BIG profit (just like on the "Flip" programs on TV).
After you learn that lesson, then "Just Do It" again, and you'll learn another lesson.
Keep doing this and you've found a sure path to success.
Mike
Charles,
Get a grip! I clearly stated that this "you've got to fail to learn" theory is ridiculous. My post is pointing out that if you want to fail - buying at retail and counting on appreciation are sure ways to do that.
I clearly said that you should learn the business before you start investing and therefore not fail.
You're the one that said you've got to fail to take the lessons to heart.
Who's giving bad advice?
I did and have consistently told them the truth. LEARN THE BUSINESS BEFORE YOU INVEST. Buy at a HUGE discount. It's much easier to do it right the first time than to learn by failing! I've said it over and over and over again!
Mike
my biggest fear was talking to and negotiating with sellers. asking personal questions like "how much do you owe on your house?" and I could not believe that someone would actually let me buy their house "subject to" and let me make the payments while the mortgage stayed in their name.
it's amazing how quickly i got over all that though. talk to a few seller and you're still alive and you figure out it's really not all that difficult.
I think that it is very important to learn as much as possible before acting in order to minimize failure in your efforts.
While that is true, the fear of failure can often cause "Paralysis of Analysis" which is basically becoming too immersed in book knowledge and information and never actually acting on your knowledge.
One great tool to overcome this "Paralysis of Analysis" is to accept failure as a part of success, and actually embrace it as a piece of your journey. This belief will allow you to “Fail forward.”
In achieving success, you do not always fail, but often times you first make mistakes while learning. People often times confuse failure with mistakes.
I think failure is only truly realized when you quit. Otherwise you simply make mistakes and correct them on your ultimate path to success.
-Sean
I agree "Failure" and "mistakes" are completely different. You fail because you give up. if you never give up you never fail! Mistake's are how we learn OUR lessons along the way. I say this because a mistake for me may not be a mistake for you... They are specific to our needs at the time. A decision may not benefit us at all in one occasion but my benefit us greatly in the next.
I think that it is very important to learn as much as possible before acting in order to minimize failure in your efforts.
While that is true, the fear of failure can often cause "Paralysis of Analysis" which is basically becoming too immersed in book knowledge and information and never actually acting on your knowledge.
One great tool to overcome this "Paralysis of Analysis" is to accept failure as a part of success, and actually embrace it as a piece of your journey. This belief will allow you to “Fail forward.”
In achieving success, you do not always fail, but often times you first make mistakes while learning. People often times confuse failure with mistakes.
I think failure is only truly realized when you quit. Otherwise you simply make mistakes and correct them on your ultimate path to success.
-Sean
I agree "Failure" and "mistakes" are completely different. You fail because you give up. if you never give up you never fail! Mistake's are how we learn OUR lessons along the way. I say this because a mistake for me may not be a mistake for you... They are specific to our needs at the time. A decision may not benefit us at all in one occasion but my benefit us greatly in the next.
My biggest fear is that I will keep reading and learning but never actually be comfortable enough to plunge into an investment....I have success in my current profession and would like to have that success in real estate... :goofy: