Do you ever lie?
No, I’m not talking about lying to the tax man, lying to your boss, or even lying to your spouse (shame on you!) I’m talking about something potentially much worse.
Lying to yourself.
Most of us do it all the time. We tell ourselves one thing, and try very hard to believe that. Really, Brandon, it’s okay… that extra hot peppermint hot chocolate from Starbucks isn’t going to mess up your diet… it’s such a small drink anyways…
Can you identify?
However, while lying to yourself about nutrition might be bad – lying to yourself about your real estate investing might be even worse. As an investor, I know I’ve done this multiple times and I’m not proud of it. However, I’m slowly learning my lessons and learning that the best way to succeed is to tell the truth, the whole truth, and nothing but the truth when looking at a real estate investment.
This post is going to look at 3 big lies that new investors tell themselves, and how you can learn to overcome these lies to succeed in real estate. Let’s get started.
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1.) “I Don’t Know Enough”
Education is one of the most important steps you can take as a beginner investor which is why we released “The Ultimate Guide to Real Estate Investing” for free to everyone who wants to read it. Since coming out, this online book has been read by tens of thousands of people, helping people learn the first steps needed.
However – many new investors stay in this phase indefinitely, believing they simply don’t know enough to get going. However – it’s not a lack-of-knowledge that stops people.
The truth is – no one knows “enough.” This is a learning process for our whole lives. I’m sure even Donald Trump is learning new things every day!
Don’t lie to yourself – if you’ve read the books, interacted on the forums, and read the blogs here – you probably know enough to at least take the next step. For advice on getting moving past this education, check out “The ONLY Step You Need to Get Moving in Your Real Estate Investing” or “How to Start Wholesaling: Getting Past The Education and Into the Field
2.) “I Know Everything!”
On the other end of the spectrum is those who feel they have it all figured out.
They’ve read a book (well … skimmed it) and they watched a couple episodes of Flip That House so they are ready. They don’t need to talk with experienced investors about their plan – heck, they don’t even need a plan. It’s easy – they got this.
While it’s dangerous to stay in fear for your whole life -it might be more dangerous to venture out in the world of real estate investing with no knowledge and just passion.
I talk with a lot of investors who are really excited to get going – and they are making offers on properties and trying to push forward – but don’t understand the basics. If they are lucky enough (or dumb enough) to actually land a deal – they probably are not going to succeed. There is a balance that these investors refuse to believe.
Don’t lie to yourself – you need to learn the basics. Go slow and steady and invest at your knowledge level.
3.) “This Deal Is Great!”
Most deals are not great.
Many investors look at a property and instantly think it’s a good deal just because it’s ugly and has the word “REO” in the property description. Excitement sets in and the lies begin.
“This only needs paint and carpet!”
“Everyone says it’s too much work… but I can do this easy!”
“This project will only take a few weeks to finish!”
As I said – most deals are not good deals, and most projects take more time and more costs to complete. You need to be honest with yourself on this. Will it really be that quick? Does it really only need that much work?
Before you go out and try to invest in a piece of property, it’s important that you are conservative in all your numbers and liberal in all your time estimates. I generally recommend that new investors double the amount of repairs costs they think a project will take, and double the timeline they plan on completing the project in. This could be for flips, buy and hold, commercial, notes, whatever.
Don’t lie to yourself about the numbers because the numbers don’t lie. (Click to Tweet This Quote!)
How to Overcome Your Own Lies
So how do you deal with these lies? When we’re lost in the moment, filled with excitement and anticipation, what’s the best way to stay grounded?
It’s actually quite easy – reach out to other seasoned investors.
Really, it’s that simple. Talk with several experienced investors about your deal. Often times investors are afraid to ask for other’s opinions because they don’t want to be shot down.
However, if you are asking several seasoned investors for their opinion on your deal, and you are met with criticism on those deals, assume that you probably have been lying to yourself.
This is one of the largest benefits of the BiggerPockets Forums. Go post your deal details and ask what people think – and then listen. They’ll tell you whether the deal is worth pursuing or worth dumping. Listen to them!
What about you? What lies have you told yourself as an investor? Or what have you heard other investors tell themselves? Let me know under this post in the comment section!
Photo: Michiel Jelijs