If you’ve never made a mistake real estate investing, it is likely you have not put forth much effort yet — or that you are lying to yourself. The mistakes you have made and will make are your badges of honor. None of us are natural born real estate investors, so mistakes and challenges are expected and should be welcomed. In this article we will identify many common mistakes and address how to surpass them to become a better and stronger real estate investor.
The author Oscar Wilde said, “Experience is simply the name we give our mistakes.” Experience oftentimes is developed through making our own successes and failures while risking our own time, energy and capital. However, there are other ways to gain valuable experiences.
Below is a short list of ways to learn and gain value through other people’s mistakes and experiences.
The 20 Best Books for Aspiring Real Estate Investors!
Here at BiggerPockets, we believe that self-education is one of the most critical parts of long-term success, in business and in life, of course. This list, compiled by the real estate experts at BiggerPockets, contains 20 of the best books to help you jumpstart your real estate career.
4 Ways to Gain Value From Mistakes & Experiences
1. Through trial and error.
This is the default for most of us. We aim to learn as much as we can through online resources and then head out on our own to build our real estate investing empires.
2. By listening to the advice and stories of others.
When listening to the advice and stories of others, make sure to internalize this investor’s pain and/or joy. When another real estate investor tells you how they were scammed or how they did not perform proper due diligence, put yourself into this real estate investor’s shoes. Try to feel the pain this real estate investor had so that you do not make the same mistakes that you just learned about.
3. By working with a mentor.
A mentor with a vested interest in your success should be similar to working with a partner, without splitting any of the profits.
4. Through partnering with a local expert.
With the help of your local real estate investment club, aim to identify the active local investors in your area who specialize in other types of real estate specialties you do not. Aim to partner with these investors if you discover a lead in your area that fits their niche.
As John Cena said, “If you don’t learn from your mistakes, then they become regrets.”
When we make mistakes, it hurts. The idea in psychology called loss aversion can help explain this hurt and regret we feel when we miss an opportunity or make a mistake. Loss aversion refers to people’s tendency to strongly prefer avoiding losses to acquiring gains. Most studies suggest that losses are twice as powerful, psychologically, as gains. Use your mistakes as signposts and directional markers along your journey to your financial goals. When you make a mistake or do not perform as well as you feel you should have, aim to learn what went wrong and how to avoid these same mistakes in the future.
Pro Tip: Review each deal, each week’s activities, and/or each mistake as objectively as possible. If you did make a mistake, it was likely due to only a couple of factors. Do not let a single mistake create a false limiting belief in your mind that may do much more harm than good.
6 Types of Mistakes Investors Make
1. Mistakes With Yourself
There is no question that you will eventually miss out or lose a deal because you are too lazy, analyze too slowly, or are temporarily too greedy. Each mistake you make refines your investment skills and makes you a more powerful and experienced real estate investor. Allow these mistakes to motivate you to correct the problem inside yourself and help local sellers even faster.
False limiting belief: “I’m a lazy person that can’t do this.” “I’m not a people-person.” “I like to sleep in late and watch too much TV.” “I’m too young/old to start now.”
2. Mistakes With Your Property
Perform proper due diligence always. Sellers sometimes lie or simply forget to disclose pertinent information about their property for sale. No one is to blame but yourself if you do not take the time to know precisely what you are buying while stepping into the seller’s shoes.
False limiting belief: “I made a mistake and did a bad deal last time, so I’m going to do a bad deal again.”
3. Mistakes With Sellers
While working with real estate sellers, we can sometimes make mistakes in our negotiations or due diligence that costs us hundreds or thousands of dollars. Working with sellers and buyers has partly to do with your current level of people skills and sales skills. If you feel you are lacking in people skills or negotiation techniques, aim to read up and educate yourself on the subjects.
False limiting belief: “Sellers don’t like me.” “I can’t get the types of deals these other investors can.” “There is no way I can help sellers.”
4. Mistakes With Buyers
Oftentimes it can be easy to develop close relationships with your renters and tenant-buyers. Additionally, it can be easy to be fooled into renting or selling your investment property to a high-risk, unqualified buyer. Make sure to thoroughly screen every adult who aims to live in any of your investment properties.
False limiting belief: “I always choose the wrong people to rent to.” “I’m such a sucker.”
5. Mistakes With Education
Over the years real estate investing, I have tried to be an information and real estate training junkie. While learning as much as I can about real estate investments, I have wasted my fair share of money on hokey and fluff-filled real estate investment training courses. Many times I’ve made these purchase decisions based purely on emotion and not logic.
False limiting belief: “All real estate investor training material is outdated and a waste of money.”
6. Mistakes With Family
How many times have you received happiness from an outside source? Closing deals, helping sellers and making money thrill us as real estate investors. Oftentimes we can make the mistake of taking out our frustrations and personal depressions on our family members and loved ones.
False limiting belief: “My family thinks I’m a failure as a real estate investor.”
Maxwell Maltz is quoted saying, “You make mistakes, mistakes don’t make you.” Starting today, move forward with a new lens. You are not the same person who made these mistakes in the past. You have changed and are improved and will not make the same mistakes again.
In conclusion use your past mistakes to empower your future self; do not make these mistakes in vain. Move forward from every day of your life with the clear understanding of what has been productive and what has been counterproductive. Aim to duplicate and improve what has been productive, and eliminate or outsource the unproductive and time-wasting activities of the day. If anyone has been a success as a real estate investor, then there is no reason you cannot be, too. Embrace your mistakes and grow from them.
Is their a particular mistake you’ve made that stands out to you? What did you learn from it?
Leave me a comment and let me know!