5 Steps to Harness Your Fear of Real Estate Investing (& Use it to Motivate You!)

by | BiggerPockets.com

Fear can be a powerful motivator.

It can also hold us back from being all that we can be. Achieving anything when we’re afraid of moving forward is no easy feat — but making decisions and moving ahead in spite of our fears is often necessary for success!

When it comes to investing in real estate, you will have moments where you’ll be afraid. Whether it’s due to risk or uncertainty, fear can make it incredibly difficult for you to know when to take the plunge and when to hold back. Real estate investors have to know when to move forward and when to hold back. If we do not (and many have learned this the hard way), then we either never get off go or we end up losing everything. Both are the wrong ends of the real estate investing spectrum!

Fear is healthy, and it is natural, so it is not necessarily something to be avoided or eliminated. Instead, fear is something to be managed — and when managed properly, fear is something to overcome.

Overcoming fear is harder for some than others — especially if you’re prone to anxiety or worry. But when it comes to your investments, you can’t afford to be fearful without a plan for dealing with that fear. You can, however, afford to be smart. Here’s how you can begin to overcome the fears that are holding you back from financial freedom.

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5 Secrets to Overcoming Fear for Real Estate Investors

1. Learn what you can.

Oftentimes, we’re fearful because we don’t know. What makes this scenario worse is not only do we not know, but we begin to make assumptions and almost always naturally assume the worst. We don’t have all of the information. Fear often stems from a lack of information, and if we don’t understand, we’re afraid. In many cases, the best way to dissolve fear is with understanding.

Related: Fear Could Be Costing You Millions: Here’s How to Overcome It

Sit down, organize all of the information you have, and try to fill in the gaps where you don’t. Remember what they told us in elementary school? Knowledge is power! If you have knowledge, you’ll be able to make informed, solid decisions that are rooted in facts, not fear. The simple action of organizing in itself will begin to help you overcome the fear. The confidence of action — specific and methodical action — will go a long way!

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2. Reject micromanagement.

Fearful people are the best at micromanaging. They don’t know how to let go. They enjoy controlling the little details and knowing what’s going on every second of the day. If you don’t think you’re a micromanager, think back to the last time you felt fearful about something in your real estate investment career. How nit-picky did you get? How many people did you pester?

When unsure, yes, ask questions. Get details. Be thorough and do your due diligence. But there’s a line that crosses over into obsessive micromanagement that will just drive you insane! It will make you more neurotic. It will drive people away from you, and usually the ones to leave first are the ones you need the most. Don’t let that happen. Work hard to avoid micro-managing and questioning your team and yourself to death.

3. Build a network of support.

One of the best ways to combat fear is with people. Fear grows in isolation, when we’re left alone to spin our wheels in our own thoughts. A network of support, whether it’s friends and family or other professionals (though ideally, it’s a combination of both), will help give you a space to work out your fears, receive advice, and find emotional support.

We need other people in our lives. Making financial decision is difficult, and knowing you have support behind you goes a tremendous way in moving forward. I give a lot of talks to different real estate organizations and at events, and I almost always end those talks with one pice of advice: You WILL become the six real estate investors you surround yourself with. Choose wisely and lean on them for their support.

4. Have contingencies.

Safety net. Safety net. Safety net.

One of the surest ways to guard against fear is to prepare for the future. Don’t put all of your eggs in one basket. Play it smart. And don’t make decisions that you won’t be able to recover from if something doesn’t work out!

Do you have the cushion you need to recover if this decision doesn’t work out? Can you bounce back? What’s your plan B? While you don’t necessarily need to labor over a plan for every single possible outcome, you do need to plan and prepare.

Too many investors begin to build their portfolios or start their active investing activities and bet the bank on their success. They spend everything. They go all in. They burn their boats and literally burn their entire house down. I love the “burn the boats” metaphor that emphasizes going all in — but only after you have a plan! And part of your plan must include safely navigating the world of real estate.

Have a safety net and contingencies in place so that you don’t need to be afraid of the future, no matter what the outcome is. If you can handle whatever life throws at you, you have nothing to fear.

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Related: 3 Steps to Overcome the Fear of Purchasing Your First Investment Property

5. Learn to recognize red flags.

If you don’t know what you’re looking for, it’s a lot harder to discern rational fear from the irrational. If, on the other hand, you know exactly what is cause for alarm, you’ll know what fears are founded. You’ll know exactly when you need to walk away — and when you just have the jitters.

Learn to recognize when there are real red flags about a property, a deal, or a partnership. If you know what warning signs there are, you will be able to avoid bad situations. The old adage of “if it sounds too good to be true, it is” should always be on the front of our minds. That is a simple, simple way to keep an eye on how you feel about an investment or a partner or a vendor. If it does not feel right, simply re-evaluate and then make any adjustments that you feel are necessary.

Investing in real estate is thrilling and incredibly, incredibly rewarding! If you do your due diligence and plan well, you don’t need to be afraid of what’s to come. Play it smart and let yourself be excited about the future.

Any other ways you mitigate fear and make sure it doesn’t paralyze you?

Share with a comment!

About Author

Chris Clothier

In 2005, Chris Clothier (G+) began working with passive real estate investors and has since helped more than 1,100 investors purchase over 3,400 investment properties in Memphis, Dallas and Houston through the Memphis Invest family of companies.

12 Comments

  1. Peter Mckernan

    Great Article Chris!

    It is true that fear can paralyze us into not moving at all, but that is when we need to move towards that fear and combat it with logical action. The action that we take against the fear is what can make or break our success.

    You are always one of my favorite speakers when I go to a conference when you are on the panel!

    • Chris Clothier

      I totally understand that feeling Shaquetta. It is important that when you feel that way, you lean on your support and your mentors to help you focus on facts and not on the uncertainty. They will help you to focus on what you are certain of and then make a decision to either move forward or move on.

      Best of luck to you! Chris

  2. Johannes Kornacher

    Great post, Chris. Thank you! It’s not about no fear – it is how we manage it. In my experience, sometimes a well dosed portion of fear is what got me going. And, if recognized, it creates focus and caution. I would not want to live without any fear.

  3. Tawana Keah

    You hit the nail on the head Chris, where you mention “we need other people in our lives.” North Texas has proven to be a Hot Topic for real estate investors living in other popular states like California, New York, and Florida where the cost of living a Plush lifestyle can be out of reach. The real estate investors I work with call on my expertise and vast knowledge about the best places to live in North Texas like Plano, Frisco, McKinney, Allen… all of which have been on Forbes or Money list for the best places to live… an aggressive real estate investor can flourish with the right insight and help as you said… “recognize when there are real red flags about a property.”

    Thank you so much for listing these important steps and traits to become a savvy real estate investor.

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