“What do you think separates successful real estate investors from those who give up, fail, or never get started?”
Brandon Turner asks this question each week to guests on the BiggerPockets Podcast. Of course, there is a wide variety of answers, none of them more right or wrong than the other, but there is one thing that can be a true deal maker or breaker when it comes to giving up, failing, or never getting started—mindset.
Mindset is such an important part of investing and financial independence and such a key factor to not giving up, failing, or never getting started.
So how does an investor/landlord/property manager not only keep their head above water but maintain their focus to ensure long-term success? Here are a few simple reminders to play on repeat during the day-to-day or when times get tough. They’ll help keep you in check when you’re feeling overwhelmed in the real estate game.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
This is the dream right? Going from zero to 10+ rental properties, providing stable cash flow and long-term wealth for you and your family, and building a scalable business model to boot! Learn how this investor did just that, in this exclusive story featured on BiggerPockets!
5 Mindset Hacks to Conquer the Roadblocks That Sideline Other Investors
1. Assume positive intent (until you know otherwise).
Assuming positive intent is a must for first interactions. This is especially helpful in problem-solving scenarios like dealing with a tenant concerning late rent or a contractor/handyman who didn’t meet expectations. It steers investors away from anger, fear, and emotional responses. This hack ensures its users will also be following that oh-so-important “golden rule” when interacting with tenants, contractors, agents, managers, etc. Treating others the way you want to be treated isn’t just the right thing to do, it also means you’re much more likely to find reliable, responsible tenants and contractors who keep coming back to work with you. You’ll certainly have much more joy and sanity as you juggle it all.
Sam’s new tenant’s first full month’s rent through ACH payment fails. His first reaction is to get upset, both with the tenant and himself, thinking he did a bad job of placing the tenant and that the tenant has already let him down. Then he reminds himself to “assume positive intent.” Maybe the tenant accidentally tied the auto-pay to the wrong account number, or maybe there was a mistake on the bank’s end. Assuming his renter has the best of intentions allows Sam to treat the renter with patience and kindness, hearing them out when getting to the bottom of the problem.
It turns out that Sam’s new tenant did not budget correctly for the first month’s rent. By assuming positive intent, he is able to communicate calmly and effectively with his new tenant, ultimately collecting the full rent and failed payment/late fees, while establishing rapport. His tenant then listens to him when he emphasizes how important prioritizing rent and paying it on time is and trusts that the consequences of not doing so will be handled swiftly and consistently each time (through late fees, notices, and eviction). He has no further issues with late payments from this tenant for the remainder of the lease. He’s trained his tenant, kept his cool, and behaved in a way he can be proud of.
Related: 4 Books to Help You Adopt the Entrepreneurial Mindset
What It’s Not
Assuming positive intent does not mean being naive, allowing yourself to be taken advantage of, or continuing to work with people who don’t have your best interests in mind. It just means your first interactions with others and your attitude during problematic situations assumes the best of everyone involved first. Act accordingly if you learn that some individuals don’t have good intentions (which is bound to happen).
2. Play the long game.
Successful investors know that they’re in it for the long haul. They treat small setbacks and short-term issues as that—small. This also means they don’t make short-term compromises that will negatively impact the integrity of their long-term goals. Investors playing the long game don’t get distracted by every little squirrel that pops up. They keep their eye on the bigger prize.
Lauren has a poor month of cash flow. One vacancy went on longer than expected, and another tenant turnover resulted in a $3,000 AC unit being stolen. She feels overwhelmed with fear initially, thinking her projections for her freedom number and for financial independence are off. She worries that many months of this type of hit in cash flow will keep her forever tied to her W2 income. Then she remembers she’s playing the long game. Like all investments, she knows to expect some ups and downs. She reminds herself that she’s prepared for instances like this by withholding for vacancies and CapEx expenses. She’s playing the long game, after all, so small setbacks here and there along the way don’t get her off course. She puts his head down and keeps pushing for freedom.
What It’s Not
Playing the long game doesn’t mean holding a property that continually has poor cash flow or causes more grief than it’s worth. By all means, get rid of those and move on. It’s also not getting sucked in by every “opportunity” that comes along—wholesaling, flipping, rentals, commercial, etc. Find your lane. Get in it. Get good at it and keep trucking.
3. You find what you’re looking for.
Things won’t always go your way, but they’ll go your way a lot more often if your words and actions reflect those that you’d like to see in the people you work closely with. If you’d like to work with griping, complaining, negative individuals, then by all means, gripe and moan it up. However, if you’d like to build a team of people who are dependable and practice integrity while filling your homes with the same type of tenants, then look for that. While you’re at it, be dependable and practice integrity by being honest, positive, and looking for the good in people and situations. A funny thing happens when you start looking for the things you want—you find them. Maybe not right next door, but at least down the street. Eventually, you see far more of the good and far less of the bad. Call out the good. Look for the good. Eventually, the good will come looking for you, too.
Chris has had many conversations with other investors in his area, hearing many similar stories like, “The renters around here are awful. They’ll trash your house. I have to go knock on their door to get their rent.” Chris knows he doesn’t want that type of tenant. Because he’s playing the long game, he knows that whatever investment decisions he makes need to be sustainable for the long-term. He needs his real estate investments to lead him to freedom, not headaches. Terrible tenants, elusive contractors, or dishonest property managers certainly wouldn’t be sustainable or provide freedom, so he does his homework. He reads books, listens to podcasts, and learns about online communities like BiggerPockets. Chris sees and hears success stories and learns of ways to screen tenants to minimize issues. He finds free online resources to help collect rents through direct deposit into his bank account, saving time and trouble.
Communicating his expectations clearly with his tenants verbally and in his lease and impeccably following through with his word builds dependable, positive relationships. With some positive experience under his belt, he continues his search and conversations with other investors in his area. He begins organizing monthly meet-ups to share his ideas and learn from others. Eventually, he finds investors who think like him and have much better things to say about investing in rental properties. They become a resource for each other when they need advice. He didn’t give up until he found what he was looking for.
What It’s Not
You will not find what you’re looking for by lying around waiting for it to come to you. You will find it by clearly defining your goals and objectives, then taking action. You also won’t find what you’re looking for by standing around the coffee shop complaining about tenants, contractors, etc. Standing around any place griping and complaining will only help you find one thing: more people standing around griping and complaining. Just don’t do it.
4. There’s enough for everyone.
Successful investors don’t make decisions out of fear. Acting from a place of fear is never a good idea. Successful investors compete against themselves. They are their own toughest competition, and they continuously set goals and try to accomplish them. Because of this, they not only celebrate the successes of others, but they help others achieve their goals as well. That’s not possible if they’re constantly competing with the investor down the block, thinking the success of one means the failure of another. They know there is enough for everyone. There is enough money for everyone. There are enough deals for everyone. There is enough success for everyone. And a successful investor keeps looking until they find it. Knowing this allows them to make positive decisions from a place of confidence.
Katie makes an offer on a distressed property in her area that recently came on the market. She carefully runs the numbers and submits a cash offer she thinks is fair and will allow her enough room to comfortably make the necessary improvements while maintaining a good return on her investment. Her real estate agent warns her she may have some competition, so she acts quickly and makes an offer. She then begins to doubt her offer, wondering if she should put in a stronger one. She’s afraid she’ll lose the house and the cash flow it could offer her.
Then she remembers she doesn’t make decisions out of fear. She was confident in her calculations and made the offer that was right for her. If someone else gets the property, that’s OK. There’s enough for everyone, after all. The next day, her agent calls her to let her know that several other cash offers came in at the same time. The bids kept getting higher and higher, and she lost the property. Again, she tells herself, “There’s enough for everyone,” and she plans to meet her agent at another listing later that afternoon.
She soon realizes losing the first deal means she has enough cash available to make a strong offer on this property that includes two single-family homes needing much less rehab and CapEx expenses up front. Her offer is accepted, and she’s under contract with a deal that will definitely beat the 1% rule. She learns later that she lost the other property to someone moving in from out of town. They sold their home in a much more expensive city to buy a home and live in Katie’s more affordable area. They’ll be rehabbing and living in the home with the cash they made from their sale in the bigger city. They could afford to make a better offer because it’s not an investment property for them. She’s grateful she didn’t allow her fear of missing out derail her. Trusting there’s enough for everyone meant she got a better deal. She’s happy for the people finding freedom from expensive, city living who will be fixing up a distressed property in her community and adding value.
Related: 5 Habits You Didn’t Know Were Essential for Landlording
What It’s Not
Believing there’s enough for everyone is not complacency. It’s not letting deal after deal pass you by because you’re afraid to take action. It just means that when do you take action, you do so confidently, knowing that if this isn’t the right deal, you’ll find another one. No deal will come knocking on your door. Figure out what you’re looking for. Do your homework. Take action. Repeat.
5. It’s not your house—it’s your investment.
Looking at your properties as your investments rather than your homes with help you do this. After all, you don’t live in them. Investments go up and down. They have gains and losses. Remember, successful investors play the long game. As long as your investment is cash flowing, small setbacks aren’t important. When you see your properties as investments, you remove emotion from decisions and problems. You can move forward with less fear and worry.
This helps you to not only expect some hiccups but anticipate and prepare for them. You also won’t take it personally when a tenant damages one of your properties or a contractor does something you’re unhappy with. Real estate investing requires working with human beings. Humans are not perfect. They make mistakes. They act in ways you may not agree with or appreciate. When a tenant or a contractor or a property manager does something that negatively impacts you or your business, don’t take it personally. Know that it has nothing to do with you. This will help you keep a level head, find a solution, and quickly move on. It will also ensure you’re able to reflect more clearly to find the lesson in the issue. Then do what you can to avoid it in the future.
Jim gets a text from a tenant. She can’t find work, so she’ll be moving back home with family immediately and won’t be able to pay rent this month. It’s six months before the end of her lease. It’s the middle of December, and four inches of snow cover the ground. Jim’s first reaction is to get angry, taking it personally and wondering how someone could be so irresponsible. Then he reminds himself that it’s his investment, not his house. He has prepared for bumps in the road by withholding a percentage of his cash flow. He has a security deposit and pet fees to cover any damages. Jim wants his investment to be as passive as possible, so he assesses the damage, hires people to do the repairs, and actually has money left from the security deposit and pet fees to cover the vacancy expenses while he finds a better, more reliable tenant.
What It’s Not
Treating your rental properties as investments isn’t taking a robotic approach; it’s just taking things a lot less personally so you can move on quickly. Find a smart investment. Make it a place you’d want to live in yourself. Be impeccable about screening your tenants (or finding a property manager to do so), so that you can be as passive as possible after they move in. Then let go. It’s their home now. You can enjoy the cash flow and look for the next deal.
Try one of these hacks the next time you notice things may not be going the way you’d like. They might keep you moving in the right direction.
Let us know what you think in the comments below or share your own mindset hacks.