So, you want to be a Real Estate Investor, but you haven't quite started yet? You have looked at a dozen properties, talked to your mortgage company, spent thousands on education, sought advice from an Agent, and yet, you have yet to put one foot in front of the other. No Baby steps. Nada.
How many Real Estate Investor meetings have you been to, or Real Estate books that asked you "what's holding you back"? And then, the logical answer: Fear. You are "afraid".
You have been told to "get over it", "take the plunge", and yet, you are frozen at the green light. Well, maybe you're frozen at a Yellow light. Maybe you have a plan, but there are warning bells ringing in your head. When you analyze what you are fearful of, you should see the picture of your fear for what it is. You are either a cautious, saavy calculated person, or you are a big talker, but not a "doer".
Let's look at some of the common fears for what they are:
You are afraid:
- You will pay too much for a property and lose money
- You are afraid you won't be able to manage the property
- You are afraid you will not be able to get the rents you need
- You are afraid the repairs are more than you anticipate
- You are afraid the septic system isn't good, even though the Owner says it is
- You are afraid you will not get the loan, and you will lost your earnest money deposit
Are these ridiculous fears that you need to "get over", or are they legitimate concerns that a responsible Investor needs to explore?
Not all concerns are cop-outs. Not all concerns are excuses to let you turn away from a deal without feeling like a coward. Sometimes I have not signed my name to a sales agreement on a deal "just because it didn't feel right". And guess what? I was thankful, not regretful. I analyzed, and when it came down to it, the risk was too great for one of the concerns I had.
Look at your list of reasons NOT to do a deal. What are the answers?
- Work with an Agent, who can tell you what other homes sold for in the area. Not working with an Agent? Contact an Agent who sells a LOT of homes, and ask them what they would charge you for a consult. Seek out an Appraiser, and see what they would charge for a consultation on the home. If you DO these things, you will be standing firm on the belief that you want to make a sound investment, not wallowing in fear. If you procrastinate calling, or think you are going to look stupid, then you are letting FEAR of rejection stop you. Shame on you.
- You don't think you can be a good Landlord? That is why they have management companies. Contact several, and see how they will manage your property, and how much they will charge. Then make sure you have that cushion built into the sales price and monthly payment. If you have the phone numbers of four management companies, and but you haven't called because you are not sure if they want to talk to you since you don't own the property yet, shame on you. You're AFRAID.
- Look through the paper, and call the ads that are in the area you want to buy, and get details on the apartments/houses. Ask for the current Landlords Rent Record to see what rents they have been receiving, and how long it took them to rent it. Call a good property management company in the local area, and ask them. Does this seem like too much work? It probably isn't going to work for you, so you shouldn't buy it...and you should forget about investing because you are letting FEAR hold you back.
- Call a contractor, or five, ask permission from the Owner to have some estimates done on the repairs. Still unsure? Ask five more, and get specific. What exactly are they going to repair? What materials will they use, etc.
You will start to see a pattern of what repairs are needed, what it will cost, and which contractors are going to rip you off, either on the high end, or on the low end...they‘ll get the deposit and not finish the work.
How can you avoid this? Well, after the property is yours, and the work is ready to be done, don't pay all the money upfront. Discuss with the contractor that you would like to pay them their first installment after their first day of work. Then make sure they show up on time, check their work as they go, and if it is terrible, pay them a fair wage for the day, and let them go. Don't let them get half way into the job, and then muster the courage to tell them their work stinks. Don't be afraid. Be shrewd.
- Don't EVER take the previous Owners word for anything. Always inspect things yourself, or better yet, have a professional inspect it for you.
- If you work diligently with a reputable Lender, and they have assured you, in writing, that you will qualify for the loan, make your contract to buy CONTINGENT on you getting the loan. Yeah, it could be embarrassing if the loan does not go through, but legally and financially, you are covered.
Fear is not always bad. Fear is a warning, and if you logically conquer the warnings, with sound business choices, and watch the yellow light turn green.
Sitting at the green light succumbing to your fears, now that's real estate failure.
Knowledge is the only way to overcome these fears. Overcoming your fear is success.
Courage is not the lack of fear. It is acting in spite of it. (Mark Twain)
Happy Investing,
Brandon & Ann Yeager
www.MindOfAnInvestor.com
About the Authors: Brandon & Ann Yeager
Since 1998, Brandon and Ann Yeager have been on the buying side of over 100 real estate transactions as principals in several different states. As the founders of www.MindOfAnInvestor.com, Brandon and Ann are dedicated to helping others in the wonderful realm of real estate succeed and achieve their dreams through understanding and applying practical, easy, and consistent investing philosophies.
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