Steps to Overcoming Fear in Real Estate Investing
“Fear is inevitable, I have to accept that, but I cannot allow it to paralyze me.” ~Isabelle Allende
Do you know what the hardest part of real estate investing is? It’s not finding the capital, picking the right location, or determining the best way to manage your investment.
The hardest part of investing is taking the first step.
Many prospective real estate investors fail before they even begin, because they aren’t able to overcome their fear of failure. It’s healthy to have a fair amount of fear when you begin investing — you want to be cautious and ensure you’re taking the right risks for your investment plan.
If you’ve been dreaming of owning your own investment properties, learn how to let go of your fear, plan strategically, and get started on building your real estate portfolio.
How to Overcome Your Fear of Investing in Real Estate.
If you’re ready to tackle your fears, here’s how you should get started.
First, you’ll want to determine exactly what you’re looking to do as a real estate investor by asking yourself four key questions.
- How much capital am I looking to employ?
- What is my desired minimum rate of return?
- When do I need this money back?
- What is my risk tolerance?
These questions are important because they’ll help you decide what type of property to select (single-family, multi-family, apartment complex, etc), what type of financing to secure, and how much money you’re willing to put on the line for your investment.
Once you have these answers, you should start to feel more comfortable as you move forward in the process.
Additional Tips on Conquering Investment Fears.
If you’re still not feeling completely comfortable, ask yourself three more questions.
- What could I gain?
- What could I lose?
- What happens if I don’t change?
The first one will help you understand the benefits you feel will come with investing in real estate property. Maybe you’re looking to supplement your income or set off on the path to financial independence. Some benefits, like owning your own business, might be less about money and ROI and more about a sense of pride. Whatever the benefits, be sure to write them down or vocalize them.
Next, think about all the ways your investment could go wrong. Do you have a backup plan? What’s the worst case scenario? If you plan out how you would handle a situation where an investment goes south, you’ll feel more prepared to ensure you avoid this situation.
Last, look at your life now. If you don’t change and things remain exactly the same, will you still be happy? If you’re looking for a new challenge, chances are, you’ll need to take a leap of confidence in order to change your situation.
Utilize Underwriting To Overcoming Fear in Real Estate Investing.
To help prepare yourself for this huge challenge, you’ll need to approach underwriting your deal strategically and honestly. It can be easy to get wrapped up in the best case scenario, but it’s important to be objective during this process.
You should always have a realtor or third party broker underwrite your deals, but you’ll want to underwrite them yourself, first.
To do this, you’ll need to look at the EGI (effective gross income) or actual rent coming in. You’ll want to find out how much rent the current property owner received within the last 12-months to determine this. Next, subtract 50% for operating expenses. While this number is likely on the high end, it’s better to determine the worst case scenario, in order to properly assess the deal. This will give you your NOI or net operating income.
Additional Tips on Real Estate Investing.
When investing, not everything will go according to plan, even if your CAP rate is sound and your strategy is strong. When deciding to take the plunge, you’re likely to experience some doubts. If you feel at least 75% certain, that’s enough to get started.
Be sure not to go all in during your first investment. It’s better to play it safe until you’ve gained more experience. Also, be ready to adapt your plan if needed. Lastly, if your investment does fail, acknowledge it quickly and courageously. Learning what went wrong and how to correct the issues for next time can be an invaluable experience.
Most importantly, make sure you have fun when investing! It’s a rewarding experience, so be sure to nurture the positives and not the fear. Once you’ve made a decision about investing, stop second-guessing yourself. Instead, shift into execution mode, start planning, then bring your plan to life.
Stop making excuses — just get out and do it!
See you at a meeting soon!
The Southwest Florida Real Estate Investment Association is the leading source of SWFL real estate investing events that provide investment education and networking in southwest Florida. We analyze the housing market and foreclosures and provide information, education and networking events in order to build a network and knowledge base for investors and potential investors. Our members include real estate agent, brokers, investors, hedge fund managers, rehabbers, wholesalers and more.
Our SWFL REIA General Meeting is held in Fort Myers where we provide education on hot topics in investing and an opportunity to enjoy the camaraderie of your fellow investors. You’ll get a chance to ask for advice from successful real estate professionals and even make a few deals on your latest projects.
To become a member, anyone can register as an individual, a couple, or a corporation. Being a member opens the doors for endless networking opportunities, advice from members with decades of experience, new ideas from entrepreneurs, camaraderie with those just beginning, and deals and contracts done in the meeting room. For those interested in Cape Coral rental property investment and/or Fort Myers rental property investment, SWFL REIA will be able to provide a network to help launch a successful investment career.
The SWFL REIA is known and respected as a source of current, actionable and useful information about the housing market in the area that we meet.
We meet twice a month.
One of the premier sources for real estate investing networking and education is the SWFL REIA. In the real estate world, the SWFL REIA is different in that they do not do information product sales. Their meetings are focusing on the best ways of investing in real estate by collaborating with other property investors who are sharing their experiences.
We look forward to meeting you at a meeting soon!
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