What excites me is watching new investors embrace the confidence—the self-discovery, if you will—that comes with finally taking that first big step into buying their initial investment property.
With such fast changes in the real estate industry it is easy to get confused as to what steps you should and should not do. There are so many options and investing styles, it is hard to know which one to pursue.
- Do I buy and flip?
- Do I buy and hold and rent?
- Do I buy single-family or multifamily properties?
You begin to feel like you are on a merry-go-round, and you are starting to see everything as a blur. The more you think about it, the blurrier everything becomes and you soon you catch the debilitating bug: The lack of self-confidence.
Lack of confidence is the number one culprit that stops people from investing
Often, when I talk with new investors, they may take as many as two years before ever buying their first investment.
Just think of how much appreciation and cash flow they may have missed. The sadder truth is many of these new investors never make an investment at all, because they struggle to find the confidence.
When I work with seasoned investors, they come in and make things look real easy.
This is because they know exactly what they want and what their anticipated outcome will be. That knowledge is what has built up their confidence.
So how do you build the confidence to invest like a seasoned investor? You must know what you want. I am talking about the BIG picture, the 30,000-foot view down on your investment business. What does it look like?
There is no replacement for good, old-fashioned on-the-job training.
But there are three other key factors I like to share that new investors can implement to help them overcome their lack of confidence.
No. 1 – Think like a business owner
I find most new investors just want to buy a property and make a lot of money instead of looking at what their investment portfolio may look like five or 10 years down the line.
This reminds me of when I was a child and sat in the back seat of the car while my dad taught my older sister to drive. She was driving all over the road, steering first to the left, then to the right, then back to the left again. (How scary and nonproductive!)
She could never learn to be a confident driver when driving all over the road. Dad told her to stop looking directly in front of her and trying to keep the car centered between the center line and the curb. He told her to lift her eyes up and look down the road to where she was heading. Sure enough, that very instant she was able to drive straight down the road. She quickly gained her confidence because she discovered it was easier to get to where you are going when you are looking at the destination and not at the journey. (By the way, she has 40 years of driving now, accident-free!)
The analogy, of course, is know where you want to take your investment and focus on the destination, and the rest will be less intimidating.
No. 2- Keep your pulse on the market
My investors and I all find it more comfortable to invest when we have an understanding about where the market is and where it is heading. Just like the best seasoned investors, they focus on where to buy (location) before worrying about what it is they will buy.
You want to know things like the direction of jobs and employment and affordability rates of the markets and ensure they are moving in a favorable direction to provide long-term, sustainable investments.
No. 3 – Start with low-risk investments
A paralyzing concern runs through many new investors: the horrifying “what if?”
- What if I cannot get my property rented?
- What if I get a bad tenant?
- What if I do not get my required cash flow?
Your mind can play with your confidence, so try on a more positive “what if?”
What if you bought a lower-risk performing asset, where the property was already rented, so you were comforted in knowing you had a tenant?
I’m talking about a property with seasoned property management in place and with a predetermined list of income and expenses. These “what ifs” that run through our minds and hurt our confidence can be reduced or eliminated simply buy starting with low-risk investments.
I continue to see that those investors who think big-picture, focus on the destination (with a written investment plan in place), keep their pulse on the market and start with low-risk investments are the ones who build strong confidence and even stronger investment portfolios.
Visit Larry’s website here.
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