Analysis Paralysis | Think Realty | A Real Estate of Mind

Analysis Paralysis


Are you stuck in the pursuit of your next investment property?

Research has shown that when people are faced with too many options, they sometimes experience what is known as “analysis paralysis.” This term refers to a situation in which an individual is trying to make the best choice out of an overwhelming number of options, resulting in overthinking and, ultimately, no decision being made. As a rule, the more data we have available, the more difficult it is for our brains to process it. For many, the idea that other, better alternatives are out there can lead to getting stuck in the searching and analyzing phase, never quite translating into action. Others may get stuck in analysis paralysis out of fear of making the wrong choice, mired down in imagining all the things that could potentially go badly if they do.

Careful analysis of a potential rental property, including the local market in which it is located, is a critical part of making good real estate investments. But sometimes, investors will collect large amounts of information and then become paralyzed by it. To avoid this situation, investors can do several things to make their decision-making process much more efficient. For example, one strategy that investors can use to make multiple decisions within a specific time frame is to clarify their end goal. Sometimes the inability to decide stems from not having a specific idea of what it is we want. By eliminating any options that lie outside a set of parameters, investors can limit their property searches and make them far more efficient.

Other ways that residential real estate investors can keep their next investment moving forward include breaking the task down into smaller steps and then prioritizing each one. By dividing a big decision into several small decisions and then differentiating between which must be made now and which can be acted on later, investors can do a lot to keep the decision-making process moving forward.

In the end, however, the most important thing to remember when choosing your next rental property is to leave the search for perfection behind. There will always be reasons not to buy that next property, but unless the rental home has defects that would otherwise eliminate it as a prospect, it’s important to focus on how you could make the property work for your investing goals. If the property you are considering purchasing will help you get there, it is probably a good choice for you.

Knowing what analysis paralysis is and how to avoid it can keep your investment portfolio — and your profits — growing year after year.