Do you have the right mindset to succeed as a real estate investor? I wish I could give you one simple silver bullet answer to that question. I wish it were that simple, but it’s not.
There are many different traits or characteristics, I believe, that enable somebody to be successful in real estate investing. In fact, there are too many traits and characteristics to cover in one article, but I would like to cover one in particular, with two aspects related to it.
As a full-time real estate investor in Dallas, starting out part-time more than 10 years ago, I continue to evaluate what I have accomplished during the year while looking forward to the next. I ask myself, “What do I need to do differently or do better in order to exceed the results we had this year? How do we improve upon them through next year?” And every time I do this exercise at the end of the year, I can’t help but think of how critical my overall mindset is to my success. It really boils down to two things you’ve should have as a real estate investor: You’ve got to have the right mentality and you’ve got to be right, mentally. Let me explain what I mean and also distinguish between those two aspects.
Having the ‘Right Mentality’
Let’s first talk about the right mentality of a real estate investor. Some of you may have heard the phrase or term “abundance mentality.” It’s used in a lot of different contexts. If you’re not familiar with the terminology, it simply means, there’s enough to go around for everyone, there’s enough of any particular asset or need, there’s enough for everybody to utilize, to consume or to be successful. With respect to real estate investing, the abundance mentality is critical.
In the world of real estate investing the abundance mentality comes into play in two different facets. And it will continue to come into play throughout your real estate investing career. It’s not something you simply address or overcome as you embark in real estate investing whether you are part-time investor or an experienced investor. I can tell you it comes into play, regularly. And you’ve got to maintain the right mentality.
The abundance mentality comes into play when talking about the abundance of sellers. When you begin your real estate investing career or when you’re kicking the idea around, so to speak, you are probably sharing your thoughts of real estate investing with friends, family or a neighbor. Either you’re going to ask yourself or someone else is going to ask you, “Why in the world would somebody sell their house to you for a discount? Why in the world would somebody sell you their house below market value and enable you to do what you do as a real estate investor?” The key thought here is, there is an abundance of sellers out there. Whether you realize it or those with whom you speak realize it.
If you talk to any real estate investor who has been doing this long-term, that person will tell you it is a very sustainable business model. It is sustainable because those sellers out there are willing to sell their properties at a discount. And those who fail to see them, recognize or understand where the deals are have probably never been in the sellers’ shoes before.
Not everyone has unexpectedly inherited a house on the other side of the U.S. That’s an example of a motivated seller. Perhaps that seller lives in Chicago and, let’s say, due to a death in the family, he or she has all of a sudden inherited a house in Orlando, Florida. The seller has no ability, no need and no desire to own that house. However, that person is willing to sell it quickly, as-is and stress-free—ideally, for cash—to a real estate investor to keep from burdening himself or herself with that unwanted asset.
A lot of people have never been in a financial crisis, thankfully. But there are those who do find themselves in a position where they need to sell their house quickly in order to address a financial crisis or an unplanned financial need.
Divorce is one of those unfortunate examples that occurs. Unfortunately there is an abundance of people in this circumstance, who need to sell off an asset—like a piece of real estate—as a result of a divorce proceeding. Things need to move quickly, efficiently, correctly and professionally. That’s a motivated seller.
You also find an abundance of motivated sellers who are in the midst of a health crisis. We all know the cost of medical care and what it can do to a family financially. A lot of times selling a home with equity quickly is a way to care for somebody who has significant medical needs.
And believe it or not, real estate investors can be motivated sellers, too. They are part of the abundance of sellers. There are plenty of landlords out there with rental properties gone bad. Maybe they’ve had bad tenants or bad experiences and are simply ready to get out of that particular rental property. They are ready to sell it as-is, quickly, efficiently and professionally. This is just another example regarding the question of who would be willing to sell to you at a discount.
As we discuss the abundance mentality, I must note that with that abundance of motivated sellers, there is an abundance of deals out there. But you have to work to find them.
They don’t simply come to you as a real estate investor. You have to find them through advertising and action. Once you invest in advertising—diligently and consistently—you can successfully identify distressed or motivated sellers who need you to solve their problems. Then it’s your time to take action to create deals out of those situations. Identify the pain, identify a solution, then provide them with that solution to the problem. Ultimately, that means eliminating the pain of the seller. That’s when a deal is created.
That is a brief summary of the abundance mentality in respect to both sellers and deals. There is an abundance of both, but you have to go get them, and you’ve got to create them. You’ve got to find the sellers to create the deals.
Being Prepared Mentally
Now, if having the abundance mentality is the correct mentality, then let’s talk about being right, mentally. As you’re looking back at your real estate investing business this past year and looking forward to 2017 or getting ready to embark on the real estate investing trail next year, make sure you are right mentally. Here’s what I mean by that.
Ask yourself if you are simply interested in or committed to real estate investing. And the key here is, having interest in no way equals commitment. For example, it is fall and football season is well underway. Many Americans—whether it’s Saturday or Sunday afternoons—sit comfortably in their favorite chair, in front of their favorite television set and watch their favorite team play their favorite game: football. That’s interest. It’s very different from us getting up, gearing up in full pads, lining up at the line of scrimmage across from a 300-pound offensive lineman. That’s commitment. Interest and commitment are quite different. As a real estate investor, you want to make sure you’re committed.
Another distinction is having an interest will simply entertain you. Watching real estate investors on television, going to seminars with high-energy presenters, reading books or magazines can all be entertaining. It can satisfy your interest in real estate investing. But it’s very different from commitment, which is based on action. An interest can entertain you, but a commitment is what’s going to truly reward you.
If you don’t like your results this year from real estate investing, do a gut check. Check your level of commitment. Have you become more interested than truly committed? What do you have to do to regain your commitment to your business? It’s critical, as an existing real estate investor, you regain your commitment.
And if you’re a new investor who has a goal of starting to invest in real estate in 2017, you’ve probably had an interest for a quite a long time. You probably recognized converting your interest into commitment in 2017 is what will bring you success. And when you choose to be committed, you are choosing to take action. But more importantly, you’re choosing to be rewarded for your work. As a new investor, the abundance mentality is going to provide the sellers and produce the deals. Remember: you’ve got to find them and create them effectively.
Both of these ideals—the abundance mentality and being right mentally—are critical. They apply whether you are setting the stage for 2017 or whether you’re a tenured investor. Keep in mind that interest does not equal commitment. Ultimately, commitment is what will result in your reward in 2017.
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About the Author
Kevin Guz is a Dallas, Texas-based residential real estate investor with more than 10 years of investing experience. He owns a HomeVestors (or “We Buy Ugly Houses”) franchise as well as the Clear Key companies, which focus on residential real estate wholesaling, rental property management and self-storage leasing. He also is a licensed real estate agent in the state of Texas. He enjoys sharing his ongoing personal experiences, perspectives and learnings from his start as a part-time or “weekend investor” and full-time corporate professional through his ultimate transition to a full-time real estate investor and business owner. You can listen to his podcasts at http://www.blogtalkradio.com/kevinguz.