Using Math to Overcome the Fear of Acting

              One troubling reason preventing someone from accumulating wealth through real estate investing is the fear of making mistakes. This fear causes potential investors to remain by-sitters, watching others as they succeed and fail. Not all real estate investors find the path to wealth. It is also true that not all real estate investors lose their shirts. To increase the odds of success in your favor, you should overcome your fear of failure through math. Math is not inconsistent. It will not leave you to make an iffy decision. Math is straightforward, purchase it or leave it for another. Taking the time to do the math will allow you to see the deal. Once you understand the agreement, you know if the deal meets your criteria. 

What do you look for when purchasing investment property? Unfortunately, no hard, clad right, or wrong answer here meets everyone. In time, these things may change because of shifts in the industry. Some suggestions as to what not to do would be:

• Don’t deceive yourself into thinking you’ll get everything right every time and everything will flow according to your plans. Babies fall several times before they walk, but each step they take allows them to do better the next try. You’re going to make mistakes, learn from them and improve your deal spotting capability.
• Knowing that the average lending institution lends around 80% of the home’s fair market value, I recommend that you begin your investment purchasing process with an all-in cost of no more than 75%. This gives you room to survive the unknowns that will present themselves during the property’s rehab.
• Don’t purchase in a rough area, thinking that renters are plentiful. Renters may be plentiful because they don’t pay their rent, and there is a constant turnover in the area due to crimes. The properties in these areas tend to decrease in value. Avoid troubled areas.

This troubled area may be caused by:

o Crime

o Political, social, and economic issues

o Areas where it is hard or near impossible to resale your property in a normal period.

o the areas where the rehabbing is slow or costly due to local code restraints/ 

• Only purchase properties with an all-in cost that permits a positive cash flow.

These criteria may lead you to several properties before you find the deal that aligns with your goals. That’s perfectly fine. Your time and effort are always well-spent. Each time you crunch the numbers, you become faster and better at it. It’s better to wait for the right moment to strike than to rush into a deal that doesn’t meet your criteria. Remember, just because another investor did well in a similar process doesn’t mean you made the wrong decision. You have your own unique abilities, strengths, and weaknesses. Trust your math and avoid second-guessing it.

Once a property that meets your criteria is located, you start your due diligence process. This saves you a lot of time by not allowing you to spin your wheels on properties that are not worth your effort. It also allows you to manage your time more efficiently. Stay clear of the mindset that one deal will make or break you. There are plenty of bargains in real estate. No one person or company controls the market. This assures us that we also can become successful when we plan our work and then work on our plan.  Once you know your criteria, tell people. The more eyes you have searching for your next purchase, the easier it becomes to uncover it. 

Note: Images on this blog site are from a free source or taken by the author. No image or group of photos is intended to represent the people the author serves. The author does not care about Race (that is a politically correct term that he does not like because we are all of the same Race, the Human Race. He prefers the term ethnicity, color, religion, sex, gender, marital status, disability, genetic information, national origin, source of income, Veteran or military status, ancestry, citizenship, primary language or immigration status.) He is a service provider for all people. We will all rise together when we band together and help one another. Joseph Erwin is a Real Estate Broker, DRE # O2131799, and a CA general contractor # B 696662. He’s a member of the CRMLS and The East Valley Association of Realtors located in the Inland Empire region of Southern California.