Fear can be a powerful motivator.
It can also hold us back from being all that we can be. Achieving anything when we’re afraid of moving forward is no easy feat — but making decisions and moving ahead in spite of our fears is often necessary for success!
When it comes to investing in real estate, you will have moments where you’ll be afraid. Whether it’s due to risk or uncertainty, fear can make it incredibly difficult for you to know when to take the plunge and when to hold back. Real estate investors have to know when to move forward and when to hold back. If we do not (and many have learned this the hard way), then we either never get off go or we end up losing everything. Both are the wrong ends of the real estate investing spectrum!
Fear is healthy, and it is natural, so it is not necessarily something to be avoided or eliminated. Instead, fear is something to be managed — and when managed properly, fear is something to overcome.
Overcoming fear is harder for some than others — especially if you’re prone to anxiety or worry. But when it comes to your investments, you can’t afford to be fearful without a plan for dealing with that fear. You can, however, afford to be smart. Here’s how you can begin to overcome the fears that are holding you back from financial freedom.
5 Secrets to Overcoming Fear for Real Estate Investors
1. Learn what you can.
Oftentimes, we’re fearful because we don’t know. What makes this scenario worse is not only do we not know, but we begin to make assumptions and almost always naturally assume the worst. We don’t have all of the information. Fear often stems from a lack of information, and if we don’t understand, we’re afraid. In many cases, the best way to dissolve fear is with understanding.
Sit down, organize all of the information you have, and try to fill in the gaps where you don’t. Remember what they told us in elementary school? Knowledge is power! If you have knowledge, you’ll be able to make informed, solid decisions that are rooted in facts, not fear. The simple action of organizing in itself will begin to help you overcome the fear. The confidence of action — specific and methodical action — will go a long way!
2. Reject micromanagement.
Fearful people are the best at micromanaging. They don’t know how to let go. They enjoy controlling the little details and knowing what’s going on every second of the day. If you don’t think you’re a micromanager, think back to the last time you felt fearful about something in your real estate investment career. How nit-picky did you get? How many people did you pester?
When unsure, yes, ask questions. Get details. Be thorough and do your due diligence. But there’s a line that crosses over into obsessive micromanagement that will just drive you insane! It will make you more neurotic. It will drive people away from you, and usually the ones to leave first are the ones you need the most. Don’t let that happen. Work hard to avoid micro-managing and questioning your team and yourself to death.
3. Build a network of support.
One of the best ways to combat fear is with people. Fear grows in isolation, when we’re left alone to spin our wheels in our own thoughts. A network of support, whether it’s friends and family or other professionals (though ideally, it’s a combination of both), will help give you a space to work out your fears, receive advice, and find emotional support.
We need other people in our lives. Making financial decision is difficult, and knowing you have support behind you goes a tremendous way in moving forward. I give a lot of talks to different real estate organizations and at events, and I almost always end those talks with one pice of advice: You WILL become the six real estate investors you surround yourself with. Choose wisely and lean on them for their support.
4. Have contingencies.
Safety net. Safety net. Safety net.
One of the surest ways to guard against fear is to prepare for the future. Don’t put all of your eggs in one basket. Play it smart. And don’t make decisions that you won’t be able to recover from if something doesn’t work out!
Do you have the cushion you need to recover if this decision doesn’t work out? Can you bounce back? What’s your plan B? While you don’t necessarily need to labor over a plan for every single possible outcome, you do need to plan and prepare.
Too many investors begin to build their portfolios or start their active investing activities and bet the bank on their success. They spend everything. They go all in. They burn their boats and literally burn their entire house down. I love the “burn the boats” metaphor that emphasizes going all in — but only after you have a plan! And part of your plan must include safely navigating the world of real estate.
Have a safety net and contingencies in place so that you don’t need to be afraid of the future, no matter what the outcome is. If you can handle whatever life throws at you, you have nothing to fear.
5. Learn to recognize red flags.
If you don’t know what you’re looking for, it’s a lot harder to discern rational fear from the irrational. If, on the other hand, you know exactly what is cause for alarm, you’ll know what fears are founded. You’ll know exactly when you need to walk away — and when you just have the jitters.
Learn to recognize when there are real red flags about a property, a deal, or a partnership. If you know what warning signs there are, you will be able to avoid bad situations. The old adage of “if it sounds too good to be true, it is” should always be on the front of our minds. That is a simple, simple way to keep an eye on how you feel about an investment or a partner or a vendor. If it does not feel right, simply re-evaluate and then make any adjustments that you feel are necessary.
Investing in real estate is thrilling and incredibly, incredibly rewarding! If you do your due diligence and plan well, you don’t need to be afraid of what’s to come. Play it smart and let yourself be excited about the future.
This article was originally posted/written by Bigger Pockets.