Developing the Right Mindset for Real Estate Investing

The most successful real estate investors got to where they are through hard work and commitment. But, their mindset also played a key role in their accomplishments. Becoming a real estate investor and building a large portfolio is going to involve lots of obstacles and challenges. In order to make it through these tumultuous experiences, real estate investors need to have the right mindset. This mindset is essential to starting and following through with real estate investing.





Educate Yourself

  • One of the most important things you can do as you begin to develop the right mindset for real estate investing is to educate yourself. Fear is the lack of knowledge. In other words, F.E.A.R. stands for “False Evidence Appearing Real.” Therefore, to overcome fear, limiting beliefs, and other things that may be hindering your growth and advancement in real estate, you need to educate yourself. Listening to audiobooks and podcasts, reading real estate articles and books, and attending real estate seminars and meetups are all easy, low-barrier-to-entry ways to begin educating yourself. Once you choose a particular path, investing in your real estate education is a great way to expand your knowledge. Whether you invest in a mentorship program or passively invest in an apartment syndication deal to learn the ropes, both options are great ways to start learning the ins and outs of the industry.


Surround Yourself with the Right People

  • Surrounding yourself with like-minded, optimistic people is essential. You are the sum of the five people you surround yourself with. Therefore, be protective of who you let around you. Pessimistic people who have poor spending habits are likely to rub off on you.

  • As a real estate investor, surrounding yourself with other investors who are in the same spot as you can help you find people to relate to. They’re going through the same internal struggles as you, and are likely facing similar challenges.

  • Also, connecting with more experienced investors who are a few steps ahead of you can help you in more ways than one. First off, you can have someone to look up to. Success leaves clues, and finding someone who is a few steps ahead of you is a great way to cut your own learning curve and leverage their experience, knowledge, and learning lessons to your advantage.


Delayed Gratification and Patience

  • Delayed gratification is defined by Britannica as “the act of resisting an impulse to take an immediately available reward in the hope of obtaining a more-valued reward in the future.” That is what investing is, in a nutshell. Investing requires you to take capital you could use on other things, like a car, clothes, or a home, and place it in an asset where that money will grow. This is what savvy investors do, but it requires them to be patient, and wait to enjoy the fruits of their labor (and investments).

  • There’s a saying that comes to mind when I think of delayed gratification: You have to live (and invest) like others won’t now so you can live like others can’t later. Investing is sacrificing some reward you’d receive now so you can reap the benefits at a later date. This is the key to building long term wealth, and reaching financial freedom.


Persistence

  • In his book titled Think and Grow Rich, Napoleon Hill says, “The only ‘break’ anyone can afford to rely upon is a self-made ‘break.’ These come through the application of persistence.” This reigns true, especially when it comes to investing in real estate. It can take you months to find the right investment opportunity, whether you’re on the active or passive investing side. It can take several deals in order to reach your financial goals. During a particular transaction, it can take persistence to get the deal to close. In order to be persistent, you need to have a clear reason or purpose that drives your motivation for investing. Do you want to spend more time with your family? Do you want to travel? Or do you want to build a lasting legacy? It’s up to you, but having a clear purpose is key to fueling your persistence. With a purpose and a plan, you’re more likely to be persistent.


No Failure, Only Learning Lessons

  • Nearly every successful real estate investor has encountered some experience they could have perceived as a failure. When they encounter adversity during a deal, a capital raise, or some other hurdle during their investing journey, successful real estate investors allow themselves to see any setback, mistake, or stumble as a learning lesson. Any experience that doesn’t turn out the way you wanted it to is an opportunity to learn, grow, and level up. Failure is temporary, and it only becomes permanent if you give up. This is why it’s key to not allow yourself to get fixated on what went wrong, or the negative emotions that come with a setback. Take what you can from the experience. Rod Khleif describes some of his biggest and most expensive “failures” in his career as “seminars” because they have been some of the most educational experiences. You should also apply a similar outlook on any misstep or setback you encounter along your journey.


Analysis Paralysis and Taking Action

  • According to a Weji article, analysis paralysis occurs when a person becomes stuck in the analysis and evaluation of several ideas and information, and becomes convinced they need to know more before they can make a decision. This makes it impossible for them to act, and prevents them from ever taking any action.

  • Many investors spend time looking at countless deals, but never fully committing to investing in any opportunity. It’s common for them to have a fear of making the wrong investment, and therefore, they try to protect themselves from any risk by educating themselves until they feel confident. The paradox is, that they will never know enough to be 100% certain of an investment, because every investment involves risk and uncertainty.

  • This is why, although education is important, every investor should outline certain investment principles and stick to them. These principles will allow them to have a more objective approach to investing, and when an investment meets their criteria, they can act and avoid getting stuck in the analysis phase.

  • Preservation of capital is essential. But, it doesn’t matter how much you know about real estate if you don’t have any investments to show for it.


Optimism and Caution

  • There’s a fine line between being optimistic and cautious. It’s important to have a positive outlook on investing, because negativity will only hurt you. However, when it comes to real estate investing, having evidence to support your optimistic views is critical. For example, if you find a deal in a market you are optimistic about, make sure the data supports this. The market should have strong population growth, a diversified job market, and a healthy median income. When it comes to balancing caution and optimism, a good rule of thumb is to be optimistic about factors you can control, and cautious with factors you cannot control. You can control your own knowledge of a market, and you can control what value-add strategy you plan to implement at a given property. You cannot control future rental growth, and you cannot control whether or not an economic downturn occurs.


Comfortable Being Uncomfortable

  • As Robert H. Schuller’s book puts it, “Tough times never last, but tough people do.” Learning to be comfortable being uncomfortable is key to surviving and thriving as a real estate investor. There is bound to be an experience as a real estate investor where things are more challenging than you thought they’d be. Maybe a pipe bursts, a building floods, or a pandemic strikes. These experiences can be very uncomfortable. But growth is on the other side of comfort. Discomfort is what will force you to develop new skills, learn new things, and increase your resiliency. So, change the way you view obstacles. They aren’t threats, but opportunities to learn and grow. Yes, it might be uncomfortable. But that’s how you know you’re growing, and strengthening your mindset for future challenges that you will inevitably face.


Take Ownership of Your Own Real Estate Success

  • It’s important that you take ownership of your real estate success, and responsibility for the outcome of any project you’re involved in.

  • If you’re an active investor, you are in charge of the success of a deal. It doesn’t matter if you outsource the management to a third party, or if your partners are handling the asset management. You should still keep a pulse on how things are going, and ensure that the business plan is being implemented correctly. Checks and balances, and constant communication is key to ensuring that everything is going smoothly.

  • If you’re a passive investor, you obviously don’t have any control in the deal. But, it is your responsibility to vet the sponsor, and review their underwriting. Make sure you conduct your own due diligence before placing blind faith in an operator you don’t really know.


Self-Discipline and Habits

  • Discipline is what separates real estate investors who find themselves producing inconsistent and unsatisfactory results from those who succeed. As mentioned earlier in this article, having defined investment principles and sticking to them is a great way to maintain discipline as an investor looking to acquire more deals.

  • Habits are also a great way to develop discipline. When it comes to real estate investing, successful real estate investors make it a habit to continue furthering their education. Education never ends, especially if you want to remain up to date and make savvy investment decisions. They also treat their investments like a business, and approach it with a structured plan.

  • Most investors also choose a focus or a niche, which allows them to dive into one particular investment vehicle and develop a thorough understanding.


So, ask yourself : Do I have the right mindset to succeed in real estate?


Take another look at the mindset qualities mentioned above and be honest with yourself. If you find that you’re lacking one or multiple of these, it’s okay. This is part of the educational process.


A successful real estate investor’s accomplishments comes from the hard work they put into it and their commitment to education. But, education and hard work will only get you so far. It’s your mindset that allows you to carry on through adversity, and thrive despite it.


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