What holds people back from investing in real estate?
Talk to any truly successful leader in real estate, and ask them what they think is the most common mistake being made in their respective industry. They’ll likely tell you it is “failing to buy”. It all really comes down to one thing: a lack of action. As Rich Cohen of Robbins Research and the Ignite Your Sales Team Podcast puts it, “If you’re not in the batter’s box, you don’t have any chance of making a hit.” So what holds so many people back from taking action? How can those fears be overcome? How can you help others beat them?
1. Making mistakes: Even among those bullish on the benefits of real estate investment, many are terrified of making mistakes. Instead of risking making a mistake, they do nothing. Surprisingly, not taking action can be far more dangerous. Some just don’t know where they should start. Others have an idea, but are paralyzed by too many factors. Beat this by investing in a real estate education, getting a system, creating a checklist or buying criteria that makes sense for you. This gives you the knowledge you need, and a road map to march forward.
2. Missing out on deals: Some aspiring real estate investors keep dragging their feet because they fear they’ve already missed out on the best deals. They’ve been doing this for years, only to look back and say “I wish I would have invested last month.” It’s true that there may have been bigger discounts a few years ago, but there may be better ones in seven or fifteen years from now.Truth be told, there will always be deals if you know where to look.
3. Market changes: There will always be someone talking about another bubble or downturn, even in the best of times. Yes, the market will change. It changes by the hour. It is constantly in motion. There is another simple solution, however: buy good properties, in good locations, for fair prices. OK so that is easier said than done. The real take away here is education. If you study the provided material a market give you and mind due diligence you should be prepared to handle any changes that may come your way.
4. Mortgage loan denial: After a decade of the public being pounded with the message that mortgage loans are almost impossible to get, many are starting to believe it. Even if they have good credit, and a solid income, many just believe that they’ll be nitpicked to death once they apply. Who wants to go through all that hassle for nothing? Others just don’t want the embarrassment of being turned down for a home loan. Ironically, even low down payment mortgages have become much easier to get today. Even in the worst case scenario, being turned down for a loan at the pre-approval stage is relatively painless. In fact, it may only help by letting you specifically know what you need to work on. Call or email a loan officer today, or submit an online application and see what you qualify for. Remember that there are now a growing number of non-bank sources of financing for real estate buyers too.
5. Failing in front of friends and family: Not everyone has families that are incredibly supportive of them getting into real estate. This is true of some of the most successful real estate business owners and investors who now make more than all of their past friends and families combined. However, nobody wants to fail and have one of those “I told you so moments”. Remember, just like getting turned down for an online credit application, there is really no embarrassment, except what you put on yourself. You might be surprised at how much support you have behind you.
6. Debt: Many people have learned some powerful lessons about not taking on too much debt in the last decade. Some have gone to the equally bad extreme of fearing to use any leverage or credit at all. There is a huge difference in taking out a 125% LTV mortgage with payments you can’t afford versus a more modest loan. Leverage is a tool. Use it wisely.
Take action. If you are really that fearful and don’t even own a home, buy one. Buy a home you’ll be happy keeping for the long run, to live in or rent out. Give it a little time, then reevaluate. If you own a home, by a second. Use it to get away, and rent it out when you aren’t using it. See how it goes, and then expand from there. Just get moving.
