Investing in real estate can bring on a big fear of losing money. There’s concern over the stress that you can feel if something goes wrong with a tenant or a partner or a deal. On the other hand, it is a risk reward system. You can also make a huge amount of money by investing in real estate. What will work best for you is to learn from someone that is experienced in investing.
Overcoming the Fear of Real Estate Investing
When you have a fear of real estate investing, you need to decide whether to confront it and invest or to be overly conservative and put your money in a savings account paying no interest. You cerntainly don’t want to put your money in the stock market. That’s much more risky than real estate.
Overcoming your fear of investing in real estate starts by learning about the subject. That is exactly the reason that I write about and teach the subject. One of the great things about real estate investing is the property often pays for itself. Typically, you put a little of your own money in, finance the property using other peoples’ money, and either the rent or the rehab pays for the investment plus a good profit.
Overcoming the Fear of Real Estate Investing Might Be About Your Local Market
Hot markets with bidding wars going on can be intimidating. Maybe, overcoming the fear of real estate investing is about finding markets other than your own location to invest in. Yes, the overall national market is growing but not all markets are growing at the same pace. You probably don’t want to invest in high-end communities like San Francisco or Manhattan. However, the Midwest, and south still have excellent investing opportunities.
Still, overcoming the fear of real estate investing means knowing the numbers before investing. Obtain at least 12 months of expenses from the current owner. But don’t take these at face value. Study them yourself to make sure the numbers make sense. You should also ask to see the IRS income tax paperwork which is where all of the expenses are going to be shown because the owner was able to right them off from income.
Your Fear of Real Estate Investing Might Be About Others
I don’t find this to be a typical issue but for some that that can’t overcome the fear of investing in real estate, it comes down to other people in their lives. These are people that really fear others will see them as a failure if a deal goes bad. Again, this is mostly about gaining some education from an experienced investor. That knowledge and oversight will almost certainly enable you to avoid making an investing mistake.
Once you are comfortable with the expense numbers, overcoming the fear of real estate investing means plugging in your own numbers. Obviously, you are seeking to make a profit so make sure you completely include all of your numbers. The previous owner’s profit numbers (and not all expense numbers) do not apply to your situation. Your loan amount, interest rate, and other factors will differ from the current owner. It’s essential you run all of the numbers using your own circumstances. That should give you confidence when overcoming the fear of real estate investing.
If you do want to invest but are having trouble overcoming the fear of investing in real estate, my suggestion is that you sit down with your spouse to have an open conversation. Not necessarily about your fear but rather about the financial opportunities that investing offers. Also about what you and he or she think the best opportunities are today. There are plenty of them. Then educate yourself to help overcome the fear of real estate investing.
By Wendy Patton
For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.
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