Investing in real estate has literally changed my life. There are too many good things about investing so I won’t go there, but one thing that is rarely discussed is the level of disappointment and how to handle the stress that can also come with owning real estate.
I’ve noticed that most people fall into two categories, they either love investing and owning real estate, or they say they never want to own rentals and deal with bad tenants. For the most part I’ve been in the first category, though a time or two I have seriously considered selling everything and throwing in the towel. The thought of wanting to sell everything and quit was only the beginning of my investing journey, because that was a time when I let myself get stressed.
When I’ve gotten stressed about something to do with my rentals or when I’ve been under contract on a new property, I often go back to my memories of learning how to snowboard. The very first time I attempted snowboarding I fell so many times that if I were counting, I’d have lost count. I think I may have even shed a tear at one point. At the end of the day I was so tired and bruised that I swore I would never snowboard again. As my friend and I (who was equally terrible) were walking to the parking lot in defeat, we saw these little kids wiz by us on their boards like it was no big thing. We decided if some little kids could figure it out, so could we. So we were back the next weekend, and pretty much every weekend for the next few years. Those weekends on the mountain were some of the best times I’ve had, and even as I got better and better, on occasion I would have a massive crash. I was always testing my abilities and those wipe outs would remind me how much better I was getting, and I could course correct on the next run so that I wouldn’t crash like that again. I also picked up that falling/crashing was just part of the game so I learned to fall better and could anticipate and plan that I wouldn’t break anything.
Investing in real estate has been very similar to learning to snowboard. To this day, I still crash and burn and it hurts. In the last month I’ve had to deal with three low appraisals, had four deals rescind for random reasons, my mailboxes were ran over in Indiana, found an old tenant’s sweatshirts shoved in a dryer vent, one of my duplexes had a roof repair, and a seller that I’ve been negotiating with for 2 1/2 months on a development deal ran with my plans. I’m sure there are other crazy things to list but honestly I don’t focus on them. All of these potentially negative things are actually positives in my mind because they give me opportunities to course correct, improve systems and learn some very valuable lessons.
So here are some of the lessons I’ve learned from investing in real estate
1. Don’t tell a seller your plan for a property, over sharing is not necessary. (Duh!)
2. Even in an aggressive sellers market the appraisers still have to have comps to support value
3. As a seller, make sure to vet the agents representing the buyer and confirm the buyer’s financial ability before accepting an offer.
4. Stress is a choice. Things will go wrong and people will do crazy things. You being stressed about something that happens is you choosing to have a physical reaction, which does nothing more than than age you. So choose gratitude and appreciation for the lesson instead.
5. If a deal keeps you up at night, run! Always trust your gut. It’s better to pass on a good deal than buy a bad deal.
6. Don’t let anyone talk you into or out of a deal. There are two deals that haunt me that I was talked out of. I recommend having 1-2 people that you trust to run a deal by, but these should be experienced investors. It’s interesting how we tend to take advice from people who have no business in giving it…
7. Be prepared to fail so that when you do fail or make a mistake, you’ll lessen the damage.
8. You cannot control what another person does, you can only control your reaction.
9. When all else fails, look at your hourly rate from your real estate investing income. I spent roughly 5 hours a week or less on my rental properties and I earn $100,000 per year in income which means I make $384 per hour on my rentals. So having to deal with a little problem here and there is really nothing when you look at it this way.
Lessons aside, always focus on the bright side (there is ALWAYS a bright side) of any situation. The benefits of investing far outweigh the crazy stuff you’ll have to deal with, I promise! What you can do is learn to fail faster and better and keep on going!
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