How do I know I'm ready to take the leap?

Question

Hello all, my name is Josh, I am new to real estate investing and I am looking to be a buy and hold kinda guy. I am interested in being a landlord starting off in residential and hoping to expand one day to commercial properties as well. I started this discussion to draw in the interest of everyone new and hopefully get more tips and tricks besides the beginners guide on everything and some real experience from others. I don't want the focus to be exactly what I want to achieve. Not everyone wants to be a landlord, some of you are just flipping homes.

My worry is how do you now this property is "the one"? I feel like I have a lot of decent properties in my neck of the woods but as this is my first investment I am very weary on pulling the trigger in fear of getting the wrong one. Or maybe overlooking something better. If I buy the wrong rental is it easy to turn it to a flip? My worry is buying that wrong property or something is missed in that inspection and now I am looking at a major fix that might put me out of the market to be competitive rent wise.

SO what I am looking for are those tips and tricks, the things to watch for when buying properties, maybe some of your good stories and the horror stories. How to know if your inspector is worth his salt. Me and my Ex wife's first property was a non invasive inspection, (didn't know that even existed) and we missed a crack in the foundation under the living room that took an effort to access through the crawl space.

Hope this makes sense and looking forward to hearing from everyone.

Thank you!

Joe Villeneuve · Answer

You'll know you're ready when you don't find the urge to ask that question

Jim K. · Answer

You'll wake up in the middle of the night and run out into the woods until you see a tree split by lightning. You'll reach into the tree and pull out a magic ring. Holding it aloft, you will say the words of enchantment engraved along its rim and another bolt of lightning will come down and strike you. You'll float over your body, up, up, up and your vision will turn until you see the lights of a house. You'll concentrate, and the house will get closer and closer until you can read the street sign outside and the numbers on the house. There'll be a loud crack of thunder and suddenly you'll wake up in your bed. It was all a dream! But the street name and number will stay with you and you'll look them up and...YES, THIS IS ALL BULLS**T.

There's no magic risk avoidance trick and there's no safe word. Every bad thing you imagine might happen. Learn as much as you can to minimize the specific risks you mentioned, but in the end, you have to be able to pull the trigger. A lot of people simply can't. If that's you, then you're going to have to change.

Mike Dymski · Answer

Fear is wanting to have a predictable outcome for something we have not experienced.  We get as much clarity as we can, take action, and then more clarity will unfold for us.

David Martin · Answer

@Joshua Seguine Sort of agree with Joe, in that you'll know when you know. The "right property" is only like 30% of the puzzle. It's the mind game that gets you to the point where you'll take the leap, and that's because you'll have the mental toolset to see the property in a whole other way. Trying to not sounds cheesy, but you'll sort of have that moment in the Matrix where Neo knows he's 'the one', and is able to see the world around him for what it is, and not how it's been presented to him.

To get to that point will actually be several leaps, and you'll have to face each one as they come. Your first leap will be actually making offers on properties, your second will be feeling like you know a property inside and out enough that nothing about it feels scary because you have the data and the team to attack it, and probably last is that leap in to agreeing to finance it with someone because there's little doubts left that it's the one. So don't think that you're just taking one big jump... know that until you've signed that closing paper, you're still able to walk away if it's too much, and all you will likely lose is cash for inspection, appraisal and earnest money. The real challenge is pushing yourself to take the next leap in the process each time, and that's the mental game.

Bill F. · Answer

This reminds me of a story that Charlie Munger like to tell about Mozart.

"A young man comes to see Mozart, and says, “I want to compose symphonies.” ​​ And Mozart says, “You’re too young to compose symphonies.” ​​ He’s 20 years old and the man says, “But you were composing symphonies when you were 10 years old.” ​​ And Mozart says, “Yeah but I wasn’t running around asking other people how to do it.”

Costin I. · Answer

@Joshua Seguine - your first investment will be a learning experience and should be considered successful if you break even. (Even) "If you fail, correct your course of action. In this journey, the only failure is not trying." - Gino Barbaro

Here some recent articles good for starters:- one to raise you up: 3-important-questions-starting-investing-real-estate https://www.biggerpockets.com/...- one to bring you back down to earth: dont-just-dabble-in-real-estate-investing https://www.biggerpockets.com/...- one in the middle: cheap-free-steps-today-pro https://www.biggerpockets.com/...- 10-lethal-mistakes-avoid-real-estate-investment https://www.biggerpockets.com/...- telltale-signs-youre-not-ready-to-invest https://www.biggerpockets.com/...- vital-importance-mentor https://www.biggerpockets.com/...- get-ready-to-invest https://www.biggerpockets.com/...- get-your-head-in-the-game https://royallegalsolutions.co...

"Ignorance is bliss. Knowledge is power, but also a burden, leading to analysis paralysis. The cure to both - the 4 ions: education, action, progress(ion), not perfection".

Joshua Davies · Answer

@Joshua Seguine I don't think any first time investor has been "ready". First time doing anything can be daunting, and especially when there is potential to lose a lot of money. The biggest thing is to educate yourself to a level where you feel confident in your market research, and analysis of the property. Offer to analyze deals for other investors, it will be great practice to formulate your own analysis worksheet - you will learn a lot just from this. Ask them for their honest feedback of where you could improve the process next time.

After a while, you will become a pro at running numbers and that will give you the confidence to analyze your own investment, without involving emotion. I feel like a lot of first time investors want to jump the gun and purchase the first property they see because they "like the look of it". Once emotion is involved, the potential to lose money doubles.

Remember, real estate investing is a marathon, not a sprint. There is no rush to purchase your first property. It is better to wait until you have the required education and understanding to purchase a good deal, rather than jump in and purchase a bad deal.

Hope this helps.

Sean Ybarra · Answer

@Joshua Seguine great. Look forward to it.

Joshua Seguine · Answer

@Sean Ybarra I'll message you privately for further discussion!

Sean Ybarra · Answer

@Joshua Seguine That sounds like a plan. Let me know if you have questions on how you would start the process of acquiring the property. I am happy to help out fellow investors as much as possible.

How do I know I'm ready to take the leap?

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