Tips for Fighting Analysis Paralysis?

Question

Hello everyone! I am very new to the real estate investing world and am currently in the education phase; I'm trying to learn as much as I can before I get out there. However, the more I learn the more I realize I don't know. I can feel the analysis paralysis starting to kick in. I want to make sure I've learned "enough" before I start searching for my first property but I can tell that it will never feel like enough since there's so much to learn! I know at some point I'll have to just get my hands dirty and get experience in the field. Any tips for pushing yourself to take that next step?

Joe Villeneuve · Answer

The indecision that comes from AP is usually because of a lack of confidence in the next move.  The reason for that is a lack of confidence in the factors/knowledge that is the basis for that analysis.  Many times this is due to the lack of knowledge in the three main knowledge bases every REI must know.  That lack of know can be, and I find usually is, due to not knowing what those 3 base knowledge bases are, and/or not knowing how to use them...or what they mean.

So, the fastest way to unbind you from REI constipa..., is to learn the following 3 mandatory knowledge bases:

1 - Market Analysis.  Property Analysis is always based on on this.  You don't analyze properties, one at a time.  You analyze markets and grab the properties within that market, when they hit the MLS, that match the criteria that works within that market.

2 - How Money Works.  This is learning how to live on the left side of the equal sign...where the variables live.  If you stay on that side, and not wait for the answers on the right side, you will have control over the right side...but never involve yourself on that right side.  Too many would rather sit on the right side and let the properties come to them...then complain that there are no deals.  There are deals out there.  It's not a matter of finding them, or them finding you.  It's a matter of designing.creating them.

3 - Having a REI Plan.  I have found very few REI understand what this is.  "I want to buy 1 rental, and flip 3 properties per year..."  isn't a plan.  It might be a summary of what you "did", after you did it, but it isn't close to being a plan.  "I want to be financially free, and..." is also not a plan.  It's a summary of a set of goals, but it's not even a goal on its own.  A Plan is specific with details.  It is designed using reverse engineering from your specific financial goals, backwards through a series of connected pre-requisites (like college classes leading to a degree), which are also financial in nature, that startw with the financial position you are in at the time you start executing the plan.

All three of these knowledge bases must work as one.  The Market tells you "where" to invest, How Money Works are the strategies you will use in that market, so it tells you "how" to invest, and the plan tells you "when" to execute the right strategies in the appropriate market, where the criteria from the Plan's timeline, dictates the "where" and "how".

When this is accomplished, the paralysis will be gone.

Ika Sargeant · Answer

@Rachael Osborne I can understand how you have that AP after reading this thread. There are too many voices and ideas. Nothing wrong with advice you are getting and nothing wrong with learning as much as you can. Someone suggested buy your own home. That is the best place to start; as a home owner. You will go through home buying processes such as getting a loan and negotiating on your home. you will build your confidence. You will learn that what you are learning is not an end in itself. You are likely never going to reach a point of knowing everything there is to know. That information is simply your compass but not your destination. Besides real estate information changes fast. A neighborhood that is out performing this year might be flat next year. So you will never get off the learning train but you can start

Bill Liu · Answer

how you are educating yourself currently?

If you have not talked to a person about real estate yet Id suggest that first. Find an local agent and have a conversation about it and if what they say makes sense to you then you can take the next step. If everything they say if gibberish then either they are not a good agent or you need to learn more.

Kevin Hunter · Answer

@Rachael Osborne, congrats on the desire to get moving.  Analysis paralysis has a lot to do with emotion. Try to do whatever you can to remove emotion from the equation.  Analyze a thousand deals.  Just find them on any real estate sale website and analyze them from an investors point of view.  Not sure where you are in northern Virginia but try 100 deals in Arlington, 100 in alexandria, 100 in Springfield, 100 in Woodbridge, 100 in Manassas, 100 in................. you will come to learn what a good deal is a what a bad deal is.  You may not find a single deal that works.  Then work your analyzer backward.  What price would it take to get to a good deal?  How can you get there?  House hacking might be a good way, multi-family might be a good way, value add, etc.....  This will take some time.  Once you have done that, while you continue to educate through books podcasts, and you figure out the end game, or goal, or future state, whatever you want to call it, you will be in a position to get started without emotion, while making informed decisions.

Also remember, is there ever a BEST time to start?  Probably once in a generation.  Is there ever a worst time to start?  Probably the same.  Have you ever heard someone say "Geez, I wish I had started later..."

Good luck!

Nestor Grajeda Jr · Answer

just starting to learn to analyze deals and maybe as simple as this is, @Kevin Hunter and @joe

@Joe Villeneuveundefined this was nuggets to me. thanks. anything you guys need pics of properties or anything RE related im there. im in los angeles.

Rachael Osborne · Answer

My compass but not my destination...why what a powerful way to put it! That's really sticking with me and I will keep that in mind as I go through my journey. Thanks Ika!

Rachael Osborne · Answer

You're right, the general concepts are pretty easy to get but the devil's in the details. At least from a beginner's perspective it certainly seems that way. I appreciate your point about timing though; I need to figure out the "when", not just the "how". Thanks for your input!

Drew Sygit · Answer

Let's look at your options Logically and try to put them in an order of risk:

1) Shadow a Mentor: you may have to pay a tousand or two (don't sign up for anything that costs more than that!), and you'll have to search for the right mentor, but you can learn from their deals.

2) FInd a Partner: You can lower your risk by partnering with someone already doing what you want to do. There is a risk of picking a bad partner, so you'll want to have a strong partnership agreement.

3) Buy Owner-Occupied: buy something on your area and rent out your extra bedrooms. Even if you're in an expensive market, you can make this work with roommates. Live in the property for a year and then buy another and rent the first one out. Once you learn more you can even start investing out of state (OOS).

4) Buy Rental: You stated your market is too expensive to invest in. So, that means you'd have to do OOS investing. OOS investing is the riskiest investing on this list because you can make so many mistakes and get taken advantage of by so many "experts".

If your AP is strong, maybe real estate investing isn't for you. Just because "everyone else is doing it" doesn't mean you have to:)

Stephen DeThample · Answer

Get your financing in order and everything else falls into place.

Good Luck!

Benjamin Hedden · Answer

@Rachael Osborne just take the leap.

Worst case scenario your USD doesn’t depreciate by 2%.

And you can borrow 300k at today’s dollar my goodness. Sign me up!

Tips for Fighting Analysis Paralysis?

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