Risk adversity, self limitations & podcasts

Risk adversity, self limitations & podcasts

Investor · Carbondale, IL · Member since 2009 · 95 posts · 31 votes

The older I become and the more responsibilities I have, I've become more adverse to risk. I know generally risk=reward, you can't fly if you don't try, you can't expect to excel or stand out if you keep doing what everyone else is doing... I've become so adverse to risk, or making mistakes, that I over analyze, miss or pass up deals. These self imposed limits have stalled any wealth creation. How does an investor get past the fear of risk or messing up? I educate myself probably too much. This site contains so much information and wisdom regarding real estate and has been a great encouragement. I recently watched the Terry Adams podcast #134. This is one of my favorite podcasts. The whole interview was so common sense and down to earth that I could relate. Brandon and Josh do a great job of selecting investors to interview. I try to take bits and pieces from each podcast to apply to my investing strategy. Thank you to those on the forums, podcasts etc. who share their wisdom and experiences to help others like myself improve in our investing careers.

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  • Investor · Madison, CT · Member since 2014 · 710 posts · 458 votes
    9y

    @Shawn H. - Your post suggest that you used to invest more aggressively. Is that so? Or have you not yet done a real estate deal? I love the metaphor a lot of people use about driving in the fog. You never know exactly what's beyond your headlights, but once you get there, you can see a little further and a little further. Making your first purchase is like making the fog lift, or more like driving in the dark than the fog. You might not know exactly what's around the next corner, but your vision is a lot better, and you have a better idea what the potential hazards are. 

  • Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y

    There is nothing wrong with being risk adverse. Everyone has a different level of tolerance for risk.

    To deal with risk, you should have a strategy for it.

    1> You set your risk policy up front. (I will only invest in "X" situation that make "X" returns.)

    2> Have a policy for dealing with projects that are "interesting" but just miss your risk parameters.

    3> Have strategies for reducing risk: home insurance, umbrella policies, flood insurance, work that's always done to code, LLC or some other structure to protect your personal assets, replacing items before they fail, budget rehab +10% for overages, et cetera.

    At the end, then there is the sort of random risk that you can't account for. So you need Plan A, B, C, D, et cetera.

    You try to think of odd things that could happen outside of your risk reduction strategies. Something like someone breaking in and steeling your copper or water heater or workers' tools. Even if a policy covers you, you can't have those missing things bring your business to a halt, so you have to have cash or credit reserves or backups for emergencies.

  • Investor · Pearland, TX · Member since 2016 · 246 posts · 136 votes
    9y

    that's why you find partners. 

    let's do some real estate math.

    1(x)+1 = 1

    You working by yourself against yourself. x = (fear * motivation). right now your fear is outweighing your motivation, therefore you're stalled.

    (1(x)+1) + (1(x)+1) > 1 

    Now lets say you find someone exactly like yourself with the same goals. just the mere fact that you have someone you can talk to and brainstorm with increases your motivation ever so slightly.  then you add another 1 in there and another. 

    This is a people business. you need to find people to surround yourself with that will help to squash the fear and motivate you appropriately. 

    or. just say screw it and jump in anyway and see where the river flows. :)

    Thoughts?

    B

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