What has been the scariest part of real estate investing?

Question

What is the hardest question you have in regards to things that have scared you out of a deal? What has stopped you from taking a risk? What has stopped you from growing your portfolio, jumping into a large deal, or what is the mental anguish you just can't seem to shake? I'm setting out to solve these issues and problems for you. A strong mental game is THE GREATEST WEAPON when it comes to being successful in REI. So, hit me with your toughest and most vulnerable questions. Trust me, no one gets it right! If you aren't failing somewhere in this industry then you are bound to fail BIG. Its like riding a motorcycle...its not will you crash...its more a question of when, how, and were you trained and prepared to survive?

Linda Weygant · Answer

I talk about this a lot!  My fear of failure held me back for a long time.  Fear of losing money being the biggest one.

When I was first starting out, there was the property that had a pipe burst.  It had been remediated prior to sale, but I was so frightened of "possible" mold, that I just couldn't pull the trigger.  Now, I intentionally look for those properties.  A little mold doesn't scare me any more.

But for a lot of people who post on Bigger Pockets, I see not just a fear of failure (there's plenty of that), but there's a HUGE fear of ridicule.  SO many posts are all about the return somebody expects to get and just knowing that there's a better deal out there, with a better return.

Have you seen the posts that start with "ROI only 5% - should I go for it?"  "Cash on Cash only 14% - what to do?"In my opinion, anything that gets you more than the .7% that your savings account gets you is a good deal.  Do it!

So there's this fear of looking like a chump.  My deal only cash flowed 14%, but there's some guy in another post that's boasting about his 64% cash on cash return.

Yay for him!  That doesn't mean your deal sucks.

So yeah, I'm gonna go with:

1.  Fear of failure

2.  Fear of losing money

3.  Fear of not being number 1.

Mike Dymski · Answer

Financial - Investment criteria...having to source and review hundreds of deals to find the few that meet criteria.  The opportunity cost of idle cash is big.

Personal - Helping my family understand and be intentional with their spending.

It's not scary...it just takes a lot of persistence and it's hard to maintain the right mindset.

Gino Barbaro · Answer

@Meghan McCallum

Failing in previous endeavors and having to provide for 6 children.  Once I find out my true "why", I pushed past the fear, educated myself, became a life coach and went all in, or as they say, burned the ships.

The market has slowed us down in adding to our portfolio, cap rates have been compressing and buying right is more challenging.

Best

Gino

Derek Luttrell · Answer

My biggest fear is losing momentum on my earnings/W2 to the extent that my REI growth comes to a halt.

I graduated college 4 years ago and got into commissioned sales, and my W2s have been $35k, $44k, $74k, $154k, and now in 2018 I am pacing for $230k. I know for a fact I can do big things in real estate as long as I keep this streak alive at my day job (I am under contract on my 3rd property since July 2017). The fear of plateauing in real estate is my ultimate motivator to keep my performance up at work.

Gary Weg · Answer

The scariest part of real estate for me is trying to move forward from an commercial investment I made in 2006 , it is cash flowing now, but it drained my reserves and drained me emotionally,I am trying to sell it now so I can get some cash for investing is this a wrong decision or should I hold on to it, I also live there also.

Elizabeth Wilson · Answer

@Meghan McCallum  puppy training!  Love it! :)

Sadly, we will be on vacation in Canada with Sam's parents that weekend.  But the Summit looks great!  Congrats to you and the rest of the team for pulling it all together!  Personally, I like the "ask your questions in advance" feature on the Summit's website!

Terry Lao · Answer

@Meghan McCallum

The unknown is scary, but not the worst. There is always the risk that is present in any investment, but comes risk is reward. If you do not think there is a potential reward or ROI, then no point.

However, the worst part, at least for me is the unintended consequences. For example, my first RE purchase was a partnership, and all the numbers look good. The execution had its up and downs, trial and error. The partner was a good friend, and was ultimately the demise. Basically, he wanted out and he threatened to sue me if he did not get his way.

Long story short, lost a friend.

Now, who is right or wrong, it is subjective. Hindsight, sold 4plex for 217k, made about 40k in a 1.5 years. Now, that same 4plex worth 280-290k in today's market. From numbers view, holding on would have made more money.

Does that justify me being right? Not sure if there is right or wrong answer, other than need to look at the consequences of a partnership.

Terry

Meghan McCallum · Answer

@Gary Weg Are you trying to sell it now to cash out on appreciation, in say, the form of a 1031 exchange? Well, then yes. You can take your education and experience from the first one into another that is larger and more profitable. However, if you are still feeling like a wet dog after the last hosing you took then look for a partner that has been successful in the past. That's one of my go to answers really for most issues people have in real estate. It helps hedge your risk and you get to capitalize on their KSA's for my gov't brethren (Knowledge, Skills, and Abilities). Now, in ALL business relationships (including marriage) get a pre-nup!

Ha, is sounds silly but you really want to be sure you work out all the "what if's" before you get to them...at least give it your best effort. Trust me, you want to talk about how to best be fair before something comes up.

What has been the scariest part of real estate investing?

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