608: What’s Holding You Back?

SHOW NOTES FOR EPISODE 608: WHAT’S HOLDING YOU BACK?

One of the most difficult things for new real estate investors is just taking that first step – making the first investment.  In today’s podcast, Bill explores some of the common obstacles many new investors encounter that prevent them from investing and how you can overcome those challenges.

Previous episodes of our 10 Steps to Real Estate Investing Success series have thus far included:

1. 590: Is Real Estate Investing For You?
2. 592: What Type of Real Estate Investing is For You?
3. 594: Building a Winning REI Strategy!
4. 596: Knowing Your Numbers
5. 598: The Business of Real Estate Investing
6. 560: The Importance of Your REI Team
7. 602: How to Choose the Right Real Estate Investing Strategy for You
8. 604: Finding the Best Market
9. 606: Creating Your Strategic Plan

STEP TEN: What’s Holding You Back?

• Overcoming common fears
• Where to find your first investment
• How to find your first investment
• Analyzing an investment
• Financing
• Making the offer
• The Inspection
• Making the purchase
• You bought it! Now what

Next week, Bill will take some time summarize the series and show how to bring it all together and show how it can help you succeed at real estate investing.

Introduction

Sometimes taking that first step is the toughest part of real estate investing.  Many investors have struggled with their first purchase.  We’ve had multiple very successful real estate investors on this podcast that have struggled with those same anxieties.

Are you one of those people who has done all the reading, research, listened to the podcasts, watched the YouTube channels, done the webinars but are still struggling with that first step?

Doesn’t just apply to first Purchase.  Could be…

• Second purchase
• Big Step from SFRs to Apartments or mobile home parks, etc

Why Are People So Hesitant?

• Fear
  • Of the unknown
  • Of failure
  • of making mistakes
  • of succeeding
• Risks
  • Lose money
  • Get sued
• Can I get a better return somewhere else
• Challenges of long distance investing
• Don’t want to be a landlord – Heard other people’s horror stories
• Waiting for the perfect deal
• Lack of experience
• Property value decline (recession coming)
• I won’t be able to find the deals
• Not sure I can tell a good deal from a bad deal
• I don’t have a mentor

Top 5 Most Common Barriers to Entry

• I don’t have the money – See episode #194
• I don’t have the time (I’m too busy) – See episode #228
• I don’t have the knowledge – see episode #174
• I don’t have the confidence
• I’m scared or afraid of the unknown

I could give you a ton of real life stories – of people like you and me – who struggled with that first step.  In fact, I will include some of those stories at the end of today’s show notes – of some of my favorite podcast episodes of people who overcame fears and excuses, who started, in some cases, with absolutely nothing, and grew their real estate business into a multimillion dollar enterprise – a cash flowing machine!

My Story

I wasn’t looking to get started in real estate.

How I was able to make my first investments

• I was living in Haiti at the time
• Received a large, unexpected inheritance check
• Not everyone will have the advantage of have a big check show up
• Wanted to invest it wisely
• I was already heavily vested in the stock market and within my IRA
• I wanted to diversify — not just throw the money into the market
• Looked at gold, franchises, etc.
• I researched it like I would any investment
  • Checking out a potential new stocks
  • Evaluating index funds or mutual funds
• Read some books – some on real estate investing (Rich Dad Poor Dad)
• Did research on markets
• Found out about turn-key properties
• Hopped on a plane from Port-au-Prince, flew to Atlanta, flew to Memphis and came back with 3 properties – 2 SFRs and one duplex
• The following month I started getting income
• I think the reason it was so easy for me was because I didn’t view buying rental properties any different than stocks or bonds – it was just another investment
• Now, that’s not really the best way to invest but there is some truth to the fact that we SHOULD think of real estate investing as another investment

There are some steps every investor should take and I outline those things in podcast episode #006 – How to Get Started in Real Estate Investing

Reflecting back, I don’t regret the decision.  Sure I made mistakes — lots of them!  But I’ve learned too and I’m getting better at what I do everyday.

But once you’ve done the preliminary steps, you come to a point where you need to JUST DO IT!

And if you find yourself battling fears, doubts or analysis paralysis, stop looking at the negatives and just look at some of the reasons you thought of investing in real estate in the first place.

You can start with this…

14 Reasons Why Real Estate Makes Sense

1. You don’t have to work full-time. Most of us don’t want to keep working or find more work when we retire. We want to enjoy our retirement years.  Whether you are approaching retirement or already there, the great thing about real estate investing is you can do it part-time or invest as little as a few hours per week – depending on your goals.  Once you set up your “money making machine” it continues to produce whether you do anything or not.
2. It’s a relatively safe investment. The market can go down but it always rebounds and, unlike stocks, you own a tangible asset, the land – something of value that you can see and touch.
3. You already know the basics. If you’ve purchased your own home, you have a basic understanding of how real estate works.
4. Upfront costs can be minimal. You can purchase a property with little or no money down.  You can also invest in a REIT or other investment property with a few thousand dollars or less.
5. Your money goes a long way.  In real estate you can use leverage to control more assets. In the stock market $30,000 can control $60,000 of stock. In real estate, the same $30,000 can control $150,000 or more of real estate. Leverage is important. A small increase in the value, over the years can will double your equity.
6. Income is steady.  With a rental property, you get paid regularly from the start and on a continuing basis. If you own rentals, you’ll receive monthly income.  If you are an investor in someone else’s property, you’ll generally get paid quarterly.  You get to keep more of your income than you would with stock market dividends because of the tax write-offs.
7. You can give yourself a raise.  When you increase rents, your monthly income increases and so does your equity.
8. You get bonuses.  And if the property is sold, you’ll get equity income on top of your monthly or quarterly income.  If you syndicate you get acquisition fees just for finding the property.
9. Tax advantages.  You benefit from tax advantages at tax time and equity when you sell. Your income is offset by depreciation, expense deductions and more.
10. You can work from home.  You can set your own hours and work as much or as little as you want.  You can do 90 percent of your work on the computer or telephone.
11. You can avoid capital gains.  When it comes time to sell your investment property, real estate has a big advantage over the stock market. In the stock market a long term gain is taxed at 15 to 20% depending on your income. In real estate a capital gain is untaxed for the first $500,000 (a husband and wife each get a $250,000 exemption. Then there are 1031 exchanges in which you can sell a property and buy another of equal or greater value, and not pay taxes on the sale for many years later, if at all.
12. You can be the bank.  Once you start generating lots of cash, you can also be a resource for other investors that may have trouble obtaining a loan for various reasons (too many properties, lack of experience, etc.).  As an investor can loan money to other real estate investors funding the purchase and the rehabilitation of a property and receive a very high income, as well as participation in the profits.
13. Politicians love real estate.  They find new ways to make financing available. Some mortgage lenders are encouraged to provide loans with zero to 3% down payments. There is even a program called FHA 203(k) loan. It enables homebuyers and homeowners to finance both the purchase or refinancing of a house and the cost of its rehabilitation, through a single mortgage or to finance the rehabilitation of their existing home.
14. Can leave a legacy. You have something to leave your children. You reap the benefits of the great cash flow during your retirements. And when you leave this world, you leave a wonderful legacy behind for your children and grandchildren.  What better gift to leave to the ones you love.

If you are looking to “fill the gap” in your retirement budget, reap a great return on your investment, generate a strong monthly passive cash flow, increase your net worth and leave a legacy for your children and grandchildren, real estate investing is tough to beat.

How to Move Forward

As mentioned above, there are a variety of fears that can hinder you from taking action. While there are certain fears that are healthy, in business, fear can limit your ability to make an impact.  In the pursuit of financial freedom and flexibility, fear will always be present. It’s often just an issue of mindset.  Instead of just thinking about the negatives, think of the benefits that could result — like the list I just read.  Also, listen to some of the podcasts I’ve listed below about people who have overcame their fears or lack of money to become extremely successful in real estate investing.

Take the time to read the above list on why YOU SHOULD invest in real estate when you need a boost.

Taking action and control of your mindset is the first step – the rest will fall in line!

Below are some encouraging and inspiring Old Dawg Podcasts featuring people who overcame challenges and obstacles through Real Estate Investing

• 005: From Broke Rock ‘n Roller to Millionaire Real Estate Mogul
• 035: Real Estate Investing Outside the Box
• 081: Apartment Building Investing
• 107: My First Real Estate Investment Was an Office Building
• 149: How to be Set for Life
• 193: From High School Shop Teacher to Real Estate Mogul
• 195: Making Up For Lost Time
• 217: Husband & Wife Turn $50K Home Equity Loan into $56 Million Real Estate Portfolio in Just 5 Years
• 231: California Teacher Builds $7 Million Real Estate Portfolio in 7 Years
• 221: Wholesaling Real Estate with Zero Cash
• 253: Old Dawg Investor Creates Retirement ATM Machine in Just 2 1/2 Years
• 319: Started Investing at 50 – Still Financially Independent at 72
• 331: From $39K to over $50 Million in 9 Years! Finding Off-Market Properties with Data Mining and Equity Analysis
• 353: Affordable Real Estate Investing
• 361: How a Girl from the Projects Became a Millionaire Real Estate Mom

IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher, GooglePlay, iHeartRADIO and Spotify and Subscribe, Rate & Review our podcast.  This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.

Check out our other podcasts at olddawgsreinetwork.com.

Get a FREE copy of our 3-Minute Rental Property Analyzer at olddawgsreinetwork.com.

Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com