Overcoming Fear on Your Way to Success in Real Estate Investing

Fear can be an absolutely paralyzing thing.  It keeps some from going after their dreams of creating passive income and living the life they want. It keeps others from even having dreams in the first place because  their fear of real estate investing and terrifying of doing the wrong thing.  There are two kinds of fear:

1. The first is the kind we feel as a genuine response to a real threat to our physical safety. This is actually a healthy fear; one author even goes so far as to call it a gift, saying that relying on the intuition that we have that something is posing a threat to us is the very thing that often keeps us alive and safe.
2. The second kind of fear is the type where we are afraid of things that will never happen. A shocking 60% of our population fears things that will, in fact, never take place. That means they spend hours, days, or even a whole lifetime anticipating and being stymied by something that will never become an actual reality in their lives.

It’s this second type of fear that keeps people from trying to live their entrepreneurial dreams in the business world. They have a great idea or see a great opportunity and instead of taking a calculated risk to go for their dreams, they allow their worry to win out and they never take the leap to see just what amazing things they can accomplish.

The critical part of that acronym is the first word – FALSE. These things that hold people back aren’t real. Although they appear to be real, they are actually perceptions that something might happen, which is very different than planning for something that definitely will happen. But instead of being able to separate the truth from the lies, we often succumb to the falsehoods and let them squash our dreams. People who want to start their own business are even more susceptible to these kinds of concerns. It’s hard to take a risk, even a calculated and well-planned-for one, if you are terrified and paralyzed by things that you perceive are going to happen, whether they are based in reality or not. It’s these false fears that keep people from investing in real estate. They imagine things are going to happen or that risks are larger than they are, and instead of facing those fears and tackling them with knowledge and truth, they choose to let fear win. And when fear wins, what loses? They do. Their family does. They lose future income and a sense of confidence in themselves when they choose to let fear win.

Here is the good news for all potential real estate investors: there is a way to beat fear of real estate investing. You do not have to be a victim of the falsehoods and be afraid of a failure. It is in your hands and ability right now to overcome them and to create a successful business for yourself and your family. Do it by separating the real fears from the imagined one. After you know what your real fears are, you can tackle them head on with great business sense and strategies. Here are six of the biggest fears people face when starting a real estate investment business and how to conquer them.

Fear of real estate investing #1: What if I buy my rental property in the wrong area of the city?

Choosing the right area of the city is one of the biggest decisions you’ll face on the way to starting your investment business. Its importance shouldn’t be underestimated – but it shouldn’t be overestimated either. Start by doing your research. Every city has areas that are currently growing or are already in high demand. Find out what those areas are in your city. Read real estate listings. Talk to agents you know. Ask your friends and acquaintances where they would want to live. Then do your research into the property values of those up-and-coming or established neighborhoods to know which properties you can afford in those areas.

Fear of real estate investing #2: What if the home needs too much maintenance?

Know your limits in terms of what you can and can’t do yourself with regards to doing home maintenance and repairs. Also study your finances to know what you can afford. Once you have an understanding of those two things, choose a home accordingly. If you don’t want to do a lot of repairs and can’t afford to hire people, make sure you choose a home that is newer or more recently renovated, which will decrease the likelihood of having ongoing maintenance issues. If you can handle more repairs on your own or have a bigger budget for those things, you might consider buying a property for less money upfront, but that will require more work and effort to update it and fix any maintenance issues. Either way, one of the smartest things you can do as a future investment property owner is build a network of people who you trust to make high quality repairs on various areas of your home when and if they are needed. Find trustworthy plumbers, HVAC specialists, electricians, painters, etc. who will do a good job and charge you a fair price so you’re not scrambling around if there is a last minute repair that needs to be done.

Fear of real estate investing #3: What if I don’t have enough money to make the mortgage?

The first thing you should do before you even buy a property is have a complete understanding of your personal finances. Once you have a handle on the amount of money you have to put towards this property, make a list of all of the expenses that you will incur with purchasing and maintaining a rental property. Use this comprehensive list of anticipated expenses to make sure that you have all your bases covered. It’s important to consider everything on it, like property taxes and potential association fees. Make sure that you not only have enough money to make the purchase and cover the expenses, but that you also have enough saved to pay for several months’ worth of the mortgage in case you can’t find a tenant right away.

Fear of real estate investing #4: What if I can’t find someone to rent the property?

This is always a concern, and it’s a legitimate one. It’s also directly related to choosing the right area of the city. You know the Realtor’s mantra: location, location, location. If you buy a property in a well-established, highly desirable neighborhood or one that is up-and-coming, you are significantly increasing your chances of finding – and keeping – tenants on a long-term basis. If your property is family-friendly, choose a location in a good school district, which will increase its desirability for families. The reality is that no matter where you choose to buy your property, there is a likelihood that it will take a few months before you’re able to rent it so make sure you have enough breathing room in your budget to handle a few months’ rent on your own before you find tenants. Worst comes to worst you can always lower the monthly rent amount by small percentage in order to find great tenants.

Fear of real estate investing #5: What if I get bad tenants?

Immediately following the fear of not being able to find someone to rent your property is the fear that you will end up with bad tenants. The Boy Scouts said it best: be prepared. The hard truth is that there is no guarantee with tenants. They can look stellar on paper and be horrible tenants in reality. Do the best you can to minimize your risk of getting a bad tenant by following these four steps and these tips on becoming a landlord. Learning how to screen your potential tenants will dramatically reduce the likelihood of getting a bad one. In the meantime, be sure you have enough saved to cover the mortgage for at least a few months in the event that the tenant you do choose breaks the lease or doesn’t pay rent on time.

Fear of real estate investing #6: What if I don’t have any support from my friends and family?

The first things to consider when it comes to support are whether or not you need it. If you are going to need support from your family, whether it’s financial to help you get started or people to help you with repair work, then getting their buy-in is a crucial step in the process. The best way to do that is schedule a meeting with them (yes, a formal meeting with your friends or family to show them you’re serious) and present your meticulous research to them. Show them you know what you’re talking about and that you have overcame the fear of real estate investing. Anticipate their questions and concerns so you can directly answer and address them. Make sure that you have their buy-in before moving forward with any purchases. Assuming you do not need the financial or physical support of your friends and family to help you with a rental property, you can then consider whether or not it’s important to you. Some people need to know that they are being emotionally supported when it comes to big decisions like this. If that’s critical for you, talk to the people who are closest to you to find out what they think before you proceed. If it’s not, you’re free to move on to buying your first property.

To Summarize

Investing in real estate is a big step for sure. But don’t get stuck in the “paralysis of analysis.” Learn to distinguish between the fears that you need to address and the ones that exist only in your mind.
You can also try to find a job in this field to be more confident in your future. There are many vacancies associated with real estate investment. Try to find something that works for you.
Take your time, do your research, and get everything in order in order to concur the fear of real estate investing. When you do that, you will find that any actual fear you have in starting this new business is minimized or even erased completely.