No money, no time, no experience, too scared — and what to do about each one
We continue the series on mindset today by tackling the biggest roadblock to becoming a real estate investor:
Excuses
The reasons we use to justify not making progress; not taking action.
The discussion on excuses builds on the last two newsletters:
Investment strategies for each stage of life based on your available time, investable capital, and time horizon.
These should help give you a clearer sense of the options available and how they align with your personal situation.
But none of this will give you results unless you take action. And a major hindrance to taking action is to listen to the common excuses we tell ourselves.
That is why I am going to break down some of the most common excuses for not making real estate investments and how to overcome them. Today we will discuss:
Excuse #1: I don’t have enough money.
Excuse #2: I don’t have enough experience.
Excuse #3: I don’t have enough time.
Excuse #4: I am scared the deal won’t go well.
Creating a sense of agency.
Let’s dig in.
Excuse #1: I Don’t Have Enough Money
Yup. That may be your reality. You are living paycheck to paycheck and you have no savings.
Does that mean you just give up? No. There are plenty of things you can do to make progress to being a real estate investor. Here are some options to consider:
Invest in REIT’s
As discussed in 5 Ways to Invest in Real Estate (From $60 to All-In), you can start investing in real estate by buying shares in a real estate investment trust for less than $60 per share. There is nothing wrong with starting small.
Start Saving by Earning More and/or Cutting Expenses
As the saying goes: you can have anything you want, but you can’t have everything you want.
Look at the screen time report on your phone. What if you took half of the time you spend on social media, TV, movies, etc. and gave it to a side hustle to earn more income? Then put 100% of that money in a high-yield savings account to start making progress towards investing.
The flip side of this is to cut expenses. Take a morning to review all your spending over the past 90 days. Divide the expenses into two categories: (i) required (rent, mortgage, food, etc.) and (ii) nice-to-have (eating out, subscriptions, etc.). Get real with what you are willing to cut from the nice-to-have. Then set up an auto-payment from your paycheck to move this expense reduction into your savings account.
Be a Student
Until you reach your savings goal to make an investment, keep learning. In How to Find Your First Deal: A Step-by-Step Guide, I talked about the importance of getting in your reps.
You want to spend hours researching the market, reviewing and comparing deals, and talking with brokers. This doesn’t cost you any money. Start now.
Excuse #2: I Don’t Have Enough Experience
Correct. You don’t develop experience until you do the thing you are trying to learn.
I didn’t magically become a real estate investor. I worked at it. So can you. Here’s how:
Work for a Real Estate Company
In an earlier newsletter, I introduced the idea of Rockstar Reggie. He diligently works for a real estate investment company. He is paid to learn the industry he wants to invest in. And one day he may be able to participate in the company’s deals. Working for a real estate investment company is a great way to develop experience.
Build a Tribe of Mentors
Seek out investors who have “been there, done that”. So many of us enjoy sharing our knowledge. Ask them questions like: How did you find your first deal? What do you know now that you wish you had known then? Once you find a potential mentor, be someone they are excited to help. You do this by demonstrating that:
You are driven and humble.
You value what they have to say. Always take notes.
You are reliable. You do what you say you are going to do.
You are grateful. You show appreciation.
Create a Mastermind
Form a group of 2 to 6 people who meet regularly to discuss your real estate investing goals. Bring structure to the discussion by taking turns giving updates. Don’t be in competition with each other. Be a team of professionals who support each other.
Sharing knowledge that you each gain individually will allow all of you to multiply the power of your collective learning.
Excuse #3: I Don’t Have Enough Time
Welcome to the club. If you are single and don’t have kids or other dependents you are caring for, then I call BS. You have plenty of time, but you lack focus on what is important to you. Once you have kids and dependents, your life will be WAY busier.
But there is a strategy that will work for everyone’s situation: decide what you want and schedule the time to focus on it IN ADVANCE. Here’s how it works:
Step 1: Get Your Priorities Straight
Maybe you know what your goal is. Now you need to turn that into a weekly rhythm and/or action steps that will allow you to make progress. Force rank what you are trying to achieve against your goals.
The idea of force ranking is that you list all the things that you want to do (or take up your time) in order with the idea that some are more important than the others.
Step 2: Own Your Calendar
Once you have your force ranking, then you need to take ownership of your calendar. I like to print out a blank week from my calendar application on my computer. Don’t have a printer? Then draw it on a blank page.
Start by filling in your true time commitments: work, school, dependent care, etc.
Then look at what is left. This is the time you have to put towards real estate investing. Pick some portion of this time to commit to real estate investing.
Here’s an example relative to my writing goal: I don’t write this newsletter each week without owning my calendar. On Sunday mornings I take two hours to write the first draft. On Monday mornings I take two hours to do multiple rounds of edits. On Tuesdays I have the time to do any final edits. What happens when someone asks me to coffee on Monday morning? The answer is “no”. This is my dedicated writing time. Have the same structure and discipline for your priorities.
Excuse #4: I Am Scared the Deal Won’t Go Well
Good. You are a human with a healthy level of risk aversion. Real estate investing is risky. You can lose all of your money. Here’s how to mitigate this fear.
Don’t Bet the Farm
What has worked for me is to make multiple, smaller investments over time. I always accept that I could lose 100% of an individual investment, so I never make an investment big enough to wipe me out. Yes, I wish I had invested more when a deal goes extremely well, but it is an acceptable trade-off for me.
Be Careful With Recourse Debt
As discussed in Debt: An Amazing Tool with Strings Attached, recourse debt is personally liable to you. If the deal goes bad and you default on the loan, the lender can come after you personally. Be very careful.
Gain More Experience
Re-read Excuse #2. Learn from the experience of others before you do your own deal.
Creating a Sense of Agency
Excuses will come up whenever we have fear or hesitation. The key to all the recommendations above is to create a sense of agency.
What is a sense of agency?
It is a feeling that your actions have a direct impact on your goals. It is the opposite of feeling helpless.
You become the agent for the change you want to see in your life. You develop agency by:
Identifying a goal.
Creating an action plan.
Taking regular action (daily, weekly, etc.)
Measuring your progress.
It is such a fulfilling feeling to make progress on your goals.
Any progress.
It doesn’t have to be huge progress. As a real estate investor, you want to focus on the long game. You are building a path to financial freedom.
Stay focused. Be patient. Take deliberate action.
You got this.