This is a continuation of a discussion originally started here, in a piece titled, “Fear Factor 101: Is Fear a Factor?” So let’s proceed by picking up where we left off.
The fact of the matter is that the lessons are usually in the failures. Bill Gates himself said that success is a lousy teacher. Now, don’t get me wrong, I’m not suggesting you look to fail for the sake of learning lessons. The failures will come along the way to success in business and in life so IF you want to start, build, or grow a business, just be prepared for some failures along the way.
Build for the long-term. Invest in yourself and your business. Be a student of your craft. Become an expert.
I personally think it’s hard to argue that two of the most important ingredients of business success are leadership and credit (both personal and business credit). Cash, education, and having good people around you might round out the top five. You don’t need all of these ingredients to succeed in business but I’m not sure you could find me a successful business owner that didn’t have at least some combination of these necessary ingredients. Having as many of these ingredients as possible will help you weather your storms.
Our company has some clients who are real estate investors. As of the date of writing this article, it is arguably one of the best times ever to buy real estate. Some would argue that we’re in the midst of the best time ever to buy discounted real estate. They’re not making any more land and the population continues to grow. There will certainly be peaks and valleys along the way but, bottom line, real estate over time increases in value. To that end, we all need a roof over our head. So you do the math and tell me if real estate is a good or bad long-term investment.
Again, any good thing can get messed up and done the wrong way but we’re not talking about a business that’s already seen its best days like some industries (like manufacturing and industrial businesses perhaps). I do not think it is a business for everyone but it is certainly a good business for someone who will treat it like a business and not a weekend hobby.
I say all of that to say that even in a great industry, at a great time, with a bright future, it’s easy to find reasons “not” to buy real estate right now. Watch the news, talk to a former investor who was “speculating” and lost everything, or try doing it on your own without good mentoring. All these will discourage you if you let them and fear will jump into the driver’s seat and a year later you will still be in the same place you are today.
For today’s serious real estate investor there are deals, deals, and more deals out there. So, as a good friend of mine likes to say, ”whatchu gonna do?” It’s all in the action.
Think about it like this, if you do 100 deals you’re going to have some that make money and some that don’t. But you’ll certainly have more winning deals than losing one’s unless you don’t learn from your mistakes and repeat the same mistakes that caused you to lose money. Will you get discouraged if your first deal doesn’t make you the money you wanted or planned on? Most people throw in the towel if things don’t go as planned – fear gets the best of them.
I recently heard a story from a real estate agent who took a new client into a property that was inherited by heirs of an estate. The client was a new real estate investor who was looking for a “fixer-upper.” The sellers (the heirs of the property) were in another state and had no interest in real estate and simply wanted to liquidate and have nothing to do with managing a vacant property. The house was structurally very good and was in a good neighborhood but it was outdated. The sellers were “negotiable” on the $95,000 price (which was already aggressive since the sellers just wanted to unload it). The estimate to replace the wood paneling, drop ceilings, install new kitchen cabinets, new carpet, and update the bathroom was about $25,000. The houses in that neighborhood sell in the $200,000 – $250,000 range because it is a solid area with good schools and low crime. Because of the condition of the property (mainly the bathrooms not working well) the agent said it would not qualify for FHA financing so they were targeting an investor to buy it.
When the agent took the new investor through the property he seemed concerned about what he would find after they took off the wood paneling and pulled up the old carpets. He told the agent he would “think about it” and get back to her. When he called her back 3 weeks later to go “look at the property again” the agent informed him that it was already sold. Apparently, it was put under contract for $90,000 and then went to settlement 2 weeks later with the end buyer being an investor who paid $105,000. The buyer was a seasoned real estate investor who bought the property from the person who got the contract for $90,000 (the wholesaler). The wholesaler had sold other properties to this investor and because of their good relationship, the property was purchased without the buyer doing an inspection.
Which one of these businesses are you? There’s the tire kicker who was obviously motivated by fear who wanted to “look again” after 3 weeks, the wholesaler who got the property under contract for $90k and made a quick $15k, and the final buyer who paid $105k and will easily make over $50k in profit or equity from the deal (after some good, honest hard work and labor of course).
Fear is a great crutch. You can lean on it whenever you need an excuse. The problem with the crutch is that if you lean on it forever you may never do without it. It’s like a security blanket if you don’t wean off of it. How many of your decisions are influenced by fear?
Who’s the CEO of your business?
Fear Photo via Shutterstock
The CEOs who relied on fear as a motivator are probably gone. The last three years have winnowed out the fearful and the unlucky. Taking a chance is critical for survival.