REAL ESTATE Investors’ behavior modification leads to a massive 800% increase in the rate of investment! The majority of residential real estate investors invest with their hearts instead of looking at their investment as a business, a business that needs to provide cash flow to cover the operation, these investors are content with a return often in the 2% range or even worse in negative territory. When asked the investor will say that they are looking for capital gain and tax benefits so are comfortable with an investment that is showing a negative return.
This form of investment strategy is endemic in residential real estate investment, and investors are conditioned to believe that this is good. To maximize your profit take note of and avoid the following pitfalls this will require a major adjustment to your thinking and investment behavior.
Behavior pitfalls to modify:
1.Do not fall in love with your investment property: Many property investors make an unnecessary mistake when they start their career in property investment. They look at their investment property in the same manner and with the same feelings as they do when purchasing their own home to live in and this is a critical mistake as an emotion rather than business acumen takes control, and the principles of investment fly out of the window. Investing should encompass the principles of a sound investment and investors should look at the investment as a vehicle that will deliver the results that they are seeking seamlessly. Let me explain again, when purchasing an investment property it should be all about the numbers and nothing about the emotions, look for the property’s financial statement. Certainly, let emotions dictate the purchase of the home you intend to live in where, you would ask yourself emotion-charged questions such as I “like” the house, will I “enjoy” living in this neighborhood, and numbers will if at all figure last, liking and enjoying are all emotionally charged issues.
2. Change your behavior and start becoming a successful investor by evaluating the property investment by its numbers its financial statement. Start asking yourself questions like “Can I purchase this property at a discount, or a wholesale price”, “Is there enough room for a healthy spread if I use this property as a cash flow tool”,” How much of a spread can I get over and above the cost of money to purchase this investment”. TIP: Keep emotions out and the numbers in, you will be glad you did.
3. Do not be Greedy: A major pitfall especially for quick cash investors is the danger of becoming greedy, very greedy. They get a great wholesale deal on their property investment and then try and flick it for well above retail, instead of at or slightly below retail. This stymies the sale and the hapless greedy investor has to hold on to the property for a greater length of time and invariably will end up taking less than they could have if they had sold at or just below retail. Greed costs you more than the gain so quit being greedy. Listen being greedy especially on quick cash deals will come back to bite you.
4. Remember the beauty of quick cash is the quick part. Price your quick deals to move quickly, you will end up making more money than if you were being greedy.
5. Why are some investors susceptible to being greedy? It’s because they subconsciously fear that this deal will be their last. I call this the scarcity mindset. Don’t fall prey to that. There are plenty of deals out there and this one deal will not be your last unless of course, you want it to be. Start cultivating an abundance mindset, instead of a scarcity mindset move forward by pricing your deals to make you money and sell quickly.
6. Thinking you know it all: No one likes a know it all…. do you? This is an awful pitfall that many investors fall into and is particularly prevalent when it comes to investing in real estate, and gets worse after you have been investing for a while. They believe that they know all there is to know about real estate investing.
7. Listen, the market is always changing just because something worked yesterday does not in itself mean that it will work as well today, not only is the market changing but so are the rules and the laws governing real estate.
8. Real Estate is always in a state of flux. There is always something new to learn in the realm of active real estate investment for profit. Perhaps the learning curve has diminished for those that have learned the basics of real estate investing, maybe there is not as much to learn, rest assured you will never stop learning and there will always be surprises in store for the know it.
9. Instant Gratification: Remember there is no free lunch and no easy way to wealth. It takes time, effort, and hard work, sorry you can’t sit on your butt and wish or expect someone else to make you wealthy, it is just not going to happen. Unfortunately, far too many people from all walks of life and sadly those that should know better, all want the “instant fix”, the “silver bullet”, “The secret”, to making millions. They all have one thing in common they crave the “secret” and even if there was a secret, they would want someone else to do it for them.
10. Sorry to disappoint there are no secrets, just common sense, effort, and following the principles of sound investing, now this is where the vast majority fail, they do not follow the principles of sound investment and if they did start following these principles, after a few successes they look at taking short cuts which invariably cause them hardship, you often hear these people wail why me… If you seriously want to be financially free and wealthy treat your investment as a business and ensure it creates cash flow.
11. These four major psychological pitfalls plague potentially successful investors, to overcome them you need to modify your behavior starting with the way you think.
Not convinced? Want to know some secrets that the wealthy use constantly?
Secrets revealed below.
1. Harness your positive thoughts and make them a reality. What you think so it shall be
2. Prepare to go beyond your present circumstances.
3. Nurture the ability to believe in yourself
4. Set and achieve goals
5. Learn how to have a go
6. Take responsibility for all your actions, stop blaming others when things fail or do not happen as planned
7. The willingness to do what it takes
8. Buy a property as a business and not tolerate loss
9. Buy property correctly and never pay too much
10. An aversion to debt, borrow only what can be comfortably repaid and still make a profit
11. Run your investments like successful businesses
12. Speak to and follow successful people
13. Have a positive mental attitude.
14. Take responsibility for your actions, if it going to be it is up to me.
As you can see there is not much that separates the wealthy from the poor, no it is not the amount of money. I could give a poor person a million dollars and by month’s end, they would be poor again because they have not developed the fourteen points above. Being wealthy is all about you, your thoughts, your beliefs, your attitudes towards wealth, riches money, and yourself. Your mind is the secret to you being wealthy or poor.