If you were to gather 1,000 people into a room – 500 of whom fall on the lower or middle class end of the socioeconomic spectrum and 500 of whom would be considered wealthy or elite – you’d discover a handful of stark differences in behavior and mentality. One of the most glaring differences would be real estate investing.
A very large percentage of wealthy individuals have built, grown, or preserved their wealth using real estate. In fact, it’s been the preferred method for centuries. Yet the irony is that most people don’t ever pursue real estate investing. And in most cases, it comes down to one or more of the following factors:
1. Fear and Uncertainty
“If you’ve always wanted to invest in real estate but have never given it a try, you’re probably paralyzed by fear,” Green Residential postulates. “You’re worried about putting that much money on the line, aren’t sure you’re ready for the responsibilities that come with being a landlord, and are scared you’ll never find the perfect deal.”
Fear is probably the number one factor that keeps people from investing in real estate. There’s fear over losing money, not having all of the answers, making stupid mistakes, and failing. When all of these fears are allowed to flourish at once, they prevent people from moving forward.
Here’s the thing: You will never find the perfect deal, make the perfect investment, or generate a perfect ROI. There will always be flaws, challenges, and mistakes. Your goal shouldn’t be to wait until you find an opportunity that’s perfect, but to patiently wait for the right time to jump in.
The key to overcoming fear is to educate yourself on the basics and then to do.When you take action, you almost always find that your biggest fears aren’t nearly as intimidating as they were when you were standing on the sidelines and psyching yourself out.
2. Short-Term Mentality
We live in a world of real-time consumption where everyone expects to have their cake and eat it at the same time. From fast food and Netflix to on-demand Uber rides and same-day shipping, there’s little (if any) delay between deciding you want something and actually consuming it. This has created a short-term mentality where people want everything right now and will worry about tomorrow later.
For people with short-term mentalities, real estate investing isn’t nearly as enticing as spending 100 percent of every paycheck on eating out, going to bars, purchasing brand new cars, and living in big houses. Real estate is a long-term play that requires discipline and patience. When people lack in these areas, it’s hard to see the future value of investing.
3. Lack of Knowledge
Sometimes it’s a simple lack of knowledge that keeps people from investing in real estate. If you didn’t grow up in a family or social circle where people were regularly investing in real estate, then you may assume that it’s something reserved for the wealthy. However, this simply isn’t true.
The more you educate yourself on the basics of real estate investing and the variety of options that exist, the more you’ll see that real estate is a viable option for almost anyone.
4. Lack of Capital
Finally, there’s the issue of money. While there is some truth to the idea that you need money to make money, this claim is widely exaggerated. You don’t need a six- or seven-figure savings account to get started. With just a few hundred or thousand dollars, there are ways to leverage other people’s money to get started. In fact, what you don’t have in greenbacks you can normally overcome with creativity and ambition. (This is how most people get started.)
Move Past Your Hurdles
Whatever is preventing you from investing in real estate, it’s time to do away with these factors and move. Real estate investing isn’t nearly as intimidating or challenging as it seems. Ease your way in with a simple investment like a REIT or single-family rental property. What you’ll find is that it’s a lot easier than you originally thought. It’ll take time to scale up and generate real wealth with real estate, but there’s very little preventing you from getting started and learning the ropes today.