The real estate investing business can be a serious emotional roller coaster, especially if you’re just getting started. You spend a lot of time searching for great leads on real estate deals. You do all of your homework to find the best potential deals, you follow up on them, you make the offer, and it looks like it’s going to happen…and, at the last minute, the buyer backs out. Or you make a deal, put a lot of work into rehabs, put it on the market, and it just sits there, getting no offers for weeks or months.
That kind of stuff can be really difficult. You can feel like you’ve gotten your hopes up for nothing, and you can easily get frustrated and angry. Believe me, I’ve been through more than a few really emotional deals, just on the financing end of the investments Mike and I make. However, if you learn to stay calm and let go of a few negative emotions, you’ll find that the whole process is a lot easier than you think, even with the ups and downs.
I don’t know who first said it, but I love this concept—if you aren’t embarrassed by your offer, it’s too high. When I talk to new investors, they’re almost always afraid of offending motivated sellers by making an offer that is too low. They get embarrassed that they’re asking to pay so little for a property that’s likely to make them a significant profit, but feeling embarrassed about this is really not productive.
Yes, you are trying to make a profit by paying cash for someone’s home. And, yes, they would probably love to get a better offer than the one that works best for you. However, in almost all cases, the house is in disrepair, and the owner is in financial distress. Even if you make a very low offer, you’re still going to be helping them out a lot more than leaving them to go into foreclosure.
So check your embarrassment at the door and look at how much you’re helping your sellers, the neighborhood, and your buyers by rehabbing and flipping this property.
Another emotion that really does no good and will only hold you back is fear. Whether you’re afraid that you’re not going to find a deal, that you won’t be able to stick to your rehab budget, that the house won’t sell, or anything else, it’s time to kick fear to the curb.
How? In my experience, the best way to rid yourself of fear is to load up on information. The more you know about a property, neighborhood, and market, the more comfortable you’ll be with the calculated risks you’re taking. The more you know about finding the right contractor and moving forward with repairs, the better you’ll feel about rehabs. When you start to feel scared, just dig in and do your homework. Before you know it, you’ll be ready to dive right in.
These are, of course, not the only negative emotions that can set you back on any flip deal. Anger can be a big one, especially if you get mad that a deal isn’t going your way or that renovations are taking longer than they should. Getting mad at your contractors, sellers, or buyers won’t do you any good. Staying calm and looking at what’s causing the problem could help you find a way around it, though.
In general, if you can say goodbye to embarrassment and fear, you’ll be well on your way to harnessing your emotions and making them work for you instead of against you on any house flip deal.