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Rental Property Investing: Getting Over the Newbie Hump


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One of the most difficult things in life for many people is actually getting started on something.  This applies to rental property investing as well as just about anything else you can imagine.  It’s easy to do the research, read a book or two, and analyze some real estate market data.  But it’s not easy to start pounding the pavement and ultimately jump into the fray.

The cold hard truth is that over 90% of folks who are interested in rental property investing never make it to the point of actually acquiring any property.  Simply put, in the vast majority of cases, no action is taken beyond the research phase.  Many people are scared of risk, no matter how small, and as such they make excuses justifying their inaction.  What follows are 3 of the most common excuses for not taking action, and some tips to overcome them.

The most common excuse I hear is “I don’t have the funds.”  This is a poor excuse because there are options that do not require a lot of funds.  For example, I didn’t have any money to invest when I got started, so I refinanced my home, took out a HELOC, and used the HELOC to fund the down payment on my first property.  Thus, I did not need to come up with any down payment and hence I basically used 100% leverage.  Of course, not everyone has a home they can leverage, but that should not stop you from at least pounding the pavement and building relationships.  And even if you have no money and no assets, you can still do other things to get the ball rolling, like bird-dogging, partnering with someone, or investigating piggyback loans.

Another common excuse is “I need to learn more first.”  This rationale allows people to justify never moving beyond the research phase.  Another term for this is “analysis paralysis.”  If you’re stuck in this rut, just remember that it is not possible to have 100% certainty with anything in life.  My philosophy is that having 80% of the information is enough to make a decision.  At some point, you have to take a small leap of faith…as they say, no risk, no return.

The final most common excuse I will discuss today is “I don’t have any industry contacts / I don’t know where to start.” This one is the easiest of all; start by contacting a real estate agent.  It’s as simple as that.  And finding an agent is not difficult (click to learn my step-by-step approach for finding a real estate agent). Once you find a good agent, have them email you property listings, practice running the numbers and calculating cash flow, and schedule a few showings.  Pretty soon, your momentum will keep you going and you’ll wonder why it took you so long to get started in the first place!



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