— About a year ago, a buyer, let’s call him Max, contacted me with questions about the Hawaii real estate market. Max was determined to fly to Hawaii and secure a condo that could serve as the best of both worlds:
a) a vacation home to satisfy his lifestyle for his personal enjoyment a couple of weeks per year, and
b) a cash-flowing investment that generates rental income for the rest of the time.
See related article: Top 5 Tips To Finding Your Dream Home
Many of Max’s questions had been answered in detail by email before his arrival. During his visit, we identified and viewed about a dozen of the most suitable condotel options. Max carefully studied the pros and cons including income statements and management options. Any of the top three condo choices nicely matched his criteria.
Except, instead of recognizing the opportunity and moving forward, Max got caught up in wanting to further analyze the market, the building, the unit, and the seller!?
The more he analyzed the more reasons he found to hesitate and delay his purchase decision. Primal fear was holding Max back. “What if I were to make a mistake? There could be something wrong with this condo.” Regretfully, Max never bought his condo.
Max’s Four Main Hangups
1) Entitlement – “I don’t want to pay more than everyone else paid during the last year?” — Today’s market is not last year’s market. In Hawaii, valuations tend to move up most years.
2) Wanting what is no longer available
— Coincidentally there was one condo that Max claimed he would buy without hesitation. Except, it already had sold a couple of months earlier.
3) Recency bias with pre-drawn conclusions – “The market seems to be at the top. Since the market tanked after the last run-up (a mere 10% drop during the 2008-2010 great recession) it probably will tank again soon.”
— In a market that trends upwards, values tend to be at the top most of the time compared to where they have been in the past. Yes, eventually we will experience another recession. But nobody knows when. We might see the market move higher before any price consolidation. We have seen recessions with minimal impact on Hawaii housing prices. During the 2001 recession Hawaii real estate prices even moved up.
4) Fear and suspicion – “Something must be wrong with this building if there are several sellers that want to sell.”
— Don’t hang yourself up. Inventory levels can fluctuate randomly. Temporarily elevated inventory levels could represent an opportunity for greater price flexibility. Seize the opportunity and pick up a bargain.
Max recently emailed me that he continues to keep an eye on the market. Regardless of what the market does, I suspect Max might not be able to overcome his fears.
It seems silly but it is real. And Max is not the only one. In fact, many buyers are experiencing similar self-limiting doubts and struggle to be decisive in moving forward.
Buying real estate is a huge financial commitment. But regardless of the size of the commitment, it is simply a matter of having the right mindset. Some people are able to forge forward and accomplish whatever they set out to do while others are stuck like Max.
We need to recognize and act on opportunities when they are available rather than watching them come and go. ‘Should have,’ ‘would have,’ and ‘could have’ won’t get you to where you deserve to be. It’s like driving a car by only looking in the rear view mirror.
“Successful people start before they feel ready. Who you are, what you have, and what you know right now is good enough to get going.” ~ James Clear
The Three Big Ps That Are Holding You Back
I’m intrigued by the human potential and how to optimize life. And I’m committed to helping others reach their potential too. This goes beyond real estate. It affects every aspect of our lives.
Understanding what is holding us back is the first step to recognizing a path forward. Could it be the three big Ps?
Whether you know it or not, most of us struggle with Procrastination, Perfectionism, and Paralysis:
1) Procrastination – Delaying an action occasionally might seem insignificant. But a little slip can easily turn into an unhealthy counterproductive habit. There is a compound effect and you might miss out entirely on realizing your dreams. That’s how people end up broke in life! They talk about saving and investing but never get started.
Eliminate distractions and resist short-term gratifications.
I meet many that are expressing regrets: “We should have bought real estate back then.” Instead of lamenting about the past, determine what you want. Commit to taking immediate and deliberate steps and relentlessly close the gap to achieving your desired outcome. I sincerely hope that in the future you might be able to reflect back on today: “We are fortunate that we bought real estate back then.”
2) Perfectionism – You’ll never complete anything if you think it needs to be perfect. Aim for excellence rather than perfectionism. Do the best with what little you got right now and incrementally build on it. Only once you get going will reveal itself whatever you need to learn along the journey.
I bought my first investment property in 1992 based on the desire to learn how to invest. I committed to investing but had no clear understanding of how to do it. Fortunately, my first rental property worked out sufficiently well. It inspired me to refine my investment approach and invest in many more rentals since. I learned from doing. My desire to invest surpassed my fear. My lack of knowledge and experience was only temporary.
Without buying my first little rental I would have never bought all the others. I wouldn’t be where I am financially today.
Success based on 80% knowledge with a semi-sloppy start is better than searching for all the answers but never getting it done.
If you have looked at all suitable real estate options and the very best match meets only about 80% of your top criteria, then consider yourself lucky. You found the winner! Congratulations. Don’t let it get away.
3) Paralysis from analysis – You don’t need to test every match in the box to see if it works before you go camping. Gather enough information to start taking the necessary action in the general direction you want to go. Trust in your ability to learn and discover the next steps along the way. That is how every successful person has progressed from nothing towards greatness.
In real estate, get your finances in order and monitor the inventory that meets your criteria within your budget. Strike when you are ready and when you found the right property you can afford. Nobody achieves their real estate dreams just by analyzing deals. You got to act.
See related article: 3 Things To Remember When Waiting For The Right Deal
Productive Time: Alive Time vs Dead Time
Robert Greene says: “While people wait for the right moment, there are two types of time: ‘Dead Time’—where they are passive and biding, and ‘Alive Time’—where they are learning and acting and leveraging every second towards their intended future.”
Unless you are actively utilizing your time to progress towards achieving your goals, you are automatically drifting away from them. What intentional and decisive actions are you taking today?
There Are Three Types Of People In This World
Which of them is most like you?
1) People that don’t know that they can learn and change their life. They think that achieving goals or improving their life and environment is meant for others. How they were born into this world and conditioned at a young age is how they are supposed to live their life. They are stuck and don’t change. – This is a self-limiting ‘Fixed Mindset.
2) People that know they can change. They learn and analyze like Max. They theorize, set goals and plan. But they have difficulty taking action and implementing what they learned. They are stuck in spite of all the knowledge. The most common culprit is fear. – This is Max’s ‘Analysis Paralysis.’
3) People that constantly learn and immediately look for ways to implement the new knowledge. They ask: “Knowing what I know now, how can I take massive action and progress towards my goals.” These people might seek supporting experts to brainstorm and help convert new knowledge into action and productive growth. Everything is learnable! With this fearless attitude, you can achieve almost anything you set out to do. – This is the unlimited ‘Growth Mindset.’
‘Wanting to take action’ is not enough. Otherwise, you are still stuck. You must a) commit, and b) take massive action with extraordinary effort in order to succeed. You might need an inspiring role model, a mentor, or even a coach. Someone that believes in you that could hold you accountable.
- Wouldn’t it be more fun to be like the third category of people? Overcoming fears and continuously designing and improving our environment and lives? It is common sense but not common practice. Otherwise, all dreamers would be doers.
Homeownership and real estate investing success have been achieved by many. The good news is: You can achieve it too!
Surprisingly it has little to do with your monthly income. A better precursor to success is your growth-mindset, your long-term dedication to continuously learn and take immediate action. Words without subsequent action are just hot air.
I know individuals that earn $500K a year, renting an expensive home, driving luxury cars and living a lavish lifestyle. But some of them are only one paycheck away from being broke because they never planned their financial future.
I also have clients that succeeded in purchasing their first modest home and got out of paying rent even with limited financial resources. They started with little and step by step progressively improved their lives. Some of my clients built impressive real estate investment portfolios designing their financial future in spite of humble financial beginnings.
See related article: 7 Real Estate Investment Strategies
It doesn’t matter where you start. What matters is that you know where you want to go. You must take deliberate calculated steps towards getting there.
Do not buy real estate unless you are mentally and financially ready. However, once you are ready, ask yourself if any remaining concerns are justified or are unnecessary fears holding you back. Are you watching opportunities and life pass you by?
Life is only as complicated as we allow it to be. Investing in real estate should be as simple as:
- Determine if real estate ownership is important to you.
- Take deliberate steps to get mentally and financially ready.
- Focus on your long-term vision and be decisive when the right opportunity represents itself.
It is our sincere wish to see you achieve all your real estate dreams. We are committed to excellence. Let us know how we may assist you best. We are here to help, ready when you are.
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~ Mahalo & Aloha