As I’m sure you can imagine, I get asked for advice from my podcast listeners a lot of the time. Often, they ask about how to get started in the property industry, or as an investor, or what books to study.
But a lot of the time it’s not a lack of knowledge that might hold you back; sometimes it’s a case of self-limiting beliefs getting in your way.
Regular listeners will know that I think your mindset is critical, when it comes to investing (as well as everything else in your life), so let’s take a look at why it’s so important, and what factors are affecting your progress, which you might have forgotten about
Are you a gambler or an analyst?
When it’s a case of what might be holding you back, you often have to start with that question, because there’s a Gambler in us all, and there’s an Analyst in us all – think of it as a spectrum within ourselves.
The Gambler loves to act quickly – they put their money down, get into a deal, pay for something, done. It all happens without too much thought going into it.
The Analyst will sit down and scratch his head, look at every possibly angle of a deal and consider all the ‘what ifs’. They’ll analyse the deal to death and usually end up going nowhere. It’s known as Paralysis by Analysis – they can’t make a decision because they’ve got too many scenarios that could play out.
Whichever end of the spectrum you’re at, both are bad: if you’re a Gambler, you throw caution to the wind and are buying whatever’s in front of you, whilst the Analyst is so busy examining their options that they never do anything, and that’s no good either.
Finding the balance
To balance yourself out, start by analysing your own mindset to find out first where you are on the spectrum.
Look back at the last few years, the last few purchases, scenarios where you’ve bought something. Did you make a big investment quickly and regret it, or have you never bought anything, so you regret all the things you could have had, because they’ve increased in value, or you see someone else with it and realise it could have been you?
You’ll probably see that there’s a pattern there when you really look at everything in detail . Try to pull yourself closer to the centre of the spectrum.
Testing your Mindset
When we’re looking at the things that hold us back, there is a mindset test I like to run: The Three Cs Test.
It’s named for the three C’s that I believe hold a lot of people back: Capability, Concern and Confidence.
If you lack experience, or knowledge, in any shape or form, you’ll find that often you’re too scared to make a decision, or to take action. You have to remember that nobody was born an investor. Like everything, it’s starts with the first step. Becoming a Property Investor isn’t an event that just happens one day! It’s a journey: you start out, take your first cautious step, start small, and as your confidence builds your deals get bigger and bigger.
Remember – every master started as a disaster! Don’t expect to know all there is on Day 1.
To help overcome any Capability worries, do some training – get your practice in. Educate yourself, it’s the best place to start.
Many people have the capability, but they’re too concerned about the state of the market (or similar) – it’s their inner Analyst coming out. They may decide that the market has topped out, peaked, and choose to sit on the sidelines rather than doing anything. This happened to me in 2008, and it can scar you if you’re not careful!
Be careful that you’re not perceiving things to be in a worse state than they are, and that your cognitive biases aren’t getting in the way and impacting your thinking.
Get into the habit of doing sober deal analyses. Every single deal you do, don’t buy unless the deals stack up financially. Don’t make the mistakes of pursuing a deal that doesn’t stack up on paper, under the assumption that the market will grow and it’ll all work out in the future.
If you do that, you’re finished before you’ve started. It’s as bad as sitting on the sidelines.
The third C is confidence. I often say that ‘confidence comes from competence’. Competence in itself is related to the first two Cs.
If you’re not feeling confident, the solution is to understand the whole process of the property investment journey. Once you understand all of the various aspects it becomes very easy to navigate – although you should be careful not to get TOO confident, or even a little cocky! Stay disciplined.
Nothing beats experience, and the only way to get experience is to actually go out there and make some mistakes and learn along the way.
Timing the market is almost impossible. Time in the market will always serve you.
If you’d like to learn more about how your mindset can impact your real estate investment career, consider subscribing to my YouTube channel – Gavin J Gallagher on Real Estate.