Cats are curious creatures.
Scaredy-cat is an expression because sometimes cats are afraid and timid. Yet other times they are bold adventurers, climbing to the highest highs and roaming far beyond their home, exposing them to many dangers for just for the sake of exploration.
Human behavior isn’t as far from animal behavior as we like to think. We live in a structured environment and don’t have the danger of predators or starvation. But rather than a blissful existence, we make up all kinds of fears that are irrational in comparison.
These fears won’t kill us, but they will hold us back.
The Greatest Fear
One of the most common fears in America is public speaking at 28.4% of the population. How exactly is that going to hurt you?
There are no physical dangers so we naturally imagine social fears. For example, fear of embarrassment in front of a large crowd.
From that same study, 37.4% are afraid of running out of money. I would bet that the proportion holds regardless of income. So roughly 37% of people who make $30k have money fears and 37% of people who make $100k have money fears. Same with $250k. Maybe it’s irrational, but that doesn’t make it false.
There are a ton of these little human quirks from made up fears. For example, losing $100 is over twice as painful than gaining $100 is positive – our behaviors reflect this loss aversion even if logically it doesn’t make sense (see also prospect theory).
Can you identify areas in your life where your fears are causing you to behave irrationally?
Anyone can make a decision with perfect information. Yet this rarely happens in real life – you can’t be certain how the decision will turn out until after you make it.
Visualize this as a hike through the woods to the top of a mountain. When you start, there is just one path, but quickly it branches into several options. There is more than one way to reach the top, but some paths will not get you there. Should you even start on this journey?
The best decision makers realize their blind spots and forge ahead keeping them in mind. As new information comes in, like the path turns and starts going back down the mountain, they can adjust their plan. They know there is uncertainty, but it doesn’t hold them back. They are confident in their abilities to pull in new information as they go and that they will reach the goal even if the original plan isn’t perfect.
This is uncomfortable. We would much rather know exactly what the entire journey would look like before taking the first step.
It is a learned skill to be able to push your comfort zone.
How can you take action even when you face uncertainty? When do you have enough information to get started on the path? How can you keep learning along the way?
Adjust Your Mindset
Many reading this are overachievers, like myself. This group has a greater tendency to be control freaks – we want to be in charge and handle everything ourselves because we can do it better than anyone else.
We have high expectations and aren’t used to failing. The idea of starting on a path without complete certainty how it will wind through the woods to the top can make an overachiever feel powerless. So we take less risks and stick to things we know well.
Let’s tweak your mindset. View the journey as an opportunity to grow. All the uncertainty that exists is something that you will learn along the way. An opportunity for a power-up.
Yes, the first journey is uncomfortable and scary. But the next time you want to go to the top of a mountain, you can draw from your experience and it will be much easier.
Combat the fear of the individual journey by taking a step back and looking at a lifetime of journeys. Whether you succeed or fail this time, you will be better equipped for journeys the rest of your life.
Applying This Mindset to Rental Properties
There is an incredible amount to know about investing in rental properties. Mortgages, contracts, property management, taxes, cities, neighborhoods, schools, crime, demographics, legal entities, insurance, capital expenditures, rehab, and on and on.
You don’t have to be an expert in order to take the first step on your journey.
The first time you purchase a rental, shoot for the most conservative path possible. You might not have the upside that an expert investor will have on his or her deal, but you will learn a lot.
For me this was purchasing turnkey, where someone else does the purchasing of the distressed property and rehab work. Rather than seeking out this company directly, I went through a national marketer who vets the turnkey companies and provides education along the way in the form of an investment counselor.
Is this the perfect way to go? No, but I protected my downside and got started on a conservative path. I’ve learned a lot so far and can one day apply my experience on more advanced paths.
If you haven’t purchased a rental before, how are you going to take action in the face of uncertainty?
If you have purchased your first rental property, how did you make that first step attainable?