The Mindset of a Successful Passive Investor
Recently, we raised funds for our last deal and took advantage of the opportunity to speak with various potential investors. What we learned is that some investors simply “get it,” but others have more fear and hesitation and need more information before making a move. Thus, we thought we would take the time to share with you what we learned, and what it takes to be a successful passive investor.
Mindset
Emotions such as fear and mindset are powerful drivers when it comes to passive investing. Most of you that been following along with the JB2 Investments team for a while and thoroughly understand the benefits of investing in apartments specifically. And the truth is that there are many benefits to investing in multifamily units. And there are also many ways to eliminate or lower your real estate investment taxes. Understating these two concepts can help you generate more revenue and keep more of it in your pocket.
Why People Don’t Pull the Trigger
Many investors understand these aforementioned concepts but some investors get cold feet when the time comes to pull the trigger. At first, we tend to get self-cautious, wondering what we might have missed or if we said something wrong. But what we have come to realize is that usually, it’s just the fear from the unknown or getting outside of the comfort zone.
Those fears can be anything from uncertainty about the property, market, or even wondering if we are equipped to pull it off. Lucky for us, we are already pulling it off with the Norman Creek Apartments. This failure to launch is often referred to as “analysis paralysis.” The investor over-analyzes the opportunity so much that they can’t decide for fear of making the wrong decision. At some point, you just need to have faith in who you are investing in. You need to acknowledge that these investors have been around the block before and have your best interests at heart, ultimately creating a very symbiotic fruitful experience for all.
Investors also often fail to pull the trigger due to health reasons or familial obligations. Personal situations can easily get in the way, and for good reason. But another reason that can be overcome ties to busy people that never really give time to review the deal.
The fallacy with this is if these potential investors don’t take their financial future by the horn, they will never stop being on that hamster wheel. It is important that you are purposeful and have clear goals and a plan to achieve those goals. Investments like these should be part of that plan.
How do Investors Pull Themselves Through It to Take Action?
Successful investors are the ones that take the calculated risk or are willing to go outside of their comfort zone. The bottom line to truly grow in this space is that you need to be willing to go outside your comfort zone. Of course, this isn’t to say that you should be thoughtful. However, what sets the successful investors apart are those that feel comfortable being slightly outside of the box.
Don’t get us wrong, we tend to be on the quite conservative side of things and we proceed with caution when looking outside of our comfort zone. For example, we previously only did deals in Los Angeles. But, when we finally took the plunge and went out of state successfully, we realized we made the right decision and we haven’t looked back since. So, a lot of times it’s just taking that initial risk and opening your eyes which usually ends up bringing huge growth.
Ultimately, this mindset shift of going outside of the box is a skill. Maybe it’s that we have done so many real estate deals that we especially feel good with the uncomfortableness. It also took us a few years to get into the mindset of actually going out of state. So essentially, it's a process and mindset shift and the sooner you get through it, the better off you will be. We need to have faith in ourselves and our ability to take educated risks so that we can grow beyond our wildest dreams.