how to beat fear

Every investor experiences fear, anxiety, worry, when buying an investment property rental. Buying an investment property doesn’t have to be scary, hard, or make you anxious. After buying an investment property yourself, you will realize how easy it is to actually do.

Listen to the Podcast Episode:

The first one is always the hardest, and I want to help you get past that fear. In reality though, the easiest thing is to buy your property, but the hardest is to buy the right one and make sure you have your business set up so it runs itself.

If you can buy one rental property this year, in a year buy the second one, in two years buy the third one, and so on, and after ten years you will have 15 to 20 properties making you $250 each a month. You will not need a job again.

Last week, I talked about being frugal and how being frugal helped me build my business even faster and have a solid income. I am telling my kids they will need a decent job making a decent rate of pay.

Even if you work at Costco, you can save money by being frugal and buy one property.

Continue to save the money from your job and from your property and buy a second property —do this over and over again and after ten years, you will not need a job and you will have not wasted years and thousands of dollars on college.

There are so many other ways to make money than going to college — college isn’t going to help you make money!

If you want to actually start your own real estate investing business, you can find the step-by-step process here.

When you finish college, you will have knowledge, and that knowledge will hopefully help you in that job, but there are so many jobs that don’t require a college education.

 

First Property | Buying An Investment Property

Now, back to the topic at hand! So many of my students and people that email me tell me they are scared to buy that first property. Buying a property, any property, is the easiest part of the process.

Any person can go to any city, call up a realtor, and say they want to buy a property. They put money down, they get the financing, and then put that property in their inventory — that’s it!

If you don’t buy that first property right, however, you will start losing money. You need to build your business first, find the right area to buy, find a good property manager, and find contractors. The hardest part is creating the business, so it runs itself, so you don’t have to work.

Buying the first property is difficult and I went through the same thing.

Since I created a system, and used it over and over again, it is really just like buying something from the grocery store and putting it to use. This is true when you have an area of the country where you invest and you already have three, four, or fifteen properties, and when you have a property manager in place.

It is so much easier to buy another property, because you have the business in place.


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Fears When Buying An Investment Property

There are so many fears initially, when buying that first property. I have some questions I am going to go through and give you step by step ways to get past those fears.

All those, “What if” questions come to mind. What if the place burns down? What if I can’t get it rented? What if I lose money?

There are many ways to make sure you are making money every month. One way is to ALWAYS do a background check on your tenants.

If you want to learn how to get started investing in real estate, I wrote exactly how I would do it all over again here.

 

Feeling Overwhelmed When Buying An Investment Property

There is so much information, so many properties, and so many places to look. It is easy to get overwhelmed, freeze, and not buy the property. When you don’t buy the first property, you don’t get that first win under your belt.

What is your “Why”?

Why do you want to invest in real estate rental properties? For me, I was tired of working for someone else, I wanted to be financially independent, and I didn’t want to rely on somebody else for a job. I wanted to do everything on my own.

Your goal may be because you want to spend more time with your family or you want to travel. Whatever it is, don’t lose sight of that goal. You need to push through all of the hurdles to make it to your goal. Put that reason on the forefront of your mind and remember it every time you start to feel overwhelmed.

Never lose sight of your goal

Your perseverance is linked to your desire to achieve your goal. When you take your eyes off your goal, you lose focus and go off course.

Stay on course by reminding yourself every day what your goal is and do everything you can to achieve that goal.

Get Educated

Getting educated is one of the best ways to get over feeling overwhelmed. When I start feeling overwhelmed, it’s because I don’t have enough knowledge or information about the situation.

For example, when I am driving through Salt Lake City, I get overwhelmed, because it is a big city and I don’t know where I am going. When you don’t know where to go and you don’t have anyone to tell you information, you are going to feel overwhelmed! The key is to get educated. Talk to other people who invest in real estate and pick their brains.

Listen to podcasts, read blogs, go to real estate investor meetups, etc. There are so many different ways to get educated.

 

What if I Lose Money Buying An Investment Property?

Invest for Monthly Passive Income

What you want to do is mitigate, as much as you can, losing any money. The way to do that is not to invest to flip a property in six months. We invest in the long term where you get rental income from that property and earn passive income.

Buying An Investment Property that Makes You $250 or More Each Month in Passive Income

Here is a tip from my rental property course: only buy properties that make you $250 or more in passive income every month. If you only make $100 a month, you only make $1,200 a year — that is not that much money! If you have an $800 mortgage and you have an eviction or a one-month vacancy, that is $800 of your $1,200 eaten up!

If you have a two-month vacancy or the furnace goes out, that will eat up your entire income for year. If you get $250 or more per month in passive income, you will mitigate those problems of possibly losing money.

Watch Out for These Expenses that can catch you off guard.

Money

Do Your Research

Do your research of the area, the types of properties, and the property managers and how much they charge. Find out the type of inspections you will need, the type of clientele that is in the area, the crime rate, etc. Do your research so you understand the entire market before you buy.

I invest in a lot of different places around the country, and I try to understand as much as I can in each state, city, and neighborhood. I narrow it down to the ZIP code. I do this by talking to people and doing research online.

Work With Other Investors in A Mastermind

Work with other investors to talk about what’s working for them and what isn’t. Maybe they are selling a property and moving into apartment complexes and they are looking for a buyer. Work with other people to make sure you don’t lose money.

I can’t guarantee that you will not lose money, but do everything you can to mitigate these problems. I’ve been doing this for 12 or 13 years and I don’t lose money because I have so many properties. All of the income from my properties pay for the other properties.

 

What If I Buy The Wrong Property?

Build a Team

My key to this one, along with doing your research, is to build a team. You need to build a team of people around you that will help you find the right property, buy the right property, inspect the property, make sure it is fixed up, and find the tenants so you can collect the rents.

This includes realtors, property managers, inspectors, roofers, plumbers, electricians, etc., so you can call them up and have them work for you when you need them. Your property manager is the quarterback of your team!

Protect Yourself from Problems

Protect yourself from problems with inspections from home inspectors, roof inspectors, plumbers, property managers, everybody on your team.

PRO TIP: Use Other People

Use other people to inspect other work. For instance, if you have a roofer working on your roof, ask them to use the bathroom and check it out to let you know if it is working right. I never take one person’s word for it.

PRO TIP: Read the Fine Print

If you don’t read the fine print in your contracts, you could lose a lot of money.


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Buying An Investment Property In The Wrong Area Of A Town/State/Country?

Only buy where your property manager will manage and recommend to buy.

Do not buy a property until you have a property manager who is going to make sure the property will be taken care of on a day-to-day basis. If your property manager will not manage a property, that is probably a good indication you shouldn’t buy it.

They are going to give you reasons why.

map

Research your area by talking with EVERYONE.

You can even use Craigslist to call up a current landlord or property manager, tell them you are an investor, and ask if they have anything they are looking to sell.

In addition, you can ask them about crime, schools, etc. Build the business first and then buy the property.

PRO TIP:

When you go into an area and find a property manager you want to work with, work with them on finding the property. Ask them what they think of the property, how much rent you can expect, how likely it is to be rented, if they have concerns, etc. If a property manager is concerned about their safety in an area, that will give you an understanding of what to expect.

 

What If The Place Burns Down?

Get landlord’s insurance!

Just like with your car and your personal residence, you need insurance. You need more than just homeowner’s insurance, because that may not cover the property if there is a tenant living there.

 

What If I Get Bad Tenants?

Do a background check on ALL applicants!

Even if applicants will not pay for the background check, I will pay to have it done. It only costs $30, and it is worth it, because it could save me $2,000 by avoiding an eviction. I’ve had people lie on the application and I’ve found out they’ve been evicted four times in three years from a background check. No thanks!

PRO TIP:

Cozy is a property management system, and it is free for landlords. Go to masterpassiveincome.com/cozy to get started.

How to Use Cozy free Landlord Software property managementThey will get you set up for free and the only way they make money is by doing background checks. Your tenants pay for the background check through the application fee, and Cozy lists your property for free, they handle your expenses and income, and you can collect rent through their system.

 
Listen to this episode:

What If The Tenants Tear Up The Place?

Again, do a background check.

This is a must! Pick the best tenant that is going to take care of the place and who is the most honest. This includes criminal check, credit check, and eviction check.

If they do tear up the place, it is the cost of doing business. Hopefully, you are making $250 a month in passive income and you will end up making more than what you have to pay to fix the damage.

 

What If I Have An Eviction?

And again, do a background check.

Don’t let the tenants stay in the property longer then absolutely necessary. Start the eviction process immediately.

 

Set up business rules to follow:

    • Rent due on the 1st
    • Late after the 3rd
    • Three-day notice on the 4th
    • Eviction starts on the 14th
    • To stop eviction, the tenant must pay all back rents, late fees, and fees for the eviction (including attorney fees)

 

PRO TIP:

Do not collect any money, once the eviction process has started, or the eviction process will need to start over. Only take the full payment.

 

Get Past Analysis Paralysis

  • Get coaching if you are having difficulty making decisions. You need someone else to look at the deals with you. This tends to get people over that hurdle to actually buy a property.
  • Get one win under your Get past the analysis paralysis and force yourself to buy that first property. Once you are making $250 a month in passive income, it will be so much easier to buy the next property.

Analyze paralasys

 

Don’t Lose Money

  • Make sure you will make money by cutting your expenses in half and income in half. Run your numbers assuming you missed $200 in expenses and see if it still works out. Make sure you do not overestimate your income and underestimate your expenses. For example, in Houston, there is a city tax on top of a county tax and it is double the county tax. Imagine my surprise when I received a bill for $2,300. That is a lot of money! Praise the Lord, I was making $650 a month on that property.
  • Make sure you are investing for cash flow. When you calculate your expenses, double or triple check that you are including all of them. Find out if there is a county tax, city tax, or a local HOA fee you need to pay. Find every expense. Even if you plan on managing that property yourself, still plan on the price of a property manager, in case something happens to you.
  • Make a minimum of $250 a month on every property.
  • Buy according to your goals and financial ability. When I first started, I bought cheap rental properties. This meant there was more work I needed to do, but my goal was to be aggressive and make as much money as possible. I only had $17,000 to start with and I had to purchase what I could. Find out where you are, and determine your goals and your financial ability.

 

To Do List For Buying The First Property

To Do

The easiest part of real estate investing is to buy a property.

So… buy the right property in the right location!

  • Find the right state, city, neighborhood, and ZIP code.
  • Have your business set up before you buy — have your team in place
  • Find the right property to buy
  • Run the numbers to make sure you are making $250 or more each month
  • Have inspectors go through the property
    • Make sure there is an inspection period
    • You may need to adjust your offer if a problem is found
  • Make an offer and leave room for negotiation
    • If you don’t feel uncomfortable with the offer, you may be offering too much!
  • Allow others to do the rehab for you
    • Rehab is just a normal part of business – don’t be afraid
    • Get multiple quotes
    • Negotiate the price

 

Hopefully you are getting the excitement of how you can build a life that can be free of a job and where you can be your own boss. Check out all of the free resources available on www.masterpassiveincome.com/resources.


making money with rental properties

Making Money with Rental Properties FREE Investing Course

Get it FREE and Subscribe to the MPI Newsletter with loads of investing tips, advice, and advanced strategies for investing in real estate.

 


How To Beat the Fear Of Buying an Investment Property