5 Obstacles That Derail New Real Estate Investors (& How to Overcome Them)

Being a new real estate investor is uncomfortable and challenging. You know real estate has many benefits, otherwise, you would have never started in the first place. But the reality of getting your investment property empire off the ground may not be as easy as the stories you hear from others.

Unlike hearing popular success stories second hand, you get to experience all of the internal and external obstacles first hand. The anxiety, self-doubt, and confusion of doing something new are hard to translate (or even remember) for more experienced investors.

So in this article, I’ve reached back into my own experiences as a new investor. And I’ve also thought about the experiences of new investors I’ve coached.  Then I identified 5 stubborn obstacles that can derail new investors from their real estate goals.

But the point of what you’re about to read isn’t all doom and gloom. Instead, my goal is to help you become more aware of the obstacles so that you can prepare yourself mentally and emotionally to overcome them.

Now let’s get into the 5 obstacles!

Obstacle #1 – A Confidence Deficit

Michael Jordan was arguably the best basketball player ever. When the game was on the line, he wanted to ball because he knew he could win the game for his team. You could see the confidence in his face.

But how did he become confident? Was he born with it?

I don’t think so.

Jordan did have talent. But his confidence to hit the game-winning shot came from thousands and thousands of practice shots. He knew he could hit the shot because had prepared ahead of time.

As a new real estate investor, you can do the same thing.

I’ve found that your preparation as a new investor should focus on three primary areas:

1. Knowledge

Entrepreneurship is essentially a game of ideas. So educating yourself is always a primary, necessary step to build confidence.

First of all, you should educate yourself about your local real estate market. You can begin with my Guide to Pick the Ideal Location For Investment Properties.

Second, learn about strategies and tactics that have worked for others. I’ve shared the 15 best real estate investing strategies. And I have many articles on real estate investing tactics, including analyzing your market, finding good deals, running the numbers, seller financing, negotiation techniques, and more.

2. Financing

Real estate is a capital intensive business. This means you need money to buy or control it. But as I found out as a new investor with only $1,000 in the bank, you don’t need YOUR money. You can leverage the money of others.

So, build confidence by learning how to use debt intelligently and safely. Study alternative financing techniques like seller financing, self-direct retirement accounts, and lease options.

Then go out and ask your lenders, partners, or other sources of financing if they will put up the money. Knowing you have access to money is a critical source of real estate investing confidence.

3. Team and Community

It’s possible to borrow confidence from others. After all, we humans are social creatures. It’s how we’ve survived as a species for hundreds of thousands of years.

As a new real estate investor, be sure to focus on building a team of confident, experienced, and competent individuals. Their knowledge and skills can compensate for your own deficit of confidence.

Obstacle #2 – Too Little Time

If there was one excuse I hear from new investors more than any other, it would be lack of time. They know what to do but they just don’t have the time to do it.

First of all, I certainly can empathize. We’re all busy. In my own life, I struggle to balance the different priorities that all seem important to me.

But on the other hand, I also know that we’re all given the same 24 hours in a day. Like investing money, we all choose to spend our time on certain things. So, wise use of time basically comes down to our daily choices.

To improve those daily choices, I’d started by learning to differentiate between the urgent and important things in your life. Too often people are busy, but they’re not productive on what really matters.

Then work on batching the activities of your day into distinct 1-2 hour periods. The practice of batching takes advantage of the 80:20 principle and Parkinson’s Law, which are foundational principles of personal productivity.

Little by little, you can regain control of your time. And then you can use that time and your energy on important goals like real estate investing.

Obstacle #3 – Cookie Cutter Syndrome

When I first began investing in real estate, I went to a LOT of seminars. As I talked about in Obstacle #1, I knew that education was a key tool to becoming more confident.

But one of the downsides of those seminars was an introduction to the Cookie Cutter Syndrome. This meant that many of the “educators” were guru-types who knew it all and tried to persuade me and everyone watching that their cookie cutter strategy or technique was the best.

For example, they may show how to use a lease option technique to buy properties with little money down and less risk.

And for just $2,999 I could learn all their lease options secrets and become as amazing as they are!

Aside from my disgust at using intimidation as a persuasion tactic, these gurus also missed the point of cookie cutters. Cookie cutters aren’t for everyone. And forcing people into rigid molds ends in frustration and painful lessons.

Instead, cookie cutter techniques are simply tools in a toolbox. You educate yourself how to use these tools, and then pull them out when you need them to build your real estate investing portfolio.

If you’re a new investor struggling with overwhelm because there are so many interesting angles in real estate, I recommend going through the process in my article Real Estate Investing For Beginners – How to Find Your Focus.

 

Obstacle #4 – The Gap Between Theory and Reality

Theory is reading and understanding the concepts in a book (or a blog post!). But reality is applying what you learn in the real world.

This is a tough obstacle that we all face when we do something new. As hard we teachers try, we can’t do it for you!

But I do have two tips that might help.

First, embrace the idea of imperfection. When you were a baby learning to walk, you fell hundreds of times. If you had been a perfectionist back then, you would have quit long before you took your first step!

As a new real estate investor, you’re going to be imperfect. You’re going to stumble through your first several dozen attempts to run the numbers of a deal.  You’re going to stutter and not know what to say when negotiating with a seller or real estate agent. And you might even do like me and purchase a loser rental property!

It’s ok. We all make mistakes, and no one begins perfectly. Merging theory and reality is a process of continuous “failures” until you finally get it.

Second, just take baby steps. You can avoid fatal mistakes as a new investor if you don’t try to do too much, too fast.

If you’ve never done a deal before, just do ONE deal. Then pause and learn from it.

If you’ve never made an offer on a property, just make ONE offer. Then pause and learn from it.

Toddlers walk painfully slow while learning. And new real estate investors move slowly too.

It’s all part of the learning process. Just accept it and embrace it!

Obstacle #5 – A Persistence Problem

“Nothing in this world can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not: the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan “Press On” has solved and will always solve the problems of the human race.”

– Calvin Coolidge

Sometimes we just quit too soon. Lack of persistence and determination can be your final obstacle as a new investor.

Rolando and Jenn from Cincinnati, Ohio bought their first property after viewing over 40 properties that did not work.

Bianca DiValerio from Chicago, Illinois lost everything financially and then bounced back again.

Anthony Petz in Bellingham, Washington almost gave up before finding real estate success and quitting his job.

I could go on and on with the stories of how new investors had to persist.

But the main question is will you persist when the inevitable obstacles come?

I’m not talking about unintelligent stubbornness. Persistence includes intelligently pivoting and changing when you experience short-term failures.

But you just can’t quit too early. It takes time to learn, build confidence, and gain enough momentum to succeed with real estate investing.

The slogan “Press On” will solve many of your problems as a new investor.

Conclusion

You now know five of the primary obstacles experienced by new real estate investors. I hope these ideas will help you prepare and overcome the obstacles you face in your own journey.

But as you know, you will likely face your own unique challenges – both inside your head and in your local market. How you respond and learn from these obstacles will become your own unique success story in the end!

To your real estate investing success!

What obstacles have you faced as a new investor? And what’s your plan to overcome them? I’d love to hear from you in the comments below.