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Mindset & Money | Limiting Beliefs in Real Estate

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Hosted by
Mike Ayala

On this episode of Investing for Freedom, Mike discusses 5 limiting beliefs that he had when getting started in real estate. Mike hopes that by explaining these limiting beliefs, you can avoid some of the mistakes that Mike made, and get going quicker.

HIGHLIGHTS:

0:00 – Intro
1:13 – The first limiting belief Mike had was thinking that he didn’t have enough time
1:52 – Most of us are still working our W2 jobs when we start so the best thing to do is to get down to the things that matter
2:53 – Talk to property managers to accelerate your time
3:17 – Limiting belief 2 – I don’t have the experience
3:40 – Hire a mentor to help you add value
4:04 – Limiting belief 3 – I don’t have enough money
4:21 – Talk to a mortgage broker to help you get into a deal
5:43 – Limiting belief 4 – We tend to feel like there are no good deals left
6:27 – Monthly payments are very low right now
6:40 – You might have to look at 200 deals to find the right one
7:07 – Limiting belief 5 – There are too many real estate investors and not enough deals
7:49 – Experienced real estate investors are looking for bigger deals
8:16 – Mike invested in an 8 space mobile home park which has been one of his best investments

FULL TRANSCRIPTION:

Thank you for joining me on the Investing for Freedom podcast. Today, I’m going to talk to you about five limiting beliefs that I’ve experienced in almost 20 years of real estate investing. Along the way I’ve bought over 45 single-family properties, 39 mobile home parks and three commercial buildings. And I’ve been involved in a lot of other investments that I wasn’t leading the way on. I’m here to share this with you today, because I think I can shorten some of the mistakes that I made. Some of the limiting beliefs, some of the mindset challenges that I had, and maybe make it easier and faster for you guys to get to where I am today. Maybe you could even get it done in 5 years or 10 years. The goal is to help you be a success.

So, let’s get into the five limiting beliefs and see if we can knock these out of the way for you. So, number one, I don’t have enough time. One of my early mentors told me that in order to get a real estate deal done, you had to look at 100 properties to really analyze 10, to make offers on three, to close on one. And I would argue that in this day and age with all the real estate investors out there, it’s probably even more than that. So, we find ourselves having this conversation about how I don’t have enough time. I know I was in that boat and I learned to leverage other people’s time. There’s so many, VA’s, there’s so many ways that you can buy leads now. And here’s the bottom-line reality. If it’s a priority to you, you’re going to make the time. We just come up with a bunch of excuses on why we can’t do certain things, why we don’t have enough time. And by the way, most of us, when we start on our real estate investing journey, we’re still working our W2 jobs. We might even be working two jobs at a time, and we’re just trying to find that financial freedom. So, what you have to really do is get this process built down to something that you can actually carve out the time and then stick to that schedule.

So, I’ve found myself so many times over the years, just not focusing on the right things and what you need to do in the real estate investing is really get down to the few things that matter. And I think this is the best way to do this. Get into networking groups, go have conversations with local people, find realtors that are looking for opportunities to sell you deals, networking, networking, networking. That’s going to be the fastest way to share your time with other people and to share your vision with other people is going to be how you accelerate the fastest. And then, like I said before, there’s all kinds of sites out there that will help you do a lot of the work ahead of time. You can find vas on Upwork that could help you do calls, cold calling, all kinds of stuff like that. So the excuse that you don’t have enough time is not a good excuse.

Another way to accelerate your time is go talk to property managers. A lot of property managers out there know that their current clients wanting to sell the property. And guess what? As a property management company, you want to keep managing that property. So, if you can get in good with property managers and become their friend, they’re going to provide you leads. That’s another fast way to find good leads. So, let’s get rid of the limiting belief around time. It doesn’t exist. You just have to make it a priority.

The second thing that was an excuse for me. And I find myself with this limiting belief in a lot of areas is that I don’t have the experience. Well, nobody had the experience when they started. How do you think that you’re going to learn? The only way to gain experience is to get moving. So many people are paralyzed by fear because they feel like they don’t have enough experience to make offers, to get into deals. And by the way, the way to get around that, hire a mentor, find someone that can come along, figure out how to add value. There’s all kinds of real estate investors that are looking for interns to go put yard signs up for them to help them clean out junk on the deal they just bought. There’s so many ways that you could add value and get mentoring from someone along the way. So, the fact that you don’t have enough experience is not a good excuse to not get started. The only way to get experiences to get moving. The third thing is I don’t have enough money. I’ve addressed this in previous videos, we talked in a previous video about what wealthy people do, they leverage debt. So, here’s the thing. Most people that get into real estate investing put a very small percentage down compared to the price of the home.

So, you could get lending at 5%, down, 10% down. You might even get a 0% down deal if it’s your first house and you could like buy a duplex and live in one side and claim it as your single residence, go talk to a mortgage broker. They’ll find out a way that you can get into a deal with low money down. Here’s another thing. One of my mentors talks about death divorce, and don’t want them, if you can find people that are just as motivated to exit their home, for whatever reason, maybe they want to move. Maybe they’re leaving town because they got transferred on a job or maybe you know, it’s a bunch of kids and the parents died, and they just don’t want to manage the property. If you can find reasons why people want out of a deal as bad as you want into it, they might even carry the loan for you with little to no money down.

I’ve done a lot of deals in the past where the home wasn’t financeable, it needed new plumbing. It needed a new HVAC. It needed so much work that no bank was going to finance it. And so, the seller-financed it for me. I’ve done a lot of no money down deals. I talk about this a lot, but there’s a lot of ways to get into deals with little to no money down. I’ve even done deals in the past where a bank-financed 80% of the deal and the seller financed the 20% down payment. Now you got to be careful getting too far into debt. You need to make sure that the price of the property and the monthly payment is something that you can afford. And just think about this concept. The more debt you put on a property, the higher the payment’s going to be. So just watch out for that. Be careful because that could bite you.

Number four, we tend to think that there’s no good deals left. And even in a market like today where the price of real estate is extremely high, there’s still deals to be found out there. One of my mentors was talking the other day too, about the price of houses are at all-time high, but interest rates are at an all-time low and with inflation because of all the government money printing that’s going to happen, you might be borrowing money at 2.5%, 2.25% interest rate when inflation is 3% or 4%. So, if you could get your mind around this, it doesn’t really matter how expensive a house is. What matters is, can you afford the monthly payment and will rent stay there? And so with interest rates at such a low point, you might find that even though houses are expensive right now, the monthly payment is so low, that it’s actually cheaper in terms of monthly payment than it was 5 or 10 years ago, consider that and do some analysis around it. It might blow your mind.

And carrying on the concept of there’s no good deals out there. This goes back to what I was saying earlier in the video, you might have to look at 200 or 300 deals in order to get a deal done. That’s just the environment we’re in. And if you’re committed to real estate investing, do as much work put in as much time as you have to find that first deal. Once you get that done, I promise you, you’re going to be excited about it. And the more of these you can get the more passive income you get the further away from bondage and your W2 job, you will be.

So, the last thing that was a limiting belief for me, and I hear a lot of people talking about this is that there’s already too many real estate investors and not enough deals. That might be true. There’s a lot of people, there’s more real estate investors today than there was in 2008, 2009, 2010, over the last 10 or 12 years, the real estate investment market has just exploded. And it’s for all the reasons we talk about. Real estate is great when it comes to leverage. It’s great when it comes to cashflow, passive income, helping you achieve your dreams, that’s all the reasons why people are into real estate, not to mention the tax benefits. That being said, don’t let the fact that there’s so many real estate investors out there already be a limiting belief and stop you. I’ve thought that myself before, but the reality is there’s plenty of room. And here’s the thing that I’ll share with you. The more experienced real estate investors are looking for larger deals. They’re looking for portfolios of single families.

Take us. For instance, we’re looking for mobile home parks that are 75 spaces and above. So, I find myself telling people all the time, find a 15-space mobile home park and eight space mobile home park, a 30 space mobile home park. Those are the kind of deals that the bigger investors are not looking for. The more seasoned investors are not looking for. And I’ll let you in on a little secret. I invested in some small mobile home park communities. I still have one that’s eight spaces. That’s one of my best cash flowing properties. So, it doesn’t have to be big to be a win. And a lot of the big seasoned real estate investors are looking for the bigger deals. So that’s where I would tell you, even though there’s a lot of real estate investors in the game, look for the small properties that nobody else is looking for that’s a win in your backyard. And that’s a great way to get started and not have too much competition.

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