From Novice to Pro: Essential of Mindset for First-Time Real Estate Investors
Over the years, I've become increasingly aware of how people limit themselves by believing the world operates on fixed, immutable rules. This mindset manifests everywhere—from how my kids avoid phone conversations to how professionals approach business opportunities. The truth is far more nuanced: the world is substantially more flexible and dynamic than most people comprehend.
Some people get trapped by perceived societal constraints, following prescribed formulas and becoming frustrated when those formulas don't yield expected outcomes. They fail to recognize that everything is negotiable if you understand leverage. Consider a simple example: the prices at a national chain like Target. Technically, a store manager can adjust product prices given sufficient reason. So, even prices at the store, which people think are nonnegotiable) are not fixed; some things are just very hard to change.
This past week, I was working on refinancing one of my properties. This property is an owner-occupied multi-family building, a category few banks will lend against. (Banks don’t like to lend to house hackers who buy large apartment buildings.) I was working with a mortgage broker when I realized that one of the people I am connected to on LinkedIn is a mortgage underwriter at a bank. While working with the broker, I reached out to my friend to see if his bank would be interested in my deal. If you don’t ask, you never get to “yes.”
Anyway, I got a rate from my mortgage broker and one from my friend at the bank. One offer was at 7.35%, and the other was at 6.85%. The only challenge here is that the bank offering the higher rate is the one I would rather work with. So, I challenged my broker to meet the other rate.
At this point, you may be asking, where is my leverage? Well, I know I have a great deal. I am borrowing 30% of the value of the building, and there is more than enough cash flow to pay the debt service. That said, if there is only one bank that will lend you money, it does not matter how good your deal is. In this case, I went back to the bank and let them know that my deal had other suitors and was looking for a rate match. Once the team at the bank found out that they might lose this solid deal, the rate came down. As I said, everything is negotiable when you have leverage.
The most successful people I've encountered don't just adapt to existing structures—they reshape those structures to accommodate their goals. Whether it's a corporate employee creating a new position or an entrepreneur identifying an untapped market opportunity, these individuals refuse to accept limitations. They recognize that many people incorrectly believe they're incapable of transformation, constructing invisible barriers from misunderstood restrictions. The real question then becomes: if it is possible to change, do I have the skill and tenacity to change it?
Too often, people conflate "can't" with "shouldn't"—critical distinctions that determine potential. "Can't" represents an absolute fact, while "shouldn't" merely reflects risk and opinion. When I launched my business, I encountered numerous warnings: I couldn't borrow on a credit card for a down payment, shouldn't invest in certain neighborhoods, couldn't undertake major renovations on my first project. I disregarded all such advice, understanding that every situation is unique and formulaic guidance rarely applies universally.
In 1984, the NBA had a stringent dress code, seemingly aimed at maintaining uniformity and professionalism on the court. However, the rules quickly became a canvas for Nike's innovative marketing. Nike saw the $5,000 fine for uniform violations not as a deterrent but as a mere operational cost, an investment in branding. When Michael Jordan wore the now-iconic black and red Air Jordan 1s, which violated the league's uniform policy, Nike seized the opportunity. They paid the fines for each game he wore the shoes, turning the penalties into a sensational marketing campaign. Nike's ability to break the rules as a form of playing by the rules, which meant paying the fines, transformed a perceived “can’t” into a landmark moment in sports marketing, forever changing the landscape of athletic endorsements and consumer culture.
Failure typically stems not from external obstacles, but from an inability to recognize when a plan requires adjustment. The most critical moments arrive when ground-level realities diverge from initial expectations—these are opportunities to pivot, to deeply analyze circumstances, and to question received wisdom. Real estate isn't a mathematical equation with predetermined solutions; it's a dynamic landscape requiring constant recalibration.
The entrepreneurial mindset isn't about defiance, but about strategic thinking. It's understanding that you can fundamentally do whatever you want if you're willing to recognize and manage potential consequences. This perspective transforms limitations into opportunities, allowing innovative thinkers to unlock pathways others might overlook.
In real estate specifically, this approach means continuously evaluating unique circumstances, assessing risks strategically, and maintaining the courage to challenge conventional thinking. Success emerges not from rigidly following established paths, but from critically understanding your specific situation and potential actions.
Ultimately, your journey depends on embracing flexibility. By viewing the world as a realm of possibilities rather than a set of restrictions, you position yourself to seize opportunities others might miss. Your path isn't predetermined—it's co-created through strategic thinking, calculated risk-taking, and an unwavering commitment to understanding the nuanced landscape of potential.
Remember: the world is fluid, and you possess the power to shape your own destiny. Approach each challenge with creativity, act strategically, and remain motivated. Your extraordinary path is waiting—all you need is the perspective to see it.
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