The Psychology Of Real Estate Investing

by : Alex Anderson

In the 1980s, if you were going to go on a diet, magazines would tell you to "think thin." They never actually explained what that meant, but everyone knew they were supposed to do it. Adopt the psychology of the thin person, whatever that was. It follows that, in order to become rich, you should be able to accomplish that by adopting the psychology of the rich, right? Actually, it does. Specifically, you should adopt the mindset of the successful real estate investor.

Successful real estate investors are opportunists. They always have their antennae up and ready. They put themselves in the way of information. They "live the life" of the real estate investor, so to speak. And because of all this, they notice things.

Ken McElroy, author of "The ABCs of Real Estate Investing," which is part of the Rich Dad series, says it's all about patterns. If you look at enough properties, study enough areas, talk to enough people, he said, you will start to see these patterns. Then things will start to happen. You may start to seem lucky. And, McElroy says, it may be luck, but it is a sort of luck, that comes from being prepared.

Remember: "Fortune favors the prepared mind." Opportunity is all around us, but if we are blind to it, it will be as though it doesn't exist. The prepared mind recognizes opportunity.

McElroy emphasizes over and over again that being successful in real estate is a process. It isn't just something that happens one day, as in one day we're suddenly successful. It is something that you do every day. Eventually things begin to happen for you.

Someone who is successful focuses on doing a little at a time, on learning this or that thing, or making this particular deal. It's a "walk before you can crawl" proposition.

For instance, McElroy says, if you have found a good deal, you can get funding for it because other people will want a piece of the action. It isn't about negotiation skills necessarily, he said. Of course, those skills can get you an even better deal at times, but you shouldn't fret over whether you are good at the negotiation table. Just look for good deals.

Although they are always evaluating risk, always aware of it, successful investors are not frightened away by it. They determine whether the risk seems reasonable. If the numbers add up, McElroy says, then it is a good deal. If it is a good deal, the savvy investor goes for it.


People who don't know how to properly evaluate risk may think everything is too risky. They assume, for instance, that a larger deal may be too risky for a beginner to deal with. They assume that because they think the investor is sinking a lot of personal cash into it when, in truth, a larger deal stands to make a larger sum for the participants. Therefore you may be able to get more backers for a deal like that. In the end, you may put up less personal money than you would have on a smaller deal.

Real estate investment is just like anything else you want to learn how to do. Well, for one thing, you have to learn how to do it. And you learn by doing. Get out there and look at properties. Visit cities as though you were intending to buy. Go online and read about areas. See what other people have to say about the real estate in a particular area. Get to know people. Before long, you will know enough to begin thinking about actually making a move. You don't have to have a wad of cash in hand before you start playing the game. Just get out there and enjoy yourself. The rest will come.