Are you interested in investing but afraid of the risk?
You can manage risk by making a calculated decision. But how do you know what questions to ask before pulling the trigger? I believe in leveraging others’ knowledge before taking a calculated risk. Based on my knowledge and experience with failure and success, here are 5 questions that you can ask yourself before taking an investment risk:
1 – What kind of deals are right for YOU?
There are many options for investing in real estate. From new builds to restoration to renovations, deciding the type of work and deals you want to do beforehand will allow you to find your niche. Defining and finding the right risk is crucial to the success of your investment. There’s a growing market for retail, single-family homes, urban apartments, and a changing market with office buildings. Start studying each type of deal so that you can be fully prepared to take the risk when the right deal comes your way!
2 – What market is worth the risk?
You know the saying – location, location, location! The fact is, location really does matter when making your decision. It determines the type of market you will be working in. While popular markets may seem “safer” due to the amount of opportunity, don’t underestimate the amount of opportunity in secondary and tertiary markets. These markets will function differently than popular markets, but sometimes the best deals and “diamonds in the rough” are actually hidden in plain sight. I recommend looking at the big families and key players in each market to understand where the market is headed and where there may be hidden opportunities with untapped potential. Different markets play by different rules, so make sure you understand the type of market you want to enter and factor that into your calculated risk!
3 – Have you done your research?
I can’t stress enough the importance of doing your research before taking a risk. This is where the “calculated” part of “calculated risk” comes in. Doing your due diligence to understand the market, the key players in the market, and all the moving pieces of real estate will make or break an opportunity. Not sure where to start? Learn from others who do! Attend broker meetups. Connect with real estate attorneys. Some of the best real estate deals I’ve done came from attorneys who have handed me properties. When you know what you want and start putting yourself out there to form connections, you may be surprised how you attract the right investment opportunities.
4 – Who’s holding you accountable?
Accountability is one of the main ingredients to achieving success in a calculated risk. Having someone ask you the right questions, challenge you, and push you outside of your comfort zone can be a game-changer. I’ve found that to be successful, you can’t only focus on investing. Balance is essential. When I found a group of other like-minded guys who were invested in me as a person and pushed me in every aspect of my life, I was able to achieve a level of success I never expected. The group improves every aspect of my life, which impacts my clarity when it comes to taking investment risks. I can wholeheartedly say I would not be where I am today, at this level, without that group of guys. Intentional community is everything!
5 – Are you willing to challenge your mindset?
The main thing that holds us back from taking the right calculated risks is our limiting beliefs. It’s important to remember that limiting beliefs are only in our heads. Here are three quick ways to challenge your mindset:
- Network – Surround yourself with people who inspire you and take the same types of calculated risks that you want to. Learn how others think and don’t be afraid to ask questions.
- Read – Books are one of the biggest assets of knowledge that you can leverage in your own life. In a 3-hour read, you can gain 10 years of knowledge based on another successful person’s experience. I’d say that’s a pretty good trade!
- Take action – Just do it! If you want to live up to your potential, the only way you can do that is by taking calculated risks. I had to learn to go ahead and take action, even if it meant I was losing money; I would gain wisdom, which is always priceless. Don’t let your doubts and excuses be the reason you missed out on the right investment risk today. Your future self will thank you!
Want to hear more tips for taking calculated risks? Start by finding the best deals in real estate with this video.
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