How do we overcome fear of the first investment?

Many people who would like to invest in real estate in general in general, do not do it, and they will not do it because of the fear.

Fear of failure is paralyzing fear.

Where does this fear come from? This fear stems first and foremost from the education we received at home. If at home they did not talk about money and they kept telling us that we had to study, so that we would have a respectable profession, where we could easily find work and be able to support our family.

In addition, they also told us that if we worked hard and proved ourselves, we would be able to keep this job and not fire us. Recall this to thousands of academics who are fired every year from various high-tech industries and are unable to find work in their field and have no choice but to convert to something else.
We were also told that investments are dangerous and therefore it is better for us to hold our money in the bank - where it is the safest.

I'll tell you more than that, your bank will be happy to leave your money in the bank with a savings plan, giving you 0.5% on it. But on the other hand if you go out and go into minus it will take you 12 -13% on this exception.

That's how the bank makes money, it gives loans at high interest rates and when it has to pay for money it supposedly borrowed from customers of the bank it pays the smallest interest.

Another thing from which fear stems is the lack of knowledge.

People do not know what to do with money. That's why once we have some money we immediately waste it on unnecessary things that may seem to them at that moment very necessary, but that money goes just lost.

I want you to think for a moment about situations that happened to you in life when a savings plan was released or a study fund was opened. You received a very large amount of your hands, and how much time did you spend? If you are like most people then most likely very quickly.

Now consider how hard it is to spend a sum of 500 on something. You will try to bargain over the price as much as possible to save 20 a shekel. Think about how long it takes you to decide how much tip you can leave for a waitress who served you at the 20 or 30 restaurant.

The very small amounts bother us, but on the other hand we make decisions about 100,000 in a few seconds.

So how do you deal with fear?

The first thing we have to do is forget everything we were taught in childhood and know that there are people who make a lot of money in real estate transactions and they were not born rich people.
The second thing is to learn and understand, and ask questions. Anything that seems to you, even the smallest thing you do not understand, to ask. Ask to understand that actually investing without knowledge is like crossing a road with your eyes closed.

Of course, another thing is to want to succeed and to succeed you must act and implement. Even if you make a mistake along the way, you can always learn from these mistakes and fix it later on.

There are many people who studied in real estate courses and workshops, read a lot of books on the subject, take courses in thousands of shekels and know the whole theory by heart, but they never overcame fear and jumped into the water. Success will not happen in a course or reading a book. Success will happen if they do something with what they have learned.

In order for us to truly overcome our fears we will have to think in advance of everything that can happen to us during the investment. If we think in advance about anything that can happen to us in the course of the journey, we can prepare tools to deal with everything and prevent it from happening.

What are some of the things we are afraid of buying property and let's see how we deal with them:
I have no idea where to buy.
I bought a property at a price that was too expensive.
How will I know what the physical condition of the property.
How do I know if the property is free from liens or debts?
What will we do with a tenant who does not pay?
How will I know that the house is registered in my name?
What would happen if I did not find a tenant?
What will happen if prices fall.
What if they stung me on the way?

Let's get through them!

I have no idea where to buy?

The first situation relates to finding the right area for investment. The great United States contains many diverse markets. Is so great and many investors are trying to find the right market to invest in and are never sure if they are in the right area at the right time, so where are buying real estate in the United States.
A market survey is the first and most important thing to do before we decide to invest in a particular area.

The United States is huge and contains many markets, but there are still colder and warmer markets, so as buyers we want to find a market where we will have more bargaining power in front of sellers, a market where you can easily lower prices and buy cheaper than sellers' demand prices, . As a sellable market where properties are sold fast at good prices and even above advertising prices, a market where the amount of buyers is greater than the number of sellers, such a market is known as a sellers' market.

According to recent tests, it can be said with certainty that today's boiling markets in the US are the states of the western strip of the sun, and the more calm markets are in the eastern and northern parts of the United States.

I bought a property at a price too expensive!

The second situation talks about the price we pay in the deal, and how we will know that we have not paid too high a price. Of course, if we paid too high a price, it means that we did not perform a proper market analysis. In a market analysis, we will focus on a micro-level market. We will examine neighborhood data, the socio-economic level of the residents, the level of the schools, the proximity of the property to places of entertainment and commercial areas.

In addition, we will check sales in the last three months and even in the last six months within a radius of up to 2 from the property. We'll also look at how many properties are offered today compared to the price we buy the property.

This test will prevent us from paying too high a price but still if we paid a little too expensive but the feasibility analysis showed us over 10% Return on the invested capital We will start to enjoy the current income and over time we will reexamine the feasibility of the sale.

How will I know what the physical condition of the property?

The physical condition of the property is a critical point, even if the property looks beautiful in the pictures still there is a concern that there is a problem in the foundations or that the roof leaks.
A fundamental problem is a very critical thing that can cost us a lot of money to fix. Even if we were traveling to the US ourselves to see the property, we would not be able to tell if there was a problem with the fundamentals.
That is why it is very important in purchasing property, to invite a professional - expert in testing homes. This is called Home Inspection. If you have a qualified contractor you trust, it can save you the cost of the test. The inspector will give us an opinion on the property, will issue us a detailed report of the deficiencies and the general condition of the property.

Even if the house is made of wood and is termite-digested, it can be tested by means of an inspection by an interpator.
The Insector report will tell us the deficiencies in all the large and small components. In addition, we can ask the Insector to take pictures of the property, inside and out, pictures of the street.

Pictures taken by the Inspector are not ordinary pictures that we receive from the seller of the property, which will show us only the beautiful and successful pictures he took, but pictures that will focus on the faults and help us see the real state of the property.

How will I know if the property is free from liens or debts?

Checking whether the property is free from liens Debts or foreclosures is very important for any investment property purchase in the US, but this is a routine for an experienced real estate attorney. The test is called the Preliminary Title Inspection.
The test is performed by the Teitel company and after closing the deal we will receive insurance called Title Insurance.
This test and insurance cost us around 400 $ and it will protect us in case there is any claim debt or historical foreclosures on the property.

What will we do with a tenant who does not pay?

A tenant who does not pay is the nightmare of any real estate investor in Israel. The laws in Israel are very good with the tenant and the only way to get him out of the property is to file a request with the court, a lengthy and cumbersome process that can take an entire year.

In the United States this is completely different, the laws are very strict and in most countries tend to benefit the owner of the property rather than tenants. A tenant who does not pay will receive a message called "Notice" already after 7 days, warning the tenant not to pay. At this stage, a penalty ranging from 10 to 15 is added from the monthly rent and is called late fee. If the tenant has not yet paid the debt up to 15 per month, an additional letter will be sent giving the tenant a final warning and the option to pay within 3 days or to immediately vacate the property.

A discussion on the subject usually takes place within 10 days, and the tenant receives a few days again, in order to allow him to pay the rent, with the addition of additional expenses, as compensation to the owner of the property and to return to normal activity with the property owner. After the number of days in the hearing has passed and the tenant has not yet paid, it is possible to contact the local sheriff in order to evict a tenant when the entire procedure for evacuating the entire tenant can take a month and a half to two months.

How will I know that the house is registered in my name?

In contrast to the country where all the owners of the properties are concentrated in the Land Registry in one central location, in the United States, each district is responsible for registering ownership of property in the district. After the closing and transfer of ownership, the lawyer or the Teitel company will submit the documents for registration in the district and after a few days we will be able to see the registration on the district's website.

What if I do not find a tenant?

Another connotation that can be a barrier for the investor is the thought that we will buy property but we will not be able to rent it.

We are going back to the point where we started and is analyzing the market we did before buying the property. Examination of the population, level of income, level of education, crime level will all reveal to us the level of the region and whether there is any demand for rent in this area.

The issue of rent is the most important component, if the property is not rented we will not receive any income.
All of our calculations The entire analysis we made was based on income from the property and if there was no income, how would we profit?

At this stage, let me reassure you, the US is the state of rent. Every second house is a house for rent because it is the mentality of the Americans. The average occupancy time is between one and two months, and the likelihood that you will not be able to rent your property after two months is very slight. We will need to take a number of actions to ensure that the property is indeed leased.

One of the steps is to choose a successful management company that will advertise the property and offer it for rent. You can also ask the management company to send you links to sites where the property is published so that you can verify that it has been published.

When purchasing a property, it is important to involve the management company in the early stages of the purchase. Even if the asset is not yours, a good management company can warn you in advance if there is a problem renting a property in your area.

What happens if prices fall?

The real estate market in the United States has experienced ups and downs over the years, the severe crisis that lasted from 2008 to 2013 is already behind us and there is no doubt that we are currently on a moderate rise that will continue until the next crisis, in some places it is still possible to purchase properties at a much lower price than construction prices Increase in rental prices.

Investing in real estate is a long-term investment. It is a business built on income and expenses. Our goal is cash flow regardless of the market trend that can rise and fall in the coming years. The truth is that this is not so much to interest us. If the market is declining we will still get the rent And if the market is on the rise then the value of our property will rise - but note that only on paper and only on the day you sell the property only then you will know whether you actually realized profit or not, if there is no profit you can always continue to rent the property.

What if they stung me on the way?

Many people lost a lot of money in their real estate investments, after they bought properties from shady companies and places we would not even approach a battle to them. If you ask them to invest in real estate, it is very dangerous.

But 95% of those who lost money in real estate lost because they did not properly check the deal offered them and believed the company that markets.

So before you make a mistake and buy a property without checking, just because you have seen a beautiful presentation or have been impressed by the magnificent office of the company from which you want to buy - stop and think again!
It is recommended to consult and get another opinion about the transaction.

Always remember that every investment begins with thought and ends with actions. At some point you have to stop thinking and make the first move and jump into the water. The second jump will be easier and the next. The fear of the unexpected sometimes paralyzes us and prevents us from acting. The only way we can overcome this fear is by reducing the risk by knowing in advance that we will overcome any obstacles that may arise along the way.