Thick Skin in Real Estate

Many people get into real estate, a few succeed, and others decide real estate is not for them. There are many roles a person can take on in real estate but being an investor requires the thickest skin. An investor faces rejection daily, is essentially profiting from other’s misfortune, and depending on the level of the investor, can be risking thousands of dollars.

As an investor, rejection sometimes comes as a simple NO and other times it comes with plenty of four letter words. Why does this happen? Well, you are or should be attempting to negotiate a purchase price low enough to make a profit. At the same time you must make sure you can validate the offer and can explain it to the seller. When you just give a seller an offer that investors give, the seller is usually quick to say NO. Many sellers do not look at their properties from an investment stand point but are emotionally tied to the property. This causes them to take an investor’s offer as an insult. When the seller takes an offer as a huge insult, the seller may do a number of things from hanging up to lecturing you about how the offer was so insulting, to yelling. This is where negotiation skills come in to play. You must have thick enough skin to let all this go and, if given the opportunity, explain the reasoning behind the offer. I have seen newbies and veteran investors both lose it, get into an argument, and as a result lose the deal. I have always said, “Lose your composure, lose the deal.”

When investors contract a property, it is usually contracted from a distressed seller. This is sometimes difficult for veteran investors to handle and sometimes more difficult for newbies. Every distressed seller I have contracted a property from has had a compelling story of how they ended up having to sell their home. Many times these stories are heartbreaking but as an investor you cannot make a financial investment based on these emotions. Making a purchase based on emotions might lead to you being a distressed seller, which is something you do not want. Instead, focus on how you are helping the situation. The seller may be facing foreclosure and by purchasing the property you will be saving the seller’s credit score. Saving a person’s credit can be worth more than adding a few thousand dollars to an offer. A respectable credit score can mean lower interests rates for everything ranging from credit cards to cars to future homes. When you perform on the contract the seller will be able to move on with his/her life because of you. Because you are always looking to create win-win situations you should look at the positives that you are creating for the seller.

So far, everything we have discussed is based on personality, emotions and/or ethical beliefs that can be taught to change, but financial risk is tangible. Although real estate investing is a profitable business you will eventually have money, sometimes a substantial amount of money, at risk. When you buy distressed/ugly houses, you never know what issues may be behind the walls. As a landlord you are risking the properties by renting to complete strangers, no matter the amount of due diligence you do. If a tenant puts your investment at risk by not taking care of the home or not paying rent, you have to evict the tenant. This could include evicting a family. However, keep in mind that by not paying their rent, that tenant is “taking food off your family’s plate.” This can be tough to do, but it is a part of the business.

As you can tell, real estate investors need to be thick skinned. With time and experience your skin will get thick, but every once-in-awhile a situation will pierce through so you have to remember that you are an investor looking to make a profit. With that said, make sure to establish win-win situations so you know that you are still providing a great service in your investment community. This will create more opportunities in the future.