Everybody makes mistakes. Business or personal, minor or catastrophic—they happen all the time. What separates successful investors from the hoards who never make it beyond a second, third, or fourth deal, is not how they get their good deals, but rather how they handle it when they make a mistake. Successful investors are not exempt from the law that everyone makes mistakes; in fact, they make more mistakes than failed investors. What makes a failed investor fail is that he never bounces back from his first mistake (if you can show me someone who has gotten through five deals without making any mistake, I will be very impressed). Successful investors, on the other hand, make their first mistake, learn their lesson, and continue investing until they make their next mistake, whereupon they learn from that one, and they continue investing until they retire happy and rich on a beach at 50.
Learning from a mistake requires four simple-sounding steps (they are not so simple to enact consistently, which is why not everyone is a millionaire real estate investor): 1) identify the mistake, 2) take responsibility, 3) let it go, and 4) use what you learned. If you can get in the habit of taking care of each of these steps when a mistake is made in your business, you will find that the mistakes are rarely ever repeated, and you will slowly eliminate all of the major hurdles that stand in the way of inexperienced investors, leaving a clear path toward smart decisions and successful deals.
The first step is to identify the mistake. Sometimes this is easy, like when you get that “Ah, I’m such an idiot!” reaction to something you realize you’ve done. Most of the time, however, things simply go sour and you can never pinpoint exactly what went wrong. The key is to be systematic and detailed throughout the process, so that you can always refer to notes and records to learn exactly what happened, or be confident about what didn’t happen. But the key to development is to know what went wrong.
Next, you must own up to your mistake. This means not hiding from those who may have lost money because of your actions or decisions, but rather confronting them and making every effort not to burn any bridges (which in the real estate industry can be a death sentence). When you’ve taken responsibility for something, you can move on from it guilt-free. Part of that is the process of forgiving yourself for the error, and letting it go so that you can maintain the confidence that is required to make big investment decisions (which are often something akin to strategic decisions).
Once you’ve forgiven yourself, you need to jump right back on the horse. While the sting is still fresh, get back in the game and use what you’ve learned from examining your bad experience to ensure it never happens again. Obviously, new problems will inevitably arise, and you need to be prepared to go through this examining and rebuilding process quite a few times to clear away the common investing errors. The definition of insanity is repeating the same action again and again, expecting a different result. In real estate, you’d really have to be insane to repeat your mistakes over and over, losing more and more money, but you would be shocked at how many investors fail simply because they continue to fall into the same traps again and again. Learn, and rise to the top.
Tell us what you think by leaving a comment. If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.
IndianaInvestmentPropertyGroup.com
InvestmentPropertyMadeEasy.com
Based out of Indiana, Jay Redding is a real estate entrepreneur, with experience in single family and multi-family investing.
