Over the years I have talked with a number of folks who want to invest in real estate. Some do quite well while others never get past the starting gate. As we've discussed on here, analysis paralysis grips a healthy percentage of newbies.

I have to admit, when I was set to buy my first unit on my own I suffered from it. I had read more than a dozen books, I had my lease in order, I had an application and evaluation criteria. I knew how to evaluate properties. I had several sources including an insider on the MLS, a couple of wholesalers that were sending me lists, and an attorney that specializes in estate planning sending me people who needed to sell. In short, I had everything I needed to be successful but the first few months I didn't manage to buy anything. By the time I over thought it the experienced investors swooped in and bought it first.

I have always wondered what it is that causes this in some folks more than others. This isn't just a RE phenomenon, it happens in sports, business, really anywhere the people have to perform. Well, it turns out researchers have determined that it is a process of overthinking. The successful ones don't remember the details of the process because they let the muscle memory of the training take over. The ones that failed remember every detail.

Here's a link to the article: npr.org/2024/07/19/g-s1-11434/why-we-choke-under-pressure-according-to-a-cognitive-scientist

I overcame my paralysis by using the same technique to screen applicants. I developed a set of investment criteria that included a minimum cash flow, cash on cash return threshold, and an assessment of the location. That boiled it down to pass-fail on making an offer. At that point the only mental process was to submit the offer which made it much easier to get over.

What has been your experience with Analysis Paralysis and how have you seen it play out?

In January 2006 is when I bought my first fixer-upper house after researching my market for 6 months prior to that. I had analysis paralysis too during that 6 months and the number of "what ifs" going through my head was overwhelming. I finally got to the realization (a moment of clarity) that the worst thing that could happen would be that I would lose my initial investment of $20,000. After paying $20K for the house, plus another $10K for rehab, I would rent the house out $500/month.

After 4 months of collecting rent checks, I was ready to go looking for another rental house. Buying the 2nd house for $18K, was a breeze. And after that, I went looking for another one and another one.

I admit that I still have analysis paralysis from time to time.

The tendency to overthink everything is my super power as well as my biggest downfall. I am much better at dealing with it now. I lost out on a lot of good deals because I wanted to plan for every eventuality.

Now I just kind of run the numbers and go for it. I still make insulting offers at times, but that's all part of the game.

My biggest problem with it is when I am doing a rehab, whether it is a simple turnover or like the one I just completed that needed updating.

I don't always know when to say when. Do I go all in and replace the kitchen cabinets even though they are in decent shape but out dated? Do I add the extra days to the job to tile the entire bathroom half way up? Sure it helps with cleaning but those extra days could be used for something else.... or could they?

I have caught myself stuck on painting the walls because I still had a little of the old paint left but I wanted to change to a more modern color.

These are not high dollar decisions, but they still catch me from time to time.

I think it is hard to think against the herd. If the stock market is collapsing and the real estate market is collapsing (2008), it's hard to be the one that says "Hey I'm all in!" I didn't start until 2017 and felt sure it was too late to get deals. Now 7 years later, things are much higher and I am wishing I bought more.

I think it was probably having a low tolerance for financial risk.

When you have little $, it's scary to spend a bunch of $$$ on something new.

I did have a couple landlords I knew who were encouraging - probably helped push me over the hump.

I still remember my auto mechanic telling me how he lives in a new custom made house on the water for $300/month because of his rentals.

Perhaps I have it now?

I think I used to have analysis paralysis more than I do now. I run numbers quickly and can pull the purchase trigger pretty quickly.

It is not a matter of if you will screw up, it is a matter of how many times and ho bad they are. If you don't think you screw up - ask your spouse and see what they have to say. We all screw up.

I some times fall into the Paralysis by Analysis category. However I think it is best to be like that - you don't make as many decisions but the one's you do make are probably good. And the good decisions is what builds confidence. Cleaning up a mess because of a poor plan/analysis takes a lot longer and is normally very expensive.