Even though you may consider yourself a real estate investor, I could argue that your most prominent role is that of a problem solver. Regardless of how you invest, you will be confronted with a slew of problems. How you handle them, however, will go a long way in defining the path you choose. If you remain calm and head things off before they escalate, people will continue to want to work with you. Conversely, if you panic and overreact, you can bet that people will avoid doing business with you. Even seemingly easy deals are filled with complications, or at least the potential. If you invest in real estate, you need to accept that things won’t always be easy; there will be problems you need to address. The sooner you realize that, the better. However, there are a few things you can keep in mind if you want to act in a way that is conducive to your success.
1. Acceptance: The first step in dealing with problems is accepting that you will have them. Every investor, regardless of their experience, will have issues that come up out of nowhere. By no means does facing challenges mean you are any less of an investor. That said, you are defined by how you react once they come your way. Some of the problems will be easy to deal with, but others will be more serious. The sooner you can accept that problems are inevitable, the sooner you can work towards solving them, or better yet, proactively heading them off.
2. Act quickly: Great investors must have the ability to act quickly with sound judgement. Too many people take their time to evaluate a problem, which isn’t bad, but the process must progress. By all means, think a problem through, but you need to act quickly once you come up with a solution. Thoughtful decision making is always critical, but time is also of the essence. The longer you wait to act, the bigger the problem becomes. In thinking of solutions a week earlier, you are in a better position to act.
3. Inform everyone: I do not advise keeping problems to yourself. Neglecting to inform the parties involved can only go poorly. These are not easy phone calls to make, but they need to take precedent. In waiting to inform the appropriate party of the truth, you open yourself up to too many potential issues. That said, not telling someone what they need to know is one of the worst business moves you can make. You are essentially lying, even if you aren’t doing it consciously.
4. Fair and firm: Nobody really likes making tough decisions and delivering bad news. However, it needs to be done. Whether you are considering lowering a listing price or changing a rental property policy, you need to act fast and firm. In the case of lowering a list price, every day you wait can cost you money. When dealing with tenants, they form an opinion of you based on your response. Whatever you decide to do, regardless of the situation, you need to make your decision and stick to it. If not, you may find yourself right back where you started.
5. Learn from the past: Everyone makes mistakes when dealing with problems at one point or another. The key is to not make the same mistake twice. You will find that some problems you face can be avoided or kept to a minimum. Even though every situation is different, there is a lot you can learn from each situation. There are times when you face a problem that you will never forget. Other times you will deal with things that are quickly out of your mind. Every problem you face should be treated like a learning experience. There is nothing wrong with failing to act on a problem the first time. However, there is no excuse for allowing it to happen again.