Embracing Mistakes: A Path to Growth and Innovation in Real Estate Investing
For those of you who know me well, you know I love tennis. I played high school and college tennis and still love to watch all the majors and anything else I can find. Recently, I was glued to the U.S. Open while catching up on work and preparing for this article. During one segment, they flashed back to the 2010 second round of the U.S. Open at Arthur Ashe Stadium in New York City, where tennis professional Andy Roddick made a mistake, seemingly finding a new way to lose. Andy’s mistake occurred in the third set; he foot-faulted. Without going into too much detail, it suffices to say a foot-fault is an error during a tennis serve that a professional should not let happen. You would call this a mental mistake in today's sports era. This made me think of investing and the mental mistakes we can make that negatively impact our business.
Andy did not lose because he had a foot fault. Reports suggest he lost because of his reaction afterward; he had a belligerent response that was mocking and sarcastic. His reaction lingered and colored his mood for the remainder of the match. Even though he rebounded a bit in the fourth set, by then, it was too late, and he had lost the match.
I have seen similar scenarios with real estate investors. A mistake creates a sullen reaction that they don’t recover from, impacting their work and perhaps their teammates. To me, this is a classic case of productivity drain. A contactor makes a mistake and instead of trying something creative to fix the problem we blow up and lose more time and money in the process. A resident accidentally floods the bathroom and instead of seeing it as a way for insurance to pay for the much-needed upgrade we have a meltdown and waste the upgrade opportunity and make an enemy of the otherwise great resident because of our poor attitude and customer service. We’ve all had times when we didn’t bring our best self to a challenge.
So, the question today is, how do you create a mental state, and a work atmosphere where you can make mistakes freely, take accountability when they are discovered, fix them fast, and then explore what happened to determine how to prevent it from happening again? Maybe even create a strategy of asking “is there any possible good that could come from this?” and get creative to find positive solutions to a frustrating problem.
I heard a story from a real estate investor, pre-COVID, that illustrates using mistakes to your advantage. She had asked her realtor to list her newly renovated property for a certain price via text. However, she accidentally mistyped the number and it went onto the market above what she had intended. Instead of panicking and blaming the realtor who should have known better, together they staged it better than normal, provided a “catalog” of appliances to be picked out later from the holiday sale at Home Depot, and let the listing stand. When they dropped the price by only a bit, the listings skyrocketed, and they sold it for over $15,000 more than they would have originally listed it! A little creativity can go a long way in recovering from a mistake!
For real estate investors, the stakes can be high, and mistakes can be costly. However, embracing mistakes as learning opportunities can lead to significant growth and innovation. Here are some specific strategies for real estate investors:
Uncover Teaching Opportunities: Mistakes in property management, tenant relations, or investment decisions can highlight gaps in your knowledge or skills. Use these moments to educate yourself and your team, ensuring everyone is better prepared for future challenges.
Uncover Trends: Mistakes can reveal underlying trends in the market or shifts in tenant needs. For example, if multiple properties are experiencing high vacancy rates, it might indicate a need to adjust your marketing strategy or improve property amenities.
Opportunity: Every mistake is an opportunity to make a remarkable recovery. If a renovation project goes over budget, use it as a chance to negotiate better terms with contractors or find cost-saving measures for future projects.
No Hiding: Create a culture where mistakes are openly discussed and addressed between you, contractors or subcontractors, vendors, property management teams, and any other teammates. Encourage your team to report issues immediately, so they can be resolved quickly and efficiently. This
transparency can prevent small problems from becoming major setbacks.
Encourage Teamwork: Real estate investing often involves multiple stakeholders, from property managers to contractors to financial or legal advisors and more. Foster a collaborative environment where team members work together to solve problems and improve processes. This teamwork can lead to more innovative solutions and a stronger, more resilient investment strategy.
Creating a culture where mistakes are seen as learning opportunities rather than failures can significantly enhance productivity and innovation. By fostering an environment of psychological safety, where everyone feels safe to speak up, take risks, and make mistakes, we can build a more resilient and dynamic organization. Even if you are team of one, give yourself some grace. The mind can play tricks and keep you from being your most logical self when making decisions if it becomes too concerned about past mistakes.
In the world of real estate investing, where market conditions can change rapidly, and unexpected challenges are the norm, the ability to learn from mistakes and adapt quickly is invaluable. Embrace mistakes, learn from them, and use them as steppingstones to greater success.
But the smartest strategy of all is to learn from the mistakes of others. You can do that easily by being a part of a real estate investors association affiliated with National REIA. Not only will you hear success stories and stories of warning at the local level, but you will also get a national perspective in the National REIA Real Estate Journal, on the REIA Now monthly webinars, and more.
Rebecca McLean is the Executive Director of National REIA.