The idea of having a Scarcity Mindset versus one of Abundance has been written and talked about for centuries. These opposing viewpoints have been covered quite well in books, such as Killing Sacred Cows by Garrett B. Gunderson. But I was probably first introduced to the Scarcity Mindset from Stephen Covey’s book, The 7 Habits of Highly Effective People.
Here’s an excerpt from Covey’s description of the Scarcity Mindset:
“Most people are deeply scripted in what I call the Scarcity Mentality. They see life as having only so much, as though there were only one pie out there. And if someone were to get a big piece of the pie, it would mean less for everybody else.
Related: One Easy Change of Perspective Could Vastly Improve Your Real Estate Business
The Scarcity Mentality is the zero-sum paradigm of life. People with a Scarcity Mentality have a very difficult time sharing recognition and credit, power or profit – even with those who help in the production. They also have a very hard time being genuinely happy for the success of other people.”
This idea of not having enough pie to go around can be very destructive. This type of thinking can lead to folks trying to accumulate, or hoard, as many possessions as possible. They believe that in order to win, someone else has to lose.
How Do You Know if You Have a Scarcity Mindset?
You may have this type of mindset if you get jealous of others and their successes. You may be envious of other people’s possessions. You may be afraid of failure. You like to keep your money safe, and you are afraid to invest or take chances.
You may be interested in instant gratification, as you won’t think twice of putting something you can’t afford on a credit card. Or you may think that successful people are just plain lucky.
How Does a Scarcity Mindset Affect Your RE or Note Investing?
The majority of people seem to have this mindset; it’s very common.
When I started as a real estate investor, I had a scarcity mindset. I was competitive, and I thought that I had to find a good deal before the next guy stole it from me. I wasn’t really networking or building relationships with other investors.
There are probably too many ways to describe the thoughts I once had, but here’s a few of them:
There aren’t any RE deals near where I live.
I can’t find any good, safe note deals.
The hedge funds are buying up all the good REOs and rehab deals.
The banks aren’t lending right now.
The guy at the real estate meeting with 100 houses is just lucky; it’s easy for him.
I’d rather put more money in my 401K instead of buying a note.
I’m keeping all my RE strategies to myself.
I’m afraid to quit my regular job and try RE investing full-time.
After I joined a national real estate group and founded my own group (RING – Real Estate Investor’s Networking Group), I was exposed to so many more ideas and an infinite number of ways to do different deals.
For example, in the old days, I would submit one agreement of sale on a property, much like a traditional realtor making one offer on a house. Later on, I started to make multiple types of offers (i.e. a high-subject to offer, a mid-level offer with owner financing or the owner carrying a second lien, or a lower bank financing offer, or an even lower cash offer). Keep in mind, the more offers you make, the more deals you get. Utilizing strategies for buying properties with zero money was a skill set that once learned, allowed for endless deal possibilities.
It was the relationship building and the sharing of these types of ideas that really helped me shift away from the Scarcity mindset more towards the Abundance mindset.
How Does This Compare to an Abundance Mindset?
You may have this type of mindset if you don’t worry about competition, as you are more inclined to collaborate with others. You can be genuinely happy for the success of other people. You may not be very fearful of failure because you see it as a learning opportunity (i.e. the hurry up and fail attitude).
Related: Viewing Investment Real Estate From Different Perspectives
Instead of assuming you can’t do something, you ask yourself how you can make it happen. With an Abundance Mindset, you may think more longterm. Instead of feeling the need to hoard material things, you may be more focused on how to utilize your resources and money.
How Does an Abundance Mindset Affect Your RE or Note Investing?
You are happy for someone you know who just closed on a killer multi-unit deal.
You’re willing to share your best investing ideas to help others (and you are humble enough to ask for help if you need it).
You take responsibility for your mistakes and don’t blame others. (Example: I dropped the ball recently on a duplex I own by not getting it inspected, and it’s 100% my fault.)
Instead of assuming that you can’t afford to buy a note or property, you would instead ask yourself, “How can I afford this?” Or, “How can I make this average deal a great deal?” For example, maybe you can access your IRA account, or maybe you can access a HELOC to an investment that will cash flow enough to cover both the HELOC payment and a new car payment.
Maybe you focus on socially conscious investing and serving more people through your investments. For example, renting out a property to recovering veterans or setting up a drug and alcohol recovery house.
Instead of thinking others are just plain lucky, you realize that you can make your own luck.
You don’t compete or compare yourself with others. You believe in “Coopetition,” cooperating with competitors.
As you can see, the possibilities are limitless when you live in a world of Abundance. With this mindset, I’ve never had a problem finding a good deal because …read more