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The First Step Is The Hardest

“The first cut is the deepest.” – Cat Stevens (also Rod Stewart and Sheryl Crow)

Any time you begin a new endeavor, taking the first step can be painful. Inertia is a powerful force, and we often imagine the rocks in our path to be much larger boulders than they really are. And it’s tough to get those rocks rolling.

Dr. Peter Kim knows this well. He wasn’t born a passive income prodigy. He had to learn to take those first steps before he was able to benefit from what are now multiple passive income streams. What can you do to take that first difficult step towards whatever excites (and perhaps frightens) you?

This post was originally published on Passive Income MD.


The First Step Is The Hardest


I remember my first real estate investment vividly. It was a $5,000 investment in a deal found on a real estate crowdfunding site. Looking back, the amount of money wasn’t huge (I had been an attending for a few years, so losing this investment wouldn’t crush my future), but it sure felt like it.

Investing in real estate was a brave new world for me, and taking that first leap was quite a challenge. Plus, no one likes the thought of potentially losing money.



Making The Decision


The decision to make that first investment was a long time coming. As an anesthesiologist, I’ve been trained to analyze the risk-to-benefit ratio in every decision I make at work.

It’s not something I usually have a ton of time to sit and think about at work since I’m taking care of patients in real-time. However, even when I’m outside or work and make other decisions, going through the process has simply been ingrained in me after years of training.

So, I asked as many people as I could about real estate crowdfunding. I did my research. A lot of research. When I finally found something that piqued my interest, it happened to be a debt deal: the borrower of the funds was looking to raise money to fund their fix-and-flip property.

As investors in this deal, we would essentially lend to the borrower as if we were the bank. They wanted the money for 12 months at an 11% APR, meaning that every month they would pay me the interest on my investment, which is calculated as an 11% annual return for me.

It was a pretty good deal for me, provided nothing went wrong. Fortunately, nothing did, and I got a decent return out of it.

The return was good, but I got something much more valuable out of that first investment. It gave me a little courage and opened the doors for me to make other, more lucrative and long-term investments.



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Overcoming Decision Paralysis


I’ve seen this same thing happen to other physicians. They’ve lived in this “analysis paralysis” state for years.

They want to make an investment, they want a change, but they give themselves all the reasons in the world why they can’t take that first step.

This could be for many reasons:

  • They may feel like they haven’t gained enough knowledge of investing
  • They feel they don’t have enough time to thoroughly vet the deal or handle an investment
  • Perhaps they don’t have the capital to invest.
  • They’re focused more on fees than net returns.
  • It could be a combination of all of these.



Of course, everyone’s situation is different, and there are legitimate reasons to not invest. But if we’re honest, most of the time that hesitation boils down to fear and anxiety.

There’s nothing wrong with being cautious and doing your due diligence to the best of your abilities. In fact, what really scares me is when physicians make their investments with no due diligence at all.

They just take the word of a colleague or a friend that “it’s a good deal” then dump a good chunk of money into it and cross their fingers.

There’s also nothing wrong with taking advice. But it’s important to know exactly what you’re getting into and exactly what makes the deal a good one for YOU.

Yes, your goals might be different, and a good deal for one person might not be the best for another.

For example, let’s say someone is trying to make sure their portfolio is balanced with different types of real estate investments with different strategies.

They have some nice, safer deals, and they’re willing to take on a little more risk for potentially higher returns.

However, their friend might not have any other safer, cash flow investments, and they’re going all-in on this deal when what they really need is cash flow.

It’s all personal, which is why it’s important to understand what your goals and objectives are when choosing a deal.



Shifting Your Mindset Begins With You


I remember talking to a friend nearly five years ago who was considering investing in a rental property.

He was looking at several, and he always seemed to have an excuse as to why it wasn’t ideal.

The property tax in that area was too high or the projected return was 0.5% lower than he hoped for that area. He wanted to wait for interest rates to drop. On and on.

Well, I checked in with him recently, and guess what? He still has yet to purchase a rental property in spite of having that desire for all these years.

Unfortunately, not much has changed for him, except that his personal expenses have increased and he’s more entrenched into being financially dependent on medicine.

For so many of the people that I’ve seen become successful and reach their goals, there’s one big factor that has led them to that success – the mindset that in order to make a change, you have to take action.

That willingness to take the first step is critical – even if it’s a small one.

Of course, there’s no guarantee that that first step will be successful. But I can guarantee that you will learn something from it, and it will help you with the next deal. And the next one, and the one after that.

Many of you have probably heard that Chinese proverb: “The best time to plant a tree was twenty years ago. The second best time is now.”

Action should always be valued over strategy. Winners are the ones that ultimately take action. I’m not saying strategy is important, but strategy without action means nothing. Planning means nothing if you don’t follow through.

So I encourage you – take the first step. It doesn’t have to be one that changes your life either way, but it just might lead to the step that does.



What would you like to take the first step towards? What’s stopping you?

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5 thoughts on “The First Step Is The Hardest”

  1. Mindset and taking the first step are absolutely important. As someone who dealt with a lot of paralysis by analysis in the past, I’m definitely hesitant to take first steps into something new. With something like real estate investing, though, where there’s potential for huge measurable financial losses, it’s important to find the middle ground between jumping in and overthinking. Taking the time to read, understand, and take calculated risks.

    That’s where I’m at with real estate. I absolutely want to get into the game, but recognize that I need to have a plan to be somewhere for at least 5 years first. So my first steps in real estate are at least a year away.

  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Hello! Found your blog through WCI and liked how comprehensive your posts are.

    Is there a good site, or maybe you could write one, detailing how residents can choose between starting a Roth or traditional IRA if they can going to go the PSLF route? I know traditional reduces AGI but Roth makes some sense given resident salary. Projected income about 350K (i know not anesthesia salary) upon retirement. Thanks PoF!

  4. Sounds like someone has been spending too much time at Tony Robbins seminars.

    It is about strategy and implementation . Some of my best investments, and I have built a net worth of close to 10 million, have been ones I didn’t act on. Some of my worst have been when I acted for the sake of acting when it was not part of my overall strategy.

    A winner is someone that achieves their goals and is true to themselves. I consider warren buffet a winner and yet he is sitting on a mountain of cash because he did not act just to act.

    I am sitting on a pile of cash (a bit smaller then Warren Buffett’s) as I avoided jumping into the latest real estate Crowd funding bubble. Looking forward to some great deals on investment properties over the next 12-18 mo.

    The advise I give…for free and not to monetize it, is implementation is often the hardest step. Both Strategy and implantation take Effort. Like anything , reducing it to small steps, often is a way to balance the emotion and intellect.

    • A lot of these real estate crowdfunding sites are just waiting for another financial crisis to happen before they implode. The financial crisis might be happening shortly if the pandemic keeps the economy shut down for a longer time and the housing market tanks. Many of these crowd funding sites (not the eREITs) are unsecured loans that you give to people to flip houses. They get all the reward, you take all the risk (for an 8% return). Once they implode, the flippers walk away and the investor is left holding the bag. A lot of people are going to lose money in them, probably soon.

      • Most of the crowfunded platforms I’m familiar with are mainly in commercial real estate / multifamily housing.

        Peerstreet does short-term loans for house flippers, and I’m invested in a DLP access fund, and they also focus on short-term loans.

        As with any asset class, diversification is key.



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