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The 5 Mindsets of Real Estate Investors

I was inspired to write this after inspecting several properties. Although they were not foreclosed, they surely looked like the typical foreclosed property that badly needed repairs. I have to admit, they were so damn ugly. Anyway. the owner mentioned something like this:

Iba talaga pag investor ang tumitingin ng property, nakikita yung potential. Pag hindi investor, maririnig mo “Ang pangit naman…” (Investors really have a different perspective, they see a property’s potential. For non-investors, you will only hear them say… “this property is so ugly!”)

I guess this is very similar to how people see a glass of water, depending on their mindset.


A typical scenario

A foreclosed property looks ugly because it has not been maintained for quite a long time. It obviously needs repairs. It’s dirty and it stinks. It’s an ugly house that does not belong to the neighborhood (which can actually be good if the neighborhood is “nice”.). The surrounding houses look okay, and they are all very similar in terms of house design and structure.

What follows next depends on what real estate investor mindset you have, and I have listed 5 of the most common below.

Real Estate Investor Mindset 1…

“This foreclosed house stinks, this is such an ugly house and I will not buy it. Real estate investing sucks!”

He then goes home, watches TV, etc, and then goes to sleep, ready to get back to the rat race the next day.

Real Estate Investor Mindset 2…

“This foreclosed house stinks, this is such an ugly house, this would take lots of money and time to clean-up and repair. Why bother?! Real estate investing sucks!”

He then goes home, watches TV, etc, and then goes to sleep, ready to get back to the rat race the next day.

Real Estate Investor Mindset 3…

“This foreclosed house stinks, this is such an ugly house, this could take lots of money and time to repair. What the heck, I’ll get an estimate for repairs.”

After getting one estimate, he says “What the… this is so expensive!”. This will never work, real estate investing sucks”

He then goes home, watches TV, etc, and then goes to sleep, ready to get back to the rat race the next day.

Real Estate Investor Mindset 4…

“Hey, this foreclosed house stinks, this house is so ugly, but I can see an opportunity here! Sure, this needs time and money to repair but let me check how much would be the After Repair Value (ARV) of this property”

He then gets comparables or comps from the other houses in the area and proceeds…

“I’ll check if the cost for repairs will have reasonable returns, especially since this looks like a nice neighborhood, I might get a high enough ARV which would justify the cost for repair. Maybe I can use the repair costs to get a discount from the bank.”

After analyzing the numbers using repair estimates, comparables, projected monthly cashflow, and the asking price of the bank, etc, he realizes that the numbers don’t look promising and says

“This will not work as is but let me see… how can I make this work?!”

He also knows that

“If the numbers don’t work,  it’s okay… I’ll find another one soon…”

He continues searching for a way to make the numbers work either for this property or the next… or the next…  until he eventually finds what he is looking for! The cycle continues…

Real Estate Investor Mindset 5…

“Hey, this foreclosed property looks good on paper, but I don’t have time to do my due diligence…”

He then proceeds and bids on the property without doing proper due diligence, and wins. When he inspects the property after the auction, he finds out it has a lot of issues… and realizes he should not have bought the property.

Aside from newbies, even seasoned real estate investors experience this once in awhile, buying a property just for the sake of buying one, or it’s just plain carelessness and stupidity… face palm!

How about you?

Which of the real estate investor mindsets above do you have right now?

If you ask me, I have had all of the above mindsets at one point or another, and I still do at times. I just wish that Mindset #4 will always be the mindset that prevails. 😉

To our financial freedom!

Jay Castillo
Real Estate Investor
Real Estate Broker License #: 3194
Facebook: Foreclosure Philippines fan page

Text by Jay Castillo. Copyright © 2015 All rights reserved.

PS – If you feel that anyone else you know might benefit from this post, please do share this to them and don’t forget to subscribe to e-mail alerts and get notified of new listings of bank foreclosed properties, public auction schedules, and real estate investing tips.

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About Jay Castillo
People encounter problems and make mistakes when buying foreclosed properties, and Jay wants to help people avoid those problems/ mistakes. Jay encountered a lot of those, which is why he started this blog in 2008 to serve as a guide where he shares lessons learned, and how to overcome challenges you may encounter when investing foreclosed properties in the Philippines … [Read more]
Avoid losing money, wasted time and effort caused by buying foreclosed properties that have too many problems, with our free 60-item Property Due Diligence Checklist. Grab your free copy now.

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30 thoughts on “The 5 Mindsets of Real Estate Investors”

  1. I love the article, but come on Mr. Castillo, an Upworthy style headline? You’re too good of a writer to resort to gimmicks like that.

    • Hi NiiNii, sorry about the gimmicky headline, I am using a new tool that does split-testing for different versions, and apparently, this headline won. Anyway, I will revert to a less gimmicky headline. Thanks for the feedback!

      • For those wondering, the “upworthy” headline was “5 Mindsets of Real Estate Investors (I was stuck at number 3 before, number 5 is so dumb!)”. I have reverted to a more “normal” title. 🙂

  2. Hi Jay, I praise God for reading your site, I believed He sent you for me. I dream to be a real estate investor before so I purchased a property with my hard earned money as a Nanny here in the U.S. With luck of knowledge & no mentor I’m stuck right now w/ a lot of problems & sick. I got 1 BR & 3 BRs in Robinsons Tower, 1 unit in Coastal Plaza Condominium in Las Pinas and an Island in Guimaras. All are fully paid but my big problems are my tax delinquent and accumulated association dues. I want to sell all of it as my revolving capital but until now my papers are still in the process. How can I sell my property if I’m here in America??

  3. Sir jay can u teach me some techniques on how to buy house with no money down, is it possible here in the philippines?im michael duldulao from tv5 , u can email me at . . Im so much interested in starting my real estate business to have passive source of income. Tnx alot

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  5. Hello to everyone on the site.
    I quite enjoyed reading your posts, especially the positive attitude that comes out of it and you investors.:)
    To be honest, I have just started out as a property specialist at ayala land premiere, and was getting a bit disheartened because of the effort you really have to put in.
    But it’s true; there is so much to appreciate and if you think about it, this is one venture where the returns will greatly outweigh what you input.
    So to everyone out there, don’t lose hope!:D
    If anyone’s interested in sharing in the business of ayala land premiere, don’t hesitate to contact me either.
    I’ll be more than happy to support anyone in any way I can.:)

    • Hi Bea,

      Small world kasi I attended a brokers accreditation seminar with Alveo a couple of months ago. Although Alveo is different from Ayala Land Premiere, I guess they are still in the same family under Ayala Land. Yes, I understand what you mean about the effort needed, not to mention the time, which is why I cannot focus on it at the moment. Maybe when I’m officially out of the rat race and have all the time in the world, I’ll give it a try.

      Thanks for the kind words and for dropping by!

  6. Hi Jay,

    This is a somewhat unrelated question…

    Can you share how to become a real estate broker? I have been searching the internet for information but could not really find any. I think there is some kind of seminar or class and then a test. Is this correct? Where can I take the class? What are the requirements?

    Thanks for any help!

    • Hi Sam,

      Thanks for the question as I’m sure a lot of people also have this in mind. Before the RESA law, to become a licensed broker, one just has to attend a duly accredited Cromprehensive Real Estate Seminar and Review or CRESR and then take and pass the licensure exam by DTI, provided one has all the requirements.

      After the RESA Law was passed, the most common interpretation of the law is that one requirement to qualify for the licensure exam, which is now to be given by the PRC, is to attend a 2 or 4 year course on real estate.

      I suggest we wait for the RESA Law implementing rules and regulations which should be out after about 6 months initial publication of the RESA Law. You can read more about the RESA law in my post: Real Estate Service Act of the Philippines (RESA) Signed Into Law, Real Estate Brokers’ Licensure Exam Postponed

  7. Hi , that’s great, looking forward to reading more posts.
    I really enjoyed your page so I’ll definitely keep you in my feed reader
    this for future reference!

  8. all of the above!!!! =)….. a perfect description of what i always think when i passed by run down houses/bldgs and foreclosure ads…. it’s like certifying that day dreaming does make money…

    • Hi Shiela, that happens to all of us so I guess the key is really to learn on focusing on the potential of a property and the ability to envision it after renovation. =)

  9. Jay! See you on Trace’s seminar this Dec. 12. I have registered even if I am on a very tight budget. I believe I can get a lot of knowledge from that seminar…

  10. Wow, Jay, ang galing mo talaga. Parang nai-inspire uli ako papuntang real estate. I discovered your site through my freelance writing for U.S. clients. Ang topic ko kasi over the past several months ay U.S. foreclosures. Sa Google alerts ko everyday, lumalabas yong alerts mo, wow! kasabay mo yong mga alerts from Wall Street Journal New York Times, etc. Galing ng rank mo… Very informative at very inspiring yong mga articles mo, keep it up. Kung nag-invest sana ako noon sa mga katabi naming foreclosures ng Bahay Financial dito sa Muntinlupa at nearby Cavite, at hindi sa waffle franchise, sana di kami nalugi ng malaki,at sana may regular income na. May neighbor bought one, at okay siya. Kaya dati, di muna ako nagbabasa ng site mo kahit lumalabas sa alerts ko, kasi nare-remind ako about my failed investments. Pero, slowly, nai-inspire ako uli, especially now that we may have our final chance of recovering… Thanks for the articles.
    .-= Naya´s last blog ..Comment by =-.

    • Hi Naya, thanks! I really hope you get inspired and start investing. Wow, you write about foreclosures in the US pero you are based here?! Ang galing! I’m sorry to learn about your failed waffle franchise pero don’t worry about it. Sabi nga ni Rich Dad failure is part of learning and not being afraid to make mistakes will lead to success. Good luck and I will also visit your hubpages!

  11. @Nhorvel and Earth, thanks!

    I was inspired to write this after I visited 5 condo units early morning yesterday. The owner mentioned something like “Iba talaga pag investor ang tumitingin ng property, nakikita yung potential. Pag hindi investor, maririnig mo “Ang pangit naman…”

    I suppose if you stick to doing this long enough, you will really begin to look beyond the condition of a property and see its potential and picture what it can become. 😉

    Of course everything still depends on the numbers and if the deal will make sense.

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  14. I think I’m real estate investor number 3, though, I don’t really loose hope and stop looking. I just get stuck! I’m having a hard time especially on the part of analyzing the numbers using repair estimates, comparables, projected monthly cashflow, and the asking price of the bank.

    Jay, can I make a request? Can you write an article about this? Or maybe you did, I just haven’t read it.

    Still, thank you!

    • Hi Liza, actually you are doing better than me when I started. You actually had the guts to negotiate and give an offer to a private seller. I chose to stick with talking to banks, which I believe is easier because banks are motivated sellers.

      I believe I’ve written about this but in bits and pieces so I will definitely consider your request and write a series about this. Thanks!

      • hi poh,,my gusto lng po sna ako mlman kse bmili po me foreclose house,,wla mnlng me pnghhwakan documents kundi un memorandum of agreement at receipt lng..nbyran kna hlos un full dwnpyment at processing fee..tpos mgugulat ako my ngprenovte ndw nun properties n bnili ko it means d p pla ako 2nd buyer nun db?? hndi lng ako andmi nmin ng friends ko nloko ata nila kse wla tlga sila bnbgay n documents khit ano.. hope mail nio me pra mkakuha me advise wat will i do,mlyo po kse ako now.. eto po mail add ko
        thnax po

        • Hi Greizze,

          May I ask from where you bought that foreclosed house? We need to inform the public so that no one else will be victimized. I’ll send you an e-mail as well.


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