Real Estate Investing is Not for Everyone
Regardless of what so many of the best-selling real estate investing authors write, real estate is not for everyone. If you are looking for a way to get rich quick, real estate is not for you. However, if you want to supplement your income over time, or diversify your investment portfolio, and potentially enjoy some tax benefits along the way, real estate can be pretty amazing.
Real Estate is Not the Same as Cash in the Bank
This may sound obvious, but you must understand that real estate is not a liquid investment. You cannot go in and out of the market easily at a moment’s notice. Real investing done well requires time to pass to reach its full potential. Whether time has to pass in order to earn some appreciation, or to pay off debt, or to wait for the market to catch up to your ambition, success in real estate takes time.
Be Prepared for the Unknown
What if the investment does not work out? Are you financially able to absorb a loss or months of negative cash flow in a worst case situation? Can you withstand the emotional roller coaster of a less than perfect property, transaction, or tenant? This business has more than its share of ups and downs. If you don’t think you can weather a storm or two, real estate investing may not be right for you at this time.
Recognize Your Skillset
A few of our clients are involved with the maintenance and upkeep of their properties. These clients usually see themselves as full time investors, or their primary business is home construction, maintenance, or remodeling. Generally, what these clients bring to the table is a team, or personal expertise, in general contracting that saves them significant money when rehabbing a new purchase or upgrading a property between tenants.
I consider these investors ‘Hands On’ clients in the very best sense. They are experts at the construction business. In our experience these relationships are great because repairs and rehabbing are where most investors lose significant amounts of money.
Recognize Your Weaknesses
I am not an expert in construction, but I know what to look for. I try not to tell skilled tradespeople how to do their jobs. I have never had the urge or desire to step in and work on a property. I am far better at other ways of making a living. I don’t have the skills and I have no desire to acquire them. But if I was an expert, there is no question I could save money doing at least some of the work myself.
Diversify Your Investment Portfolio
The vast majority of our clients have full time jobs in other industries. They are accountants, doctors, lawyers, small business owners, and executives in large corporations. They have made their money elsewhere and are looking to make more in a diversified manner that does not require additional personal effort. They are using their money, and in some cases their banker’s money, to make more money.
Accidental Landlords
Some of our clients are what I call ‘Accidental Landlords’. These are owners who generally have a single house that they acquired from a family member, in an estate, or sometimes they elected to rent their home out after buying a new home. For whatever reason they have an extra home and lack the time or expertise to manage it. Generally, these clients are referred to us by other landlords because they know we can take the grief off their plate.
Learn More
Are you interested in diving deeper in to your personal mindsets and motivations as a real estate investor? Set aside 15 minutes and complete the Making Real Estate Work Mindset Scorecard. You will get instant results and insights to your own personal view of the business you may not even be aware of.
For more information about The ROOST Landlord Advantage™ property management system, click here.
I look forward to reading and replying to your comments and questions below!
