Do you have any friends or family who always talk about their big ideas but never execute?
I do and would be willing to wager you have encountered the same thing.
Maybe it’s the uncle Jim who wants to flip houses?
Aunt Sally who “would make millions selling grandmas spaghetti sauce recipe”.
Your friend Jimmy the plumber who has the next great idea to invent an easier way to connect pipes.
At this point, you get my gist – but the overwhelming odds are that person who gave you the idea also had a host of accompanying reasons why they can’t/won’t/shouldn’t go forward with making the dream a reality. That list looks possibly something like this:
I don’t have the capital.
I can’t take time off of work.
My family keeps me so busy there aren’t enough hours in the day.
Only rich people can pull of something new like that.
I just don’t know anything about _____, but it sounds cool.
Hopefully, you are starting to pick up what I’m putting down here. Excuses are like a virus that steals your future success and bounds you to a life of comfortable complacency. Unlike a virus though, your doctor can’t call in a cure or anything of the like to help you out. This solution falls firmly on YOU the individual to work out.
What brought me to this realization is I’ve personally succumbed to a lot of negative self-talk recently and adopted more of a “wait and see” attitude when it comes to my personal real estate investing. The local market here is beyond hot and you can essentially forget anything that resembles the 1% rule without it being a creative deal. What I mean by that is a deal that could potentially have another bedroom added/be divided into a duplex/subdivide the lot/etc…
While housing prices are at historical highs rates are at historical lows, and while I’m willing to bet housing prices will go up at least with inflation over the next 20 years – it would be equally silly not to think interest rates normalize over the long term as well. So while some properties might not cash flow well today, the appreciation play and long term rental potential are still there in a big way.
But that required effort is a ridiculous reason to sit on the sidelines for years, and while I haven’t completely done so we did only add one property to the portfolio in 2018… Which was 3 doors behind the annual goal. I’m the type of guy to really analyze a deal, likely far more so than really makes sense to do. Which is both a positive and a negative, likely more so of a negative when the market is this hot because it leads to “analysis paralysis”…. a fancy way of saying “doing nothing”.
Last week a friend of mine said “I have another deal under contract” and that perked my attention. Naturally, I’m wondering how he found this deal? Where? Etc… It turns out this is really a speculative play for dirt he thinks will appreciate in the future. It’s in the way of commercial property that is growing outward and the rental property is just meant to pay carrying costs for the dirt beneath. It’s far from a 1% deal, .75% at best and that is being generous with the loose calculations in my head. But the point is he’s getting off the sidelines, and even if the appreciation doesn’t come to pass for 20 years he will end up with a nice rental property and minimum 5-7% long term return on investment with upside in the sky (commercial property values would double the initial investment at minimum).
I would never think to do a deal like that because it’s not what I look for, my mindset has become painfully focused on SFH and small multifamily units with the long term buy and hold approach. In short, I’ve pigeonholed myself into doing virtually nothing on the investing front locally and not worked hard enough at learning to get comfortable with out of state investing. Meanwhile, my friend is doing the deal and moving on, so I’ll ask you… who is better off in the future 30 years from now?
The guy who does nothing and sits on the sidelines or the guy who jumps in and does a deal with a more meager (but still greater than savings account) returns? The answer is obvious, and a decently easy lesson.
The sidelines can be more dangerous than you think.
Of course, you shouldn’t be investing without a solid financial foundation in place, but assuming you have that part covered many of us would benefit from just getting in the game.
Let’s do the math
Calculate your mortgage or work with the compound interest to see what it can do to expedite your wealth building.