Not Everyone is Ready to Jump Into Real Estate Investing

By
Property Manager with Foundation First Property Group RM423638
https://activerain.com/droplet/56V7

Many people understand the benefits of real estate investing (which I've highlighted here), but with all the easy avenues for investing in the stock market, investing in real estate is somehow still thought of as a game only for the rich. With stocks, while there are many rules and regulations which govern them, people can simply have money withheld from their paycheck to be deposited into their 401k or 403b. The most work they will do on the management side of their stocks is choosing which funds to initially invest in, and maybe doing a once-a-year review. Prospectus? 10-Q? That's for the fund manager to worry about, they say. 

Real Estate Investing

 

And while most people over 25 know that the stock market won't continue it's upward climb forever, many are overly cautious about getting into real estate investing. There seems to be a desire to get involved, but many people don't know where to begin. And some people shouldn't begin investing until they get their financial house in order.

 

 

 

John (not his real name) came into my office yesterday. We were meeting to discuss how he could begin investing in real estate. John is the living epitome of Eeyore. That dark rain cloud seems to follow him everywhere and he can't seem to get ahead. He was making well over $100,000/year, but a divorce and general carelessness with money has left him with - well - not very much. Real estate investing has always been a dream for him, but now, at age 57, he wanted to get involved quickly. 

 

When is the best time to start investing? Yesterday. When's the next best time? Today. I fully agree with those general questions, but there are a few qualifiers that need to be considered first.

 

John had recently spent $10,000 on a get-rich-quick real estate program. That's $10,000 he didn't have. That's $10,000 he charged to a credit card and is likely paying interest on. Now, four months into his six-month program, he says he still doesn't know where to begin. Upon further probing, John admits that he has a lot of doodads in his life. For those not familiar with the term "doodads", Robert Kiyosaki uses it to describe items that simply take money out of your pocket without returning any money in the future. The boats, fancy cars, pool tables, designer clothing. Not that any of these are inherently wrong. It's just important to know the difference between an asset and a liability. 

 

What kind of doodads did John have in his life? He has a trailer worth $5000 that he pays $2000/year to park in a campground that he HAS to have, even though his family has only gone to it twice in the past two years. He financed a Suburban for his girlfriend who has a long, gas-guzzling commute but loves Suburbans. He pays the cell phone bills for his adult children. He pays the car insurance for his adult children. I think you can see where I'm going with this.

 

John doesn't need to start investing in real estate now. He needs to get his life straightened out. He needs to get his priorities straight. But most of all, he needs to rally his family to get on-board with his dreams. He needs to sell them on the idea of investing for the future. Dale Carnegie says, "There is only one way...to get anybody to do anything. And that is by making the other person want to do it." Amen! If John can get his family to start seeing their potential financial future through his eyes, and they are willing to sell various doodads and make some sacrifices, I think I will be able to help him. 

 

Real estate investing is not the magic pill to wealth-building, like the $10,000 huckster sold him on. It takes a plan. It takes perseverance. And it also takes a supportive family at home. I look forward to my next meeting with John to see what (if any) changes he has made in his life to try to achieve his financial dreams in real estate investing.

 

Image courtesy of bplanet at FreeDigitalPhotos.net

Image courtesy of Sira Anamwong at FreeDigitalPhotos.net

 

 

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Topic:
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Pennsylvania York County Hanover
Tags:
investing
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real estate
hanover
foundation first

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Jeff Wright

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