Here are the 6 Quotes that I’ve heard at various points in my lifetime which have inspired my real estate investment strategy:
#1) “Once the real estate bug bites you, you’ll either be in it for life, or you’ll swear you’ll never do it again.”
#2) “You make money on real estate when you buy it.”
#3) “Don’t fall in love with real estate, because real estate won’t love you back.”
#4) “Buy the most modest house in the best neighborhood you can find.”
#5) “Hope for the best, but prepare for the worst.”
#6) “You win deals by losing them first.”
Now let’s dive into these quotes a little deeper, so you can see exactly how they’ve helped me buy the right deal and achieve my financial goals through real-estate:
Real Estate Investing Quote #1:
“Once the real estate bug bites you, you’ll either be in it for life, or you’ll swear you’ll never do it again.”
This quote has been spot on for me: Once you buy your first property, and it goes well for you, you’ll look at every piece of cool property you see for the rest of your life like a potential hot date. You’ll immediately run the numbers in your head, fantasize about buying it, and ponder if it would be a good investment.
Personally, I loved everything about buying my first home. My mortgage on it was cheaper than renting an apartment in my area. Win! The mortgage I paid every month acted like a giant piggy bank that helped me become wealthier. Win! I loved that I now owned my property forever, and I could do whatever I wanted with it, including turning it into a future rental, in my future. Win!
I also learned to enjoy all the projects that come with real-estate. For me, real-estate is like an anti-boredom device that is always available for me to work on. Some people are entertained by puzzles and games in life. I am entertained by creating things and making money. For me, real-estate is like a personal puzzle that can entertain me whenever I am bored. I get a self-esteem rush after I fix something on my own or complete an upgrade I am proud of. My bank account simultaneously grows when I put my own sweat-equity into a project that doesn’t cost me much, but adds hundreds or thousands of dollars into my home’s value. Improving my investment just makes me feel better about myself.
But I’ve learned that investment real-estate is a different animal than a primary residence. Why? Because there are more variables outside of your control that must go right to make it feel like a success. Two things have to go right for investment real-estate to feel like a success: 1) Financially, the numbers have to work, and it HAS TO MAKE YOU MONEY. 2) You have to choose good tenants to live in your property or you’ll feel like throwing your phone into the ocean every time a bad tenant texts, calls, or emails you. Getting both of these variables to work isn’t easy to do. Here are two past articles that explain how I’ve done both: Read financial insights here, and how I choose the right tenants here.
Real Estate Investing Quote #2:
“You make money on real estate when you buy it. Only buy good deals.”
I was told this sentence long before I ever owned my first investment property by my long-time friend, Torque who is a seasoned and successful real-estate investor. The investment power inside these words exploded in my brain like a financial firecracker, and I instantly knew this insight was worth remembering if I ever had the chance to invest in real estate myself.
So what does: “Investors make their money when they buy real-estate mean?”
This sentence means that it’s WAY easier to make money on real-estate when you buy a good deal in the beginning, rather than trying to project that it will make you money in the future. When you buy a good deal, a property will start making you money on day #1 which is what you should be going for. When you buy a bad deal, you may find yourself struggling for years to play financial catch-up with it. Successful investors NEVER want to find themselves in the position of breaking-even or losing money on a property. They work their butt off to find good deals, so they can start making money on day #1.
So how do you find a good deal that will start making you money from day #1? Like anything that leads to greatness, you have to work your butt off doing the things that other people don’t want to do.
Here are some tips that have worked for us: Network, use your social media reach, and try to find a property that hasn’t hit the market yet. Try to find a win-win scenario for the seller and buyer before there’s competition for the property. Don’t buy the first property you see. Scour online MLS listings in your target area (I use Edina Realty to search Minnesota listings) to see what properties are available. Learn some handy-man skills, and choose a property that isn’t perfect, but that you can improve into perfection. Try to buy when your competitors aren’t looking, like when kids go back to school, or late in the summer when everyone is on vacation, or even better, in the dead of winter when other buyers are too busy planning for Thanksgiving and Christmas to look at properties. I once had a real-estate agent tell me, “Some of the best deals I’ve ever seen appear between Thanksgiving and Christmas when everyone else is too busy to look.” Your competition should be lower during these periods, so find your deals when competition is on vacation. We’ve personally used a combination of the above tips to buy both of our properties. These tips don’t all work all the time, but they all work some of the time. You only have to get lucky once to own an awesome property for the rest of your life. Ultimately all success boils down to this law of life on earth: You get lucky more often the harder you work.
Real Estate Investing Quote #3:
“Don’t fall in love with real estate, because it won’t love you back.”
There’s only one time that you’re allowed to fall in love with investment real-estate, and this is it: When your investment property is making you tons of money AND it is super easy to manage and maintain. That combo is the golden goose all investors are looking for, and when you have one, it’s the ONLY time you’re allowed to fall in love with a property.
DO NOT!!! And I repeat, DO NOT!!! Fall in love with a potential property because it’s so cute, unique, or any other reason defined by individual tastes or perception. Why? Because often times pretty, cute, and unique, ultimately mean EXPENSIVE to upkeep once your profit margin is calculated at the end of every month.
An investment property is a powerful thing. It’s almost like an atom bomb. It can either be used to create financial peace and harmony, or it can cause mass financial destruction. A bad property can steal, steal, steal from you mercilessly. It won’t care how horribly you regret buying it. So never fall in love with real-estate, because it won’t love you back.
(A friend to our blog, Gwen at Firey Millenial wrote a great post on this a few weeks ago based on a recent experience. Read her tip #1 here: “Buy a box.”)
Real Estate Investing Quote #4:
“Buy the smallest house in the best neighborhood you can find.”
My parents told me this tip years ago when we were searching for our first house to buy. Then I heard Dave Ramsey say the same thing in his massively successful personal debt-reduction program, Financial Peace University, a few years later. Finally, when I was buying my first investment property, the appraiser that was sent by my mortgage company to appraise the property, said the same thing to me as I walked out to fish for information after the appraisal. (I lived next door to the property at the time.)
The appraiser actually said: “I like this property. It’s in a great neighborhood, full of nice homes and well-off homeowners who’ve probably lived in their homes for a long time and have a bunch of equity built up into their homes. If the economy crashes, this is the type of neighborhood that won’t sell out or get foreclosed on, which can turn a good neighborhood into a junky neighborhood quickly. This city that you’re buying in should be able to ride out the storm if a downturn happens, and that’s always the type of neighborhood you should be looking to buy or invest in because they’re steady and solid neighborhoods that will keep your home value protected because your neighbors also don’t want to lose money on their homes.”
So when multiple successful real-estate investors tell you the same thing, listen to them. Buy the smallest house in the best neighborhood you can find.
Real Estate Investing Quote #5:
“Hope for the best, but prepare for the worst.”
Investing in real-estate is ultimately a long-term strategy and play so you always have to be prepared for what’s coming in the future. To succeed with investment real-estate, you always have to be aware that sometimes bad things happen to good people. The way I protect myself from the bad things that naturally occur in life is this: Hope for the best, but prepare for the worst, when you invest into a property.
Recessions happen. Downturns happen. Job losses for yourself and your tenants happen. At times, the values and results from your property will turn crappy when everything else in the economy is turning crappy all around you. This is why I always choose to hope for the best, but prepare for the worst with every investment I make.
How do I plan for the worst regarding investment real-estate? First, I never take out a mortgage on a property that I couldn’t pay if horrible financial things happened to me. I was in my 20’s when the great recession happened in 2008, and I saw what happened to a lot of my friends who became over-leveraged with mortgage debt. If they weren’t foreclosed on and lost their house, they felt trapped because they couldn’t sell and move into a house that better fit the needs of their families. They became broke and cash-poor because after their housing bills were paid, there wasn’t any money left over. Experiencing this vicariously through my friends inspired me to never take on a mortgage that would feel un-affordable if the economy fell apart tomorrow.
I plan ahead and make sure the property will cash-flow for me from day #1. So that way if the economy falls apart on day #2 of my ownership, I have some breathing room to take less profit if I need to and still ride through the storm to make it to sunnier financial days ahead. These ugly storms can last a year or more, so to be a successful investor, you have to think long-term about EVERYTHING.
Real Estate Investing Quote #6:
“You win deals by losing them first.”
I once had a new investor ask me, “How do you win deals? Every time I’ve put an offer on a property, I’ve lost out to someone who made a better offer.”
The story reminded me of when I first started my contract sales company in 2014. One of the hardest things to overcome when I first got started, was quoting projects, and then losing the job to one of my competitors who submitted a better offer. It was a brutal learning lesson. I’d get excited to make a sale, and then it was depressing to find out that I’d lose it to a competitor. I know how hard this experience is to go through. It almost made me want to give up on all the self-employment dreams I had. So if you’ve been through this before, I feel your pain.
But I started to learn something about making offers and writing quotes: The more I lost, the more I would learn how to win. This is what I mean: every time you win or lose a job or property, you should be taking mental notes about what you learned from the market you’re competing in. If you lose a job to a competitor, then the market is telling you that your offer was too rich for the current marketplace. So adjust your pricing next time, and come into the market with a more competitive offer. And once you win a job, then that should tell you that your current strategies are competitive in your marketplace, and you should keep doing what your doing, or even structure your offers to increase your profit margins a little bit.
In the end, it’s normal to lose deals in the beginning. It’s hard. It sucks. It will make you question your dreams, and make you want to crawl into a hole and give up every idea you’ve ever had. But don’t miss out on all the valuable learning lessons that are hidden in that pain of losing out on offers. Those learning lessons can also shine some light on the secret clues on how you can adjust your offers to stop losing, and start winning. The path to winning deals, starts by losing a few first.
These are the six quotes that have inspired my real-estate investing strategy, and they are my advice to you. Do you have any quotes that have inspired your investing strategy?
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