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Why Invest In Real Estate?

by Michael Zuber on December 12, 2012 · 17 comments

  
Why Invest in Real Estate?

“It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.” -Donald Trump

Let me ask you a very simple, yet profound question: Why invest in real estate? Understanding the answer or answers to this question will help you along your investment career.

The following are a few common answers I have received when I ask the question:

Why People Invest in Real Estate

Freedom:

Frankly, this is why I started investing in real estate.  I was star struck with the idea of riches that would give me the freedom to stop working for someone else.  I have a great job that I absolutely love that pays the bills but I still wanted long term freedom.  It seems so easy:  you buy-and-hold cash flow properties over time, sacrificing and delaying gratification; in five, ten or twenty years you have a pile of monthly cash flow and you get freedom.

I suspect most people reading this blog would agree that freedom is their main driver for investing in real estate investing.

Control:

Some investors I speak with want real estate to give them some level of control over their financial lives because, let’s face it, we have zero control in financial investments outside of real estate investing.

Alternatives:

Some investors will admit that real estate is nothing more than a portion of their overall investment portfolio.  Perhaps they have divided their portfolio to include mutual funds, stocks, and real estate investment, etc.  Or maybe they are looking to achieve higher returns out of their cash through active management.

Job, Escape or Interest:

A few investors look at real estate investing as a career or chance to own a company.  Even others look at real estate as a means to eventually replace the job or career they hate.  Many dive in head first, as if they are running away from something versus running towards something.

Creating Value or Thrill of Hunt:

I know many investors who would rather tell you about the thrill of chasing a deal down or their last remodel.  They pursue that addictive feeling and are always looking for the next rush or opportunity to turn the next ugly duckling into a beautiful swan.

Options:

After many years of real estate investing I have come to realize that I love investing in real estate because it has given us so many more options. We have options to keep working, buying, and traveling, etc.  The more we invest the more doors it opens up.

Why I Invest in Real Estate

It is hard for me to admit but I was wrong in the beginning of my career.  I fell hard for the sexy pitch of earning freedom.  Frankly, freedom is ok but I want options, and truth be told I want lots of options. That is why I keep working so hard to find the next deal, to find the next investor, and to keep building our growing portfolio.

Some might think Freedom and Options are the same thing.  But to me Freedom really meant I could stop doing something while Options means I can do other things. Having lived through this realization – I can tell you firsthand that having options is better than having freedom.  I would say you get freedom first and then you build or acquire options.

I write this post for two reasons.  First, I want to acknowledge that I was wrong.  I am not chasing freedom rather, I am creating options.  Second, I want each reader to be honest, figure out what Real Estate Investing means to his or her self.  I suspect that no matter why you think you are investing, if you peel back the onion you are really looking to create options for you and your family.

Good Investing

Photo: Eric

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{ 17 comments… read them below or add one }

Jason Grote December 12, 2012 at 7:40 am

These are the things that drew us in as well! We don’t have to chase freedom… We live in America! Americans are already free, but you are so right, many of us do not have options. The potential to have options is afforded to us by the many freedoms we have in this country. That is why foreigners are flooding into the land of opportunity. Most of them succeed while many born in this country continue struggling. The difference? They position themselves. Great thought provoking post Michael! POSITION YOURSELF FOR OPTIONS… That’ll preach!

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Mike Z December 16, 2012 at 9:56 am

Jason

Thank You.

Good Investing

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Jeff Brown December 12, 2012 at 9:38 am

The one with the most options wins. :)

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Ali December 13, 2012 at 2:35 pm

Oooh, I like this one Jeff! Options allow room for failure, because if one thing fails we can just go to something else. I think that is the problem for so many people- they rely solely on one security and assume or hope it never flunks out. Look how well that worked for people with the recent market crash. Options = awesome.

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Mike Z December 16, 2012 at 9:57 am

Jeff

Wish I had closed with that statement!!! Perfect

Good Investing

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Julian Mear December 12, 2012 at 2:12 pm

Your post is well articulated, couldn’t agree more. I was pursuing a career as a professional snowboarder when I broke my back. I realized that I needed to find another option for myself so that I could have the financial freedom and time to spend on the other things I love. Luckily my dad has been involved as a RE investor for about 15 years and I was able to hop on board (no pun intended), soon to find that RE was a passion of mine as well. Our company Winvest focuses on providing hassle free turnkey investments for the busy working professional. But as you said, investing creates multiple outlets and options ultimately leading to passive income and more free time! Ali in the video is one of our partners, and has been able to retire from his corporate job, due to RE!
http://www.youtube.com/watch?v=ZHtVT26ui2g&feature=plcp

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Michael December 13, 2012 at 6:46 am

Well put Michael. OPTIONS
That is so true. Freedom can be defined in many different ways and everybody’s version of freedom could be different. But to have the option to decide what you make of freedom is the key.
Good post and thanks for sharing.
I like Jeff’s humorous Quote – The one with the most options wins

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Mike Z December 16, 2012 at 9:59 am

Julian,

Best of Luck

Good Investing

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John Wahlgren December 13, 2012 at 1:36 pm

Great post! Very inspiring for a newbie like me.

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Mike Z December 16, 2012 at 9:59 am

John

Thank you and Best of Luck

Good Investing

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Will Barnard December 14, 2012 at 4:46 pm

Nice blog post.
As Jeff stated, having options is key and RE gives you more options than any other investment vehicle known to man or beast. I love options, and I did this biz for many of the reasons you listed above, plus I was born to be an entrepreneur and have been self employed since the old age of 19. Wow, 20 years jets by quick.

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Mike Z December 16, 2012 at 10:00 am

Will

Great story. Wish I had started at 19.

Good Investing

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Cheryl December 14, 2012 at 5:01 pm

I’m with the Donald on this one. He nailed exactly why I love real estate. And from your list, I’m all about Creating Value/Thrill of the Hunt – with emphasis on the last part of your statement – “opportunity to turn the next ugly duckling into a beautiful swan.” Great post!

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Mike Z December 16, 2012 at 10:02 am

Cheryl,

I still love the hunt and turning an ugly property into a performing asset

Good Investing

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Herbert Heagh-Avritt August 28, 2013 at 12:14 am

Mike,

I thought you would like to know that your words are still inspiring people today. I really enjoyed your story, and I applaud that you realized you had achieved freedom, and that it keeps getting better.

Thank you for sharing.

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Brian September 15, 2013 at 6:34 pm

Well…I would have also said financial freedom. However, I think Michael persuaded me otherwise. In my financial freedom vision, I didn’t exactly see myself sitting around doing nothing (okay maybe I did envision some traveling). In my financial freedom vision I usually pictured myself doing other things that I wanted to do…or in Michael’s words having the option to do other things that I wanted to do.

Good article, Michael!

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Charles Brady November 1, 2013 at 7:41 pm

Mike: First thank you! This is not only true, but a very important concept that I feel we should all internalize. Options, I have worked for many companies and came close, but my close call was stopped by one persons lack of identity or purpose. In this it is my focus and desire that can bring to fruition these options. I feel deeply that at 59, I can still make options: if I dedicate my will and drive to doing so. This really made me rethink and increased my commitment to Real Estate. So again, thank you. Excellent perspective.

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