Real Estate Investing Basics

Shop for Real Estate Assets, Not Liabilities

Expertise:
110 Articles Written

It’s time for me to come clean.  I love to shop.  Not for clothes or jewelry.  That would mean immediate revocation of my man card.  No, I like to browse for gizmos, gadgets and toys.  High tech or low tech, it doesn’t matter.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

On Sundays I sit at my kitchen table flipping through the slick glossy newspaper ads.  This week Best Buy has a sale on LED TVs.  Target has the movie Tombstone on blu-ray for $10 off.  And Dick’s Sporting Goods has that gas camping grill I’ve been wanting.

Then there’s Home Depot.  I can find something I want on almost every aisle.  Chase lounge chairs.  A belt sander.  And how can I live without this decorative metal ant sculpture for my backyard?

I need help.  I’m weak – a victim of the consumer culture.

They say the first step towards solving a problem is admitting that you have one.  Okay, now what?

The truth is I came to the realization that I’m a shopaholic about a year ago.  It’s been a long winding road but I’m finally on the mend thanks to this 3-step recovery process:

  1. I stay out of any store selling merchandise that requires electrical or battery power.
  2. I leave my wallet at home.
  3. Before I buy anything I ask myself – will this cost me money or make me money?

Step 3 of the recovery process is the most important.  I came up with it after reading the book Rich Kid, Poor Kid by Robert Kiyosaki.  In it he explains how an asset is something that makes you money.  A liability is something that costs you money.  So simple a child could understand this concept right?

Well, I guess I’m still a kid at heart because it took me 39 years to figure out.

Now I shop for cash flow producing real estate – at the courthouse steps and on the multiple listing service.  The fix and flip business I operate with my business partner is generating enough revenue for us to purchase 3-4 rental properties this year.

I’m proud to say that I’ve finally turned the corner with my liability addiction.  Although I still have the occasional relapse.  I recently bought a Motorola Xoom tablet.  Sure it’s a toy.  But I justified the expense because it will help me make money.  Last week I used it on the 6th hole of the golf course to place a bid on a house going to auction.

I guess I forgot to mention that I’m also a golfaholic.  Unfortunately, there’s no known cure for that.

    John Evan Miller
    Replied almost 9 years ago
    This was a very enjoyable post to read. You are definitely right in that there are so many investment opportunities int he real estate market right now with the high foreclosure inventory. Those that are making smart foreclosure investments will definitely receive the incredible benefits when the market rebounds (which it will). Great post.
    Marty Boardman
    Replied almost 9 years ago
    Thanks John. I almost titled this post ‘You’ll Lose your ASSets Buying Liabilities” but decided against it.
    Anonymous
    Replied almost 9 years ago
    Great Post. It is important for people to know how to sit back and think “how is this move going to make me money” when dealing with real estate. There are ton of investments in the real estate market that have the potential of being an asset instead of a liability.
    Marty Boardman
    Replied almost 9 years ago
    I think “how is this going to make me money” works in all aspects of life, not just real estate. Reply Report comment
    Marty Boardman
    Replied almost 9 years ago
    I think “how is this going to make me money” works in all aspects of life, not just real estate.
    GregB
    Replied almost 9 years ago
    Good editorial Marty. I’m glad you have control of buying liabilities. Every time I think I have that monkey of off my back something shiny catches my eye. I need to wear blinders to the builder supply store. Maybe invent a vaccination……hmm.
    Marty Boardman
    Replied almost 9 years ago
    Greg, that’s an excellent idea. Maybe a small blue pill – we could call it Buy-agra.
    Edgewise
    Replied almost 9 years ago
    Nice one Marty, the wallet left at home trick is a useful and brilliant one. It reminds me of the saying “never go grocery shopping while you’re hungry” for some reason! Another way I have read to help rationalize my consumerism is breaking prices down to actual hours you must to work to purchase the item! That one works like a charm for us frugal investors!
    don hines
    Replied over 8 years ago
    My wife and I are deep into a rehab flip. It is not ready to turn over to her to do her part of the work (painting and staging). So, when she dosen’t feel involved, we go shopping for stuff we will need for the project later down the road. Problem is, the house is full of ceiling fans, vanities, flooring, etc. Hardly any room to work. And of course it is all my fault because I don’t “just install the stuff” when she buys it. Don
    Jeff Morris (Real Estate Agent)
    Replied over 8 years ago
    Well Marty! That’s really beautiful time when to sit and check out a glossy paper, and realizing a shopaholic, doesn’t it?
    Robert Steele
    Replied over 8 years ago
    I hope that’s enough revenue to buy 3-4 rentals this year with loans and not all cash otherwise I am doing something wrong. Then again, I am assuming each of them are valued at the median US house price of $221K and not some 2 bit dumps.
    Marty Boardman
    Replied over 8 years ago
    Robert, the median price here in Phoenix is around 110K. We’re putting 30% down and financing the rest. Our target acquistion price is around 70-80K – retail value of 100K or more.
    Robert Steele
    Replied over 8 years ago
    That makes me feel better. Thank you.
    Robert Steele
    Replied over 8 years ago
    That makes me feel better. Thank you.