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

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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