Real estate investing feels higher risk to people without real estate experience. And I\u2019ll be the first to admit I\u2019ve lost plenty of money in real estate. Then again, compared to stocks, real estate investing is often lower risk<\/a>!<\/p>\n Of course, your spouse won\u2019t take your word for it. Or mine, for that matter. They won\u2019t even take the word of joint researchers from the University of California, the University of Bonn, and the German central bank, who found that real estate offered the highest returns over the last 145 years, with far lower risk than stocks<\/a>.<\/p>\n You\u2019re going to need to make an organized, persuasive case for why real estate investing can offer both high returns and low risk. I\u2019m going to use rental investing as the example, but the same principles apply to convincing your spouse to embrace flipping, commercial real estate, land, or any other form of real estate investing.<\/p>\n The first thing you have to do is reframe the conversation.<\/p>\n Your spouse is apprehensive about the idea of \u201cspending\u201d and \u201crisking\u201d and \u201closing\u201d money on a real estate deal. Shift the conversation toward the income you\u2019re going to earn.<\/p>\n \u201cHey honey, the property I’ve been looking at produces around $500\/month in income. If we had an extra $500\/month, where would you like to put it? I have some ideas, of course\u2014you know I\u2019ve always wanted to visit South Africa\u2014but I know you\u2019ve been talking about doing a more regular date night. What are your thoughts?\u201d<\/p>\n Get them envisioning the tangible, life-improving benefits of real estate investments. Set the hook.<\/p>\n The second way you need to reframe the conversation is away from \u201cHere\u2019s why we should invest in real estate\u201d and toward \u201cLet\u2019s discuss our target asset allocation and how much of our portfolio we want in stocks, real estate, and bonds.\u201d Who can argue with diversification? Not me.<\/p>\n Besides, real estate serves many of the same functions as bonds: income, diversification from stocks, low volatility. And it comes with an innate advantage in that rental income rises alongside inflation.<\/p>\n Finally, frame the conversation in terms of creating multiple income streams, for safety and security<\/em>, to protect against the risk of job loss. After all, passive income is how you scale the ladder from middle-class to financially independent<\/a>!<\/p>\n Suddenly real estate isn\u2019t about taking risks; it\u2019s about reducing risk through diversification of assets and income.<\/p>\n Your spouse will never feel comfortable with real estate investing if they remain an outsider. You need to gradually draw them into this exotic, exciting world with you.<\/p>\n Now that they\u2019re emotionally primed and ready to listen to you with an open mind, you can start introducing facts and figures. Start by showing them some cash flow calculations<\/a>\u00a0for a potential investment property (even if it\u2019s just an example and not one you\u2019re personally considering).<\/p>\n Next, show off a few tax benefits<\/a>. Higher income, lower taxes\u2014that\u2019s a hard combination to beat.<\/p>\n Start tuning into real estate investing podcasts while driving in the car together. Or turning on audiobooks that establish a mindset oriented toward investment and passive income, such as Rich Dad Poor Dad<\/em>.<\/p>\n Ask for their opinion about a particular property. Get them sitting down with you, running the numbers, comparing potential property investments. Together, form an investing strategy and plan.<\/p>\n When it comes time to physically walk through properties, bring them with you. Get their feedback. Make them part of the decision.<\/p>\n Drive the final, piercing nail in the shell of their resistance by forming a plan with them to use real estate as an opportunity to teach your kids about money<\/a>. Real estate investing really is the perfect vehicle for it; you can teach kids about budgeting, investing, passive income, leverage, retirement planning, tax strategies, even home improvement and hands-on renovation skills.<\/p>\n If you don\u2019t teach your kids how to build and retain wealth, who will? Certainly not public schools, I can assure you.<\/p>\n Went off without a hitch, right? Your spouse said, \u201cYou\u2019re right, honey! How did I ever question your financial genius?\u201d<\/p>\n Hi-fives all around if that’s the case, because my wife sure didn\u2019t say that. I probably should have married a less stubborn woman. Alas.<\/p>\n Alright, if your spouse is resisting your charms and logic, it\u2019s on to the contingency plans.<\/p>\n First, offer to let you prove the returns, with a relatively small investment. Negotiate an amount that your spouse will allow you to invest with, a trial run for proof-of-concept.<\/p>\n If it\u2019s not enough money for a down payment to buy a property yourself, you have other options. You can invest through a partnership with another investor, a REIT<\/a>, a crowdfunding website, a private note, or a syndication<\/a> deal.<\/p>\n As soon as the investment earns you $100 or so, take your spouse out to dinner. As you pour the second glass of wine, casually mention, \u201cBy the way, this dinner comes courtesy of our real estate investment.\u201d I\u2019m not above a little gimmickry and theatrics every once a while, are you?<\/p>\n Another option is to offer to house hack or do a live-in flip, to simultaneously remove your housing payment and demonstrate the efficacy of real estate investing. Just don\u2019t screw it up, because your spouse will have a front row seat for your spectacular failure if you do.<\/p>\n If your spouse simply will not budge on investing any of your joint money, you can always just invest with \u201cyour own money\u201d to demonstrate the proof-of-concept. Where \u201cyour own money\u201d comes from varies marriage to marriage, but do what you have to do to put aside an extra $500 or $1,000 to put in a high-yield real estate investment so you can demonstrate the awesome power of real estate to your spouse.<\/p>\n Spouses can be a pain in the rear, but they can also serve as a voice of reason\u2014and as a second set of eyes on your real estate deals. New real estate investors have a tendency to get excited and do too much leaping with too little looking.<\/p>\n Spouses will keep you accountable and offer a sober perspective on investments.<\/p>\n Run your numbers three times over, by yourself and with your spouse, before pulling the trigger on a real estate deal. Get outside feedback from experienced investors, real estate agents, inspectors, property managers, and anyone else you can ask.<\/p>\n The last thing you want is to lose money on your first real estate deal \u2013 your spouse will never invest with you again. My wife saw me lose money on a deal early in our relationship, and has been reluctant to trust real estate since.<\/p>\n It\u2019s been my job, both literally and figuratively, to gradually warm her to the notion of real estate. Don\u2019t expect your spouse to be on board the first time you bring it up. It will probably take weeks, months, even years to ease your spouse into comfort with real estate investing.<\/p>\n And it\u2019s worth it.<\/p>\n![\"spouse-support\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/11\/spouse-support.jpg\" "\\"\\"")
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\nRelated:<\/strong> Investing With Your Spouse? STOP and Read These 4 Survival Tips!<\/a><\/em><\/p>\nPart I of Your Devious Conversion Scheme: Reframing<\/h2>\n
Part II of the Plan: Inviting Them into the World of Real Estate<\/h2>\n
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\nRelated:<\/strong> The Quick Exercise to Help Put You & Your Spouse on the Same Investing Page<\/a><\/em><\/p>\nPart III: Contingency Plans<\/h2>\n
Final Word<\/h2>\n
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