Just starting out... how do you handle spouses fears?
Investor · Murfreesboro, TN · Member since 2011 · 113 posts · 16 votes
Hi Everyone,
I've been interested in real estate investing for a while now. It's taken a long time to get my credit straight and debts paid down. I'm still working on build cash reserves for down payments etc. (very low and taking forever to build) I know I can find the money as long as the deal is right and there are creative was of using what I have (ex. HELOC, turning over traditional 401k to SDIRA), but my question is how do you handle doing anything when your spouse has nothing to do with real estate, does not want to learn anything about real estate, and is fearful you will be putting the both of you into unrecoverable debt? I know this is a great time to jump in and take that risk, but I don't want to knowing my wifes fears. I know there are no guarantees in life, but I want to make her coomfortable enough that I can get started building our wealth and get her to at least comprehend what I'm doing to calm here fears. Any feedback would greatly be appreciated.
Hi- Wife here!
" It's taken a long time to get my credit straight and debts paid down. " This indicates that you may have not have been so responsible with money in the past. She may feel insecure about it still.
"HELOC, turning over traditional 401k to SDIRA" - putting the house and or retirement at risk: more insecurity
"Completely out of debt... Probably a good 5 years off." This indicates you either have a ton of debt or a small income (i'm guessing small income) more insecurity
"we're getting there but by that time it'll more than likely be too late to build the wealth I would like for us" This indicates either ignorance or impatience/immaturity on your part (don't mean it harshly). Any time is a good time for real estate!!- the real estate investor must just adjust their strategy to market reality. She must feel this too.
The best time to invest is when *you* are ready to invest.
So my advice to you, as a wife who, with my husband, went from debt/ low income to good income, no debt and re investments:
1. Be patient with your wife, and yourself. Realize there will always be opportunity. Lay off the real estate talk for a while.
2. Show Don't Tell: Work like a dog to get out of debt. Extra jobs, insane hours, serious budgeting that you both work on together every month. Maybe that second job is in a real estate field.
3. Sell her the dream: Not the real estate dream, but her dream! What does she want more than anything?- does not necessarily mean a consumer item. This goes with what Brian said, but take time to listen and find her exact needs/desires. Tell her how you want to help her realize her dreams- of security, nice house, travel, good education for the kids etc.
4. So you are now in less or no debt, your income is higher, your wife feels like she has a safety net under her, and is excited about her dreams. You have less urgency and more confidence in your voice. Real estate is a natural next step in fulfilling those dreams! Go for it!
Good Luck!!
I can answer the part about minimal involvement.
At first for me, the gf/now wife wanted nothing to do with my business. It made me dissapointed that she would not help me chase my dreams. It was a point of friction for a few years. The bottom line is that she simply doesn't have the entreprenurial spirit, and that's ok.
Which gets me to the point where I realized her lack of involvement was a great thing and not a bad thing.
I have a friend whose wife is nearly equally involved in their rental business. They spent 5-10 hours, LOOKING FOR THE RIGHT COLOR OF CARPET! For a 700 s.f., low income rental.
That's when the light went on a dn I realized there's a potential big upside to being able to make your own decisions at your own pace.
To help her shed fear:
Perhaps try and meet with other local investors that may be able to share some of their successes with her. Perhaps you could get her to read one or two books on the subject.
Ask her if she thinks enron or worldcom were good stocks. Shareholders have nothing, regardless of how much $ they spent on the stocks. With real estate, worst case, especially if free and clear and insured, you always have a piece of property.
I'm going through this too, kinda. Wife is "100% behind me in this" until we have to budget money for marketing...or my RE license...
She too is worried about spending money we don't have on a dream. I took her to a local REI meeting, talked to her about BP, and just recently took @Jon K. to lunch. my wife is a HARD SELL, but Jon helped put her at ease, explaining to us (her) that most of my thoughts and ideas about getting started are pretty reasonable, and I am on the right track. Find someone local that you trust, and then take the wife to lunch with him. If your plans are well-researched, its a much easier sell when she hears it from an accomplished investor that you're headed on the right direction. Best of luck, and keep is posted as this develops. We're not the only ones working through this.
Also, @Danny Johnson wrote a great article on this last year...I'll try to find it.
I think you have to find the "angle" that works for her.
My wife doesn't care for the landlording stuff, so that's all on me. She likes looking at the numbers, so I show her how the numbers stack up on my note deals.
My friend who flips houses lets his fiancee do the home-staging and chimes in on color schemes.
@Ed O Thanks for the advice. I like the meeting other investor idea. I'll have to look into a little more. Regarding reading, there's no way she will. I've tried that route. She doesn't understand it and here's all the stories about people getting forclosed and losing money that she has pretty much closed her mind. Which is really wierd because our house was bought as a short sale and she understood the concept of buying at the right price and having built in equity when we bought it. I've tried to explain ti her this is basically what I'm trying to do now and now she acts like she doesn't get it. Don't get me started on the stock comparison. I mention any stock investment I have and she has that blank and distent stare that only a husband understands.
Shane Woods Thank you also for the advice. My wife is more like 80% behind me and I think that's only because it's my dream and what I want to do. It doesn't excite her in the least when I mention it. She really has 0 interest in it and is not interested in using any of our money to do it unless we are completey out of debt (we're getting there but by that time it'll more than likely be too late to build the wealth I would like for us. Probably a good 5 years off.) My wife too is a HARD SELL. At this point I think my only option is to talk with my brother-in-law whom she has a great deal of trust in. He is in real estate, but on an entirely different level than what I'd be doing. He buys and refurbs hotels on the west coast and is based out of Arizona. Maybe I can explain to him what I'm doing, maybe get a business plan together and have him go over it, then maybe she'd be up for it. My brother-in-law has midas touch for sure in his business.
Thanks again guys! Keep the ideas coming.
This is the link to @Danny Johnson's article. Good stuff.
My wife is not really business or investment saavy. But, she did like the idea of BUYING and OWNING houses and land. She likes the idea of being RICH. She also wants to feel STABLE and SAFE.
BUY
OWN
STABLE
SAFE
RICH
These are all things that would be appealing to most people. Everyone and and everyone's relationships are different. I explain my plan to my wife and she knows I'm pretty conservative. She gets fearful before we make any large decisions/purchases and it is not uncommon for us to have a spat right before we pull the trigger on something we have BOTH been planning.
Fact is, real estate is something to be taken very seriously and whenever you are taking bets with your present and future, it is quite stressful, even if it is fun at the same.
I explain things to my wife. She is not really interested in the nuts and bolts of it, but she is interested in the final outcome. I explain to her the benefits AND the risks.
She trusts me because I share my fears with her and what I am doing to address them. I'm not trying to sell her and she knows it.
Now, if I was your wife, I would have pause at you wanting to utilize your retirement plan or personal home equity. Maybe if you showed more restraint and patience and saved enough cash to put a down payment she might be less fearful. You are talking about jeapordizing the only two assets you have in your lives right now. Let me tell you something, having 20K saved up in the bank feels REAL good and it gives both partners a lot more confidence.
See below
Also, to add, you think now is the only time to buy - not 5 years later. That's what everybody thought last year, and the year before, annd the year before....you get the point. By the time you are ready to make your second or third real estate purchase, the market will likel look much different. So if you are planning to build significant wealth, you will need to have the skills to adapt to different markets. Be patient.
This is another great read.
@Brian I couldnt agree more. My wife is not interested in nuts and bolts at all, and assumes worst case about everything, but we manage to work it out most times. I have thay same "little" spat before things we'be already discussed as well.
Shane, great article! Thanks. My wife believes in this line from the article 100%:
"Most of us were taught to do well in school, go to college and get a good steady job to provide security for our families."
and she feels that I need to make sure whatever I do for us is secure. I'm still iun the process of getting my first deal, but haven't really persued it as fervently as I would like because she does understand putting something under contract to wholesale I still have to sign my name. She doesn't get the safeties in place in the contract to back out of it. I haven't persued it because if I did have to back out I would want my rep in the area tarnished starting out.
Brian, thanks for the input. I usually am very conservative when it comes to these things. The only reason I would use my HELOC would be as the initial purchase of my first deal and then from the profits the money would go right back into paying off the HELOC. The reason for using the 401k into a SDIRA using real estate is the large profit margin. Sitting its only making about 8% but if by going into real estate it could make 15% or more I would move it (only after discussing with a lawyer, cpa, and wife and going through the numbers numerous times to make sure the deal is right.). If there is a way I could do it without exposing her to my risks I'd love to know a way. Any ideas on how to set that up? I like the BUY, OWN, STABLE, SAFE, RICH. I may have to rethink the way I approach her.
I see your wife not being on-board with your plans as a definite problem and you're right to try to talk with her about it. But, because you're still saving up for the downpayment, that in itself is a bit of a blessing because you have time to educate.
I've had experience with people who just don't "get it" as well, and it's tough. In my experience, it's not a rational attitude and the only way you can counteract it is with education. That being said, though, some folks will never come around.
Maybe try asking her what SHE thinks you guys should do as an investment (Note: Keeping it in the bank is *not* an investment). She may have some really good alternative ideas so be open-minded. Or, if not, maybe do a *really* tiny investment at first so she feels more comfortable. In many parts of the US, you can get a house for under 100k and in hard-hit areas, they can go for as little as 30-40k.
Ultimately, IMHO, you have to both agree on something. You'll only create resentment if you push too hard.
All the best,
Jason
I'm on wholesaler and I think wholesaling is a dead end for 90 percent who try it.
But, the only money you need to wholesale is that to advertise. Everywholesaler out there has a weasel clause in their contract so they are not on the hook for anything if they can't sell the house in the time frame allotted on the contract. You have some more to learn here....
8% is a GREAT return considering the relative risk of a balanced 401K fund. Not only are you getting 8%, you have additional tax benefits on any money you put in there. Plus you likely have an employer match. You may have a vesting period, too.
I don't touch my 401K except to add money up to my employers match. 80% return at minimum. Dont' kid yourself if you think borrowing the money and paying it back at interest is a great deal. There is a lot of oppurtunity cost in that. Plus, if I'm going to risk large amounts of money in RE, you bet your *** I am going to be diversified.
IMO, you save your hard earned pennies and use that on your first deal or two. Only then, once you have some experience, do you start risking the whole cow. Most of the people who do this have direct experience in real estae, have related experience or have other assetts.
You don't want to use a HELOC on your personal residence b/c if you mess up, you could loose your house - the place where you live. That is totally different than taking a second mortgage on another property. In the latter case you loose, but you don't loose your home.
There is no substitute for money in the bank. Don't buy all the hype about OPM and HML's and all that noise.
Now I don't mean to give direct advice and I'm not trying to crush anyone's dream, but I know me. And I would rather have a happy marriage and be a little patient than possibley risk everyting to appease my need for speed.
@Jason Kosowan I don't know why I never thought to ask her what to invest in. Great strategy there (side note, you are the doppleganger of I friend of mine in FL whose namehappens to be Jason as well). I've thought about looking for something very very cheap so I could try my hand using the little I do have set aside, but realized the margins in our market are tight in the low price range.
@Brian Hoyt I do have more to learn to wholesale properly and that was the other reason I've taken my time. That and the wholesale market here is tough and true deals are hard to come by. I am at least attending the REI meetings here and have met a few people. I just need to get in touch and get out there and network even if I haven't done a deal yet so people can get to know me and know I'm serious and knowledgeable about what I'm doing. Another tough thing is the REI in my area seem to have an attitude about wholesalers that isn't all that pleasant since there are a lot of pretenders around here and I don't want to be one of them. Brian I wish you lived closer. I've read alot of your posts here and you have some great insight. It'd be awesome to sit down and have beer or too and chat. I'd love to have someone like you mentor me.
Thanks again guys!
8% is a GREAT return considering the relative risk of a balanced 401K fund. Not only are you getting 8%, you have additional tax benefits on any money you put in there. Plus you likely have an employer match. You may have a vesting period, too.
I don't touch my 401K except to add money up to my employers match. 80% return at minimum. Dont' kid yourself if you think borrowing the money and paying it back at interest is a great deal. There is a lot of oppurtunity cost in that. Plus, if I'm going to risk large amounts of money in RE, you bet your *** I am going to be diversified.
IMO, you save your hard earned pennies and use that on your first deal or two. Only then, once you have some experience, do you start risking the whole cow. Most of the people who do this have direct experience in real estae, have related experience or have other assetts.
You don't want to use a HELOC on your personal residence b/c if you mess up, you could loose your house - the place where you live. That is totally different than taking a second mortgage on another property. In the latter case you loose, but you don't loose your home.
There is no substitute for money in the bank. Don't buy all the hype about OPM and HML's and all that noise.
Now I don't mean to give direct advice and I'm not trying to crush anyone's dream, but I know me. And I would rather have a happy marriage and be a little patient than possibley risk everyting to appease my need for speed.
Brian, its amazing how much we think alike. The reality is I would never use a HELOC based on the reasons you have given. The only reason I'm thinking about the rollover from the 401k is that I am no longer employed by the company that I have it out with and a lawyer in our REI club was discussing those that he has worked with and how well they are doing (20%-25% Return on investment). If this were to be an option there would be ALOT of discussion with the lawyer, cpa, and wife before doing it. As I posted earlier, I wish you were closer. I'd like to meet you and chat.
Hi- Wife here!
" It's taken a long time to get my credit straight and debts paid down. " This indicates that you may have not have been so responsible with money in the past. She may feel insecure about it still.
"HELOC, turning over traditional 401k to SDIRA" - putting the house and or retirement at risk: more insecurity
"Completely out of debt... Probably a good 5 years off." This indicates you either have a ton of debt or a small income (i'm guessing small income) more insecurity
"we're getting there but by that time it'll more than likely be too late to build the wealth I would like for us" This indicates either ignorance or impatience/immaturity on your part (don't mean it harshly). Any time is a good time for real estate!!- the real estate investor must just adjust their strategy to market reality. She must feel this too.
The best time to invest is when *you* are ready to invest.
So my advice to you, as a wife who, with my husband, went from debt/ low income to good income, no debt and re investments:
1. Be patient with your wife, and yourself. Realize there will always be opportunity. Lay off the real estate talk for a while.
2. Show Don't Tell: Work like a dog to get out of debt. Extra jobs, insane hours, serious budgeting that you both work on together every month. Maybe that second job is in a real estate field.
3. Sell her the dream: Not the real estate dream, but her dream! What does she want more than anything?- does not necessarily mean a consumer item. This goes with what Brian said, but take time to listen and find her exact needs/desires. Tell her how you want to help her realize her dreams- of security, nice house, travel, good education for the kids etc.
4. So you are now in less or no debt, your income is higher, your wife feels like she has a safety net under her, and is excited about her dreams. You have less urgency and more confidence in your voice. Real estate is a natural next step in fulfilling those dreams! Go for it!
Good Luck!!
Michael, I've had a lot of people come up to me and say that they know someone that looks *exactly like me*. It's always funny to hear about how many devastatingly handsome men people know. LOL.
Best of luck on the REI!
Michael Pilarski it can be difficult if your wife is not on board. I think Kama Ward has sold advice for bringing your wife on board in the future. It sounds like you need to work on your financial stability and probably start small and build a RE track record.
My wife and and I work together well now even though we have our disagreements. In the beginning though it was harder because I hadn't proven myself.
Is your state a community property state? The fact that you're interested in real estate and she's not means you need to find a way to have your business so that it doesn't affect her. You say you're trying to pay down debt, and you want to work up to being able to invest in real estate; and she's nervous. That's reality.
Set up a corporation to do business under, that your wife is not a part of, if that will make her more comfortable. Each of you take your share of your spendable income and come to an agreement on to how it will be split. Once you have enough to invest in real estate, do it. Then, if something happens, it doesn't affect her credit or finances, and she's not responsible for the debt. If she sees you doing good, maybe she'll want to invest in the business, and be a part of the corporation.
I think you have three options
1) Change her mind
2) Change your mind
3) Exchange her for a new wife.
Real estate investing doesn't have room for half in mentality
Look at what her parents did in regards to retirement and talk about what your parents did.
Find a common goal and figure out how to get there. Maybe you want 10 houses in 10 yrs maybe she would be ok with 1 plus your home. If you have 1 extra home for retirement you will probably be much better off.
If having 1 rental works then you might dip your toe into a rehab or what have you.
Real estate requires you to spend time that would be free time with your family etc. If she is unwilling to make the sacrifice (seen it) then you have a tough go. Good luck
I had some significant resistance from my husband early on. We grew up with different backgrounds and economic situations. My mother had apartment buildings and I spent my youth painting and cleaning her apartments AND going to look at possible acquisitions with her. My dad had the steady job and was not involved at all with the day-to-day. I really don't know who the "driver" was, but I suspect my mother brought the real estate mindset. I can recall going with my grandmother to her various rentals. In any event, they were both on board. My father told me once that there were only two mistakes that you could make in Real Estate - not buying ...and selling.
My husband didn't have any financial security growing up so he is very conservative financially. We bought our first rental when we were 23. We had 10 or 12 by age 30. I recall having to drag him "kicking and screaming" into several deals. I felt comfortable because I figured that if everything went to hell, I could call my dad. We never had to. I am a risk-taker, my husband is not.
Over the years I have gained my husband's full trust. I no longer consult him about transactions and he doesn't even know what we own or have under contract.
By the way, I bought him "Nothing Down" in the mid-80's and he later took the licensing class. He is still fiscally conservative (yesterday we had our 32nd anniversary) but that's OK. Sometimes I need some reigning-in.
Our parents shape us. We might choose to go in another direction from them or follow them, either way they are the forming force.
My grandmother used to flip houses and my parents never really had a job, always self employed, primarily with RE.
To accumulate assets and retire early is deeply ingrained. Not so w/ most folks though.
I'm really fortunate in that my wife and I are usually 100% on the same page. She supports me, and is a big part of our business (still small - 2 properties - but we're working very hard to grow it). Now, that said, we've had many discussions. I think the key in every single one of them, was for me to stop and really listen to what she was saying, and also ask lots of questions.
In my mind, the biggest step is going to be getting her to engage in discussion. Then you can get from generalities such as "I don't know anything about real estate" or "we'll lose all our money", to actual specifics about what it is about the plan that is causing the most concern. I think that reaching that point always has to be a team effort - for her to agree to engage in the conversation and articulate specifics, and for you to be a good listener, be able to back up your ideas, and maybe agree to compromise on the riskier aspects, or at least wait until there is more of a track record.