As long as I’ve been doin’ this, the one axiom virtually every real estate investor will echo as if his daddy said it first, is, everybody now, “Location, Location, Location!” Yet if we took a sneak peek at what many of ’em own, it would be easily apparent that there was a slip between the axiom and the cup, so to speak. Granted, those who specialize in quick turns have, and no doubt will continue to do well in um, less than blue ribbon areas. Not all of them, but a sizable minority. I was one of ’em. If you’re not the one stuck with the pig location, just the pretty girl profit, you’ve accomplished what you set out to do. I get it. And that’s not a backhanded shot at those who do well in poor areas. There’s a buyer for every property, right? You’re doin’ good things for that community.
But what about long term investments?
For a good part of my childhood I lived in a suburb of L.A. known as Norwalk. It was, at least back then, a mostly lower middle class place where salt of the earth types lived while they worked hard for a living. One of our neighbors had a rich uncle who used to visit them a few times a year. He lived on the west side of L.A., and owned ‘a company’. One time he showed up in a brand new 1962 Mercedes 300 SE. It was yellow with a carmel leather interior. Best of all? It was a convertible! Talk about gorgeous. I used to think he paid around $10,000 U.S. dollars for it, but have since learned he paid WAY more than that. No matter.
I remember how the fathers on our block said he’d wasted his money, how they cost so much to maintain, etc. About 20 years later I found myself in the area and drove by to see the old ‘hood. Wouldn’t ya know it, my neighbor with the rich uncle was still there! Guess what was in their garage?! Yep the 300 SE convertible. It looked like it was a few years old. Uncle had passed away the previous year, and left it to them. It had well over 250,000 miles on it, with its second valve job just a few thousand miles old. It ran like a top. I was jazzed. Their uncle had been right about buying quality at a higher cost.
Even considering how much he’d paid for it new, there it was still goin’ strong — and reliable. He’d driven it for the rest of his life — 19 years. He’d saved big bucks by opting for big time quality. Am I suggesting you buy all your real estate investments in Beverly Hills? Of course not. But I am sayin’ there’s a priceless lesson to be gleaned by how insisting on blue ribbon quality of location for your long term real estate investments will act as guardians for your ultimate retirement income.
Keepin’ with the auto analogy, think about the now famous saying, “You can pay me now, or you can pay me later.”
Investors who allow themselves to believe comprising location quality for lower prices today won’t hurt them tomorrow, will not only pay later, but dearly. Do not accept less then the best when it comes to buying properties aimed at providing retirement income. The paying later part? It lasts the rest of your life.
Not a happy thought, is it?