Real Estate seems so simple; all you do is buy low and sell high, right?
Well, what about buy and hold investing or land lording? That’s simple, right? All you do is buy a property and sit on it for 10 years or so and magic happens, no?
Okay, but setting up a long term financial plan and retiring from your day job has to be easy, because all you do is buy one additional property a year for ten years and then boom you are done, right?
Real Estate Investing is NOT Easy!
This stuff takes work and it may take a little work from you every day for the next ten years if you want to be successful. The question you need to ask yourself is: Can you work at something every day for 10 years before you see the fruits of your labor? I believe a ten year plan is a great idea as it is long enough to see real results and not so long that it feels like a retirement party way off in the distance.
If you are going to choose to be an active real estate investor or landlord, and work a full time job, then you need to realize that you are adding complexities to your life. You will need to find time to research a market, meet new people and grow your network. You will need to figure out the variables that drive a good deal versus a great deal in your market. Once you secure a property your life gets more interesting because you need to continue doing everything stated above and add to that the realities of being a landlord. You need to turn units, manage tenants or property managers, and then deal with all the surprises that happen along the way.
Unfortunately, you are not done with the complexities of real estate investing. Beyond all of the details above you need to realize that the market, financing rules, and government intervention are constantly evolving. What works one month may not work the next month and if you don’t run a dynamic operation, you will get run over or lose out on the opportunity to leverage your success.
Looking back over my career in real estate, the one area I was lucky enough to take near full advantage of was the changing market. We repositioned equity near the peak and then jumped in with both feet when the market had a fire sale in 2009-2010. I bring this up now because I strongly believe we are in the middle of a strong inflection point in the market and what worked last year will not work this year. If you did a deal already then congratulations but remember part of running your business is letting your strategies evolve with the market.
If you work at it every day for ten years then the riches and security of real estate investing can be yours. I see my ten year investment in time, money, and stress as a great insurance policy or annuity. I am near the end of my ten year investment timeline; how about you? If you are just beginning or thinking about starting, ask yourself if you can wait 10 years and invest time and money in your business every day.
Don’t worry if you say “No”. In my experience most people can’t commit to something for ten years while staying engaged and fully committed. They may have a good two or three year run but then they get distracted or cocky and things break or they miss opportunities.
If you are bought in to the 10 year time frame I wish you all the best.
Photo: Mario in arte Akeu