I have been investing in real estate for over 10 years now. Almost 8 of those years have been as a full time investor. I always thought that once I went full time, real estate investing would become much easier, and in many ways it has. But in a lot of ways, I had to change direction or find totally new ways of running my business. I was not ready for that. I was not ready for the fact that real estate investors do not fit in the mold.
The mold is not made for the real estate investor. The mold is made for people who work 9 to 5, who commute, who have W-2 income, who own one, or perhaps two properties. If you step outside of these criteria, you become weird. You become something that does not fit, something that simply does not compute.
It is simply not “normal” to be a real estate investor. It is not “normal” to own a bunch of properties. It is not “normal” to have rental income as your primary income source. Yes, you are a professional investor, which on the face of things should make things easier. But many times it does not. Being a professional is seen as a risk.
This perception of risk actually can make your job as an investor much more difficult. You would think that it would get easier to get bank financing as you grow and become more experienced. Not so. Many financial institutions now see you as a risk and the funding will stop. You don’t have a “job” anymore so how can you possibly pay the loan back?
You see, as a professional investor, you no longer compute. You no longer fit into the bank’s molds. As an example, I once had a loan processor at a major bank tell me he could not process my loan refinance application simply because he did not have enough slots for property addresses on his computer form. You do not compute.
Insurance companies will see you in much the same way. Insurance is of course all about risk and because you no longer fit the mold, you have become a higher risk. You would think that the opposite would be true as you grow your business and become more experienced. Not so. Insurance can actually become quite a concern as you acquire more and more properties. Insurers perceive more risk and can significantly bump rates or drop coverage all together.
So as you go through your investing career remember that the world likes to put things into neatly organized boxes and you simply are not going to fit. That does not mean however that these problems are insurmountable. What it does mean is that you have to work, sometime a little sometimes a lot, harder than the next guy. It means that more barriers than you realized are going to be erected to try and force you back into one of those boxes. It is a pain and it is frustrating, but you have to just go around or over them. The path may be more difficult but the reward at the end is greater.
What experiences do you have not fitting the mold? Let me know with your comments.
Photo Credit: JD Hancock