I like this picture – not just because Dave looks totally goofy or because it was taken on our honeymoon in Belize last year – but because it also reminds me of how we got started real estate investing.
We jumped into the deep blue waters of real estate, without looking closely at what we were jumping into. That’s what Dave is doing here!!
Unlike in our early real estate investing days though, Dave investigated the waters of Belize BEFORE jumping in.
I thought about this as I responded to about ten different Rev N You reader emails today. I found myself answering a lot of questions from people who want to jump into the water, but aren’t sure how to get in. The thing is though, instead of asking questions that would give them the ability to take the next step, most of them ask about things that they should worry about once they are actually in the water, or at least once they’ve put their swimsuits on!!
Even if I give each of these people all of the information and experience I have on the subject they are asking about, I don’t think they will have what they need to jump into the water and start real estate investing. It might frustrate some of the people who write to us, but sometimes I find myself putting questions back to them instead of answering their questions.
For example, one reader I wrote to this week said:
I want to buy an investment property to appreciate 5-10 years from now. I am not sure if I should buy a house or a condo to rent. I only know how to do small repairs. I fear if I buy a house , It will involve more repairs than a Condo. For the long term which Investment should I consider.
To which I replied:
Without knowing very much about your situation, I hope you don’t mind me saying that I think that you’re trying to solve a problem that isn’t really the main problem. The question probably isn’t should I buy a house or a condo, the question is more likely where can I find a property that will generate enough money that allows me to hire someone else to do any of the maintenance work that is required?
We take the real estate investing process one step at a time, and the question of house vs. condo almost never comes up in that form. Instead, it’s what area has the best fundamentals and what kinds of properties in that area will meet our objectives (and our objectives specify how much time and money we’re willing to put into a property in exchange for a certain return)?
I think the question of house vs. condo is a very good question. It’s one that I could write a lot about because there are definitely differences in buying a house vs buying a condo and we’ve purchased enough of both types of properties for me to have a pretty strong opinion on the subject. I didn’t say that to this reader though. I don’t think it’s really the question that this person is trying to answer. It’s definitely not the first thing he needs to figure out if he’s going to jump into real estate investing.
If you’ve never purchased a property for an investment and you’re worried about building a power team, or whether to buy a house or a condo, or how to set up your LLC, you might be skipping some crucial steps in the process. If you do end up buying real estate once you’ve answered those questions you may end up with a problem property or you’ll never get started real estate investing because you’re answering questions that really aren’t the problems you’re having right now.
The way we approach real estate investing is not the only way to make good real estate investing decisions, but it’s one that we have created to save ourselves… from ourselves!! We love real estate, and
we’ve found it’s too easy to get excited and run enthusiastically in the wrong direction. I think it’s just as easy to do nothing when you aren’t sure what step to take next.
So, now, we start with our goals (which also act as parameters for our purchase to keep our emotions in check when we evaluate a property), and then we move into researching markets and properties. Only once we’re at the point of looking at speciifc properties do we start worrying about power teams, or property types (like house vs. condo). And, we don’t worry about putting our properties into corporations until our lawyer or our accountants tell us to.