Or, Don’t Be a Financial Weenie
Your old pal Captain DIY is at it again, folks. This time we at the Headquarters are talking about buying an investment property.
Enter The Dragon (of doubt)
No problem, right? We’ll just pull out a nice fat wad of cash and wave it under the nose of the seller of the first nice spot we see, right? Then we’ll pack that place full of eager tenants desperately trying to give us their money, right?
If only it were that easy! Actually, if it were that easy, everyone would be doing it and there would be no deals left for me. Now that I think of it, this is a terrible idea! I’m pulling out! No more investment properties!
Also, just mention the idea of investment properties and the next thing you know your ear is being harangued by a seemingly endless supply of bad tenant horror stories that inevitably end with the utter destitution of the would-be landlord, who can be found these days huddled under a bridge muttering about the one percent rule and Home Equity Lines of Credit.
Yep, there are plenty of good reasons why we shouldn’t go anywhere near something like this, and yet here we are talking about it. Why is that?
‘Cause the Captain Ain’t No Weenie!
With the expert assistance of my highly talented and multi-faceted wife, I have gotten to know the rental market in my area incredibly well. We have studied rents; we have studied real estate values; we have watched what kind of deals are happening and what houses aren’t selling, and we know the surrounding neighborhoods and towns intimately.
In other words, we have done our homework.
A Financial Weenie is someone who might fall into one or both of these categories: they never make a move on any deal and only take the “safe” road, because they are so risk-averse as to be stuck in a rut of their own making, or they have a tendency to dive headfirst into high-risk projects without really knowing what they are getting into.
I have spent most of my life in the second category, but that has since changed.
Part of the appeal of the DIY mindset for me is the idea that we can learn how to do anything, even if that thing seems really scary and unlearnable. The electricity that flows through our homes is scary and dangerous, but I learned how to safely control it. Driving a car at well over a mile a minute is scary and dangerous, but we learn how to do it to the point of extreme comfort.
How To Not Be A Financial Weenie
The first step in Non-Weenie-Hood is, of course, to Know Thyself. Recognize your level of knowledge, skill, and risk tolerance, and see where you may need improvement. Be honest with yourself! The only thing that will come of fooling yourself is becoming a fool. Ooh, that’s a good one! Let’s put that in a quote box or something.
The only thing that will come of fooling yourself is becoming a fool
Yeah, that looks nice. Ok, next!
The next step in NWH (non-weenie-hood, in case you didn’t get that) is to educate yourself in the areas you recognize as lacking, and in which you find an interest. I have a strong interest in having rental income pay for me to spend time tinkering in my garage, so I have spent a great deal of time educating myself in the realm of Rental Real Estate. There are lots of great resources out there, Bigger Pockets being one of the most prevalent.
The last and most crucial step in NWH is knowing when to hold your breath and jump in. We have been hemming and hawing for over a year now, watching the real estate world squabble and scuffle around us. It’s highly intimidating to jump into a world like that, especially when it is peppered with big, experienced personalities and stories of hapless landlords being held hostage by ruthless tenants.
Sure it’s scary. Of course it will be nerve-racking to take that plunge. Are we going to lose sleep? Almost definitely! But what happens if we never pull the trigger and spend our lives wondering what that success might have tasted like? I think that would be far worse than having some difficult learning experiences, because that sounds like stagnation to me. And stagnation is a comfortable route to a meaningless and unfulfilling life. Another good one! Let’s try this again.
Stagnation is a comfortable route to a meaningless and unfulfilling life
The Conclusion (Finally!)
We’ve talked about me, we’ve talked about Non-Weenie-Hood, we’ve talked about real estate and finances. We have even thrown in a couple of great Tweets. I think we have done a pretty good job with this one today, especially considering there may have even been something worth learning buried in there!
Ok, before I get too full of myself, let’s go back to reality: the three main points of this article can be summed up without much fanfare thusly (seriously? thusly?):
- Utilize introspection, and be upfront with yourself about where your strengths and weaknesses lie.
- Educate yourself, especially in those areas in which you hold real interest.
- Know when it’s time to pull the trigger, and when that time comes, be prepared to actually follow through. Again, introspection is a powerful tool, and using it to mentally prepare yourself for a difficult and scary decision can be extremely helpful.