By: Jeremy Veldman
Some of you are still hesitating about whether or not to buy an investment property. It can be scary to buy a property out of state in a city/market where you don’t live and aren’t familiar with. Some of the obstacles in your mind are: what happens if the property doesn’t rent or goes vacant for a long time? What if it’s vandalized? What if it doesn’t cash flow? The biggest fear most people have- buying a property out of state and having it “sit there” vacant for months, neglected. Nobody cares about your investment as much as you do and how would you handle this if it actually happened?
But let me challenge your thinking for a moment. Most of our fears are irrational and 90% of our worst fears never come true. That’s why it’s called F.E.A.R.- “False Evidence Appearing Real.” To overcome your fear you do your due diligence and as your knowledge increases, your fear decreases. However, this is a double-edged sword. On the one hand, due diligence is important to ensure you’re buying a solid investment property and not a lemon. On the other hand, you can do too much due diligence and talk yourself out of a deal. Many people do this and end up sitting on the sidelines. You can always find a reason NOT to by a property, but that’s not what successful people do. Successful people take action, even if they may only have 30% – 40% of the knowledge. They’re uncomfortable just like you (they’re human too!) But they buy anyway. They see the picture- even though an investment property may come with hassles and baggage, in the long run, if it cash flows, it will take them a step forward toward financial freedom.
Think of buying a property like buying a car. Initially, it’s brand new, but over time it’s going to require maintenance. The oil needs to be changed, tires rotated and eventually replaced, the battery will need to be changed, alternator, radiator, air filter, sensors, etc. You get the idea. A car requires maintenance, but does this stop you from buying a car? No! You need transportation so you accept the “risks” and the “baggage” that comes with owing a car. Same is true with a property. No matter how well it’s rehabbed, eventually it’s going to need maintenance- minor plumbing repairs, cosmetics, air conditioner, furnace, water heater, roof, etc. It’s an inconvenience, but its part of the “baggage” of owning a piece of property. Fortunately, most of these repair items can be delayed considerably by rehabbing the property thoroughly and correctly on the front end.
There’s no such thing as “risk free” investing. Anyone who tells you that is lying. As with all investment vehicles, Real Estate has its risks along with its potential rewards. But risk can be mitigated away by doing a few simple things such as: (1) picking the right location- A & B areas, no war zones. (2) Rehabbing correctly on the front end- replacing mechanicals and high-dollar items that are on the back end of their useful life, adding “sizzle” features to a property to make it stand out from the competition, resulting in faster rent times. (3) Better marketing to attract the best tenants- high quality pictures, video tours, and well-written descriptions for superior online presentation. (4) And thoroughly screening tenants and placing only the best candidates. Etc. It’s a simple, repeatable process.
So don’t be afraid to take action and get in the game. Sure, there will be “bumps and bruises” along the way- just like any relationship, it has its ups and downs, but in the end it’s worth it! And pick the right team to work with, they will minimize your pain of dealing with the “baggage” of owning investment properties, so you can focus your mind and spirit on living and enjoying life to the fullest!
Please leave your comments below: