Anytime I embark on a new journey there is a certain learning curve. I try to push through that as quickly as possible and try and figure out how I can put a system around this to help me get where I want to go with less effort.
Don’t get me wrong, I’m for putting in the work. However, I’ve got enough irons in the fire and I’m not looking to add another one.
I’ve officially been a real estate investor for less than 6 months but am enjoying it so far. Sure it always hasn’t been easy but I can see the path.
I can see the path with how this fits into my life long term. I can see the path for growth. However, every time I’d look into the future I’d see two big problems.
In this post I’ll dive into those two problems a bit and see how I may be able to mitigate them.
Don’t have a long track record in rental properties
I don’t have a long track record in rental properties (i.e 4 months) but can see how larger real estate investors benefit.
There was nothing like walking into my first rental property on the first day as an owner. I felt empowered. It was a really cool feeling like it was a stepping stone into my future.
Have been spending some time thinking through the future
Anytime I do anything related to investing I try and think through the future. Is this the path I want to take? Is this the basket I want to put all my eggs?
I’ve run through scenario after scenario and really think there is a lot of potential. I’m a conservative engineer by nature so really try and put the numbers to the test. I like to figure out the worst case scenario and then see if I’m ok with that.
For instance, investing in the stock market the worst-case scenario is a drop of 50% over the course of many months (you know unless there’s a worldwide pandemic). Usually, that 50% drop eventually turns around and you get back to even over the course of some time period. If I’m ok with that (and can trust myself not to cash out) then I can accept the worst-case scenario.
My early hangups
Now that I’d dipped my toe into real estate investing I could at least get a little glimpse into what my future would hold. Being an investor and entrepreneur I want to grow and scale. I don’t want to get carried away but certainly, want to continue to grow my wealth.
After looking at some of the other alternatives, it seems that real estate is a path that may fit my skillset. However, every time I’d start thinking through the future I’d run into the same two hangups.
The first is because I’m so risk-averse. The idea of having multiple rental properties with a mortgage on each has always been a red flag for me. For whatever reason, I just couldn’t grow comfortable with that.
The second hangup I continue to run into is all the little things that are popping up with my first rental. I need to fix this or take a look at that. To be completely honest with you it got to be super frustrating.
It seems that every week there was something to take a look at or potentially fix. I knew that this couldn’t scale. The two ahas that changed my mindset on real estate investing
My two light bulb moments
Aha #1: debt is ok with enough reserves
This may seem trivial to some but one day just realized that if I have enough cash in the bank for 6 months of reserves the likelihood of failure with a rental property is minuscule.
Something I didn’t want to do was put a ton of debt and stress on myself to try and grow it to the moon. I just want something that can grow methodically over time to a good point down the road. Once I realized that I can weather the storm with simply having enough set aside, it made me feel a whole lot better.
All of a sudden I got comfortable with the idea. It’s crazy looking back on it now but it really felt like I got set free. I could now start planning for the future and think about slowly growing my group of rental properties.
Aha #2: delegation is amazing
After the pattern of every week needing to go check out a variety of issues I realized I needed to do something about this. I have a friend that is very handy and loves home projects. He gets excited about looking into an issue and solving that.
It turns out he loves the idea of helping out. We agreed on compensation and he has already taken two projects off my hands.
Lets see what the future holds
Who knows where any of this will end up but I’m certainly going to continue to pursue real estate. I love the idea that I have more control over it and its something that can grow with me over time.
Now that I feel better about two of my bigger hang-ups with real estate investing I’ll look to purchase another property or two next year.