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Why Real Estate Isn’t For Everyone

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Why Real Estate investing?People I bump into often say “why Real Estate”? Why not stocks or bitcoin, or precious metals or some other hot investment sector?

Well, because Real Estate requires a different mindset is what it really comes down to.

People who get excited about stocks, or bitcoin or gold futures or other shorter term investments are often looking for quick gratification. Note the qualifier there, often.

Sure there are many people using stocks and mutual funds for long term retirement, but they rarely are the ones getting all excited about the next big thing.

These long term visionaries are much closer to being Real Estate investors than they realize.

Why Real Estate?

The simple answer is that it’s one of the simplest most consistent ways to grow your money over the long term.

It actually acts as a hedge against inflation due to property values being driven up by inflation.

You might think of property as a boat at sea and inflation as the ocean. As inflation rises, or the ocean in my example, property values get raised up as well much like the boat on the ocean.

A properly chosen property creates cash flow that can assist you moving forward whether it’s to retirement or as an income supplement.

Perhaps the best part is your tenants are paying down your mortgage every month helping you create more equity and putting you in a more secure position the longer you own it.

Are there challenges associated with Real Estate? Obviously, it’s why many of you are here reading this.

Why Real Estate Isn’t For Everyone

It’s often these challenges that become excellent excuses for people to not invest in Real Estate. After all, isn’t it far easier to simply trust the bank with your retirement funds?

And that’s the crux of the problem. People choose easy rather than smart options. They don’t do their own homework, their own research and they simply hand their dreams and hopes off to someone “more experienced” with investments.

So Real Estate isn’t for everyone, it’s for people who are in it for the long haul. People who are willing to put in some work to manage and maintain their properties. People who are a lot like you who come tot this site to get some insights, learn a few tips and maybe pick up some new ideas to help you become even more educated about your landlord business.

So thank you for not being everyone, but rather for being eager to learn and interested in being educated about what you’re doing.

Your First Rental Property

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It’s not uncommon that your first rental property is your worst rental property.Lessons learned from your first rental property

After all, it’s where you cut your teeth and learned from your mistakes.

Sometimes you learned you picked the wrong area, or perhaps the wrong type of property, or maybe it was where you evicted your first tenant out of.

Whatever you learned, that first rental property is what can make or break you.

You see often the first one is what discourages investors and landlords from carrying on. they learned that “all tenants are bad”, “you can’t make money in Real Estate” or simply that “landlording is too hard”.

On the other hand for many rental property investors, that first rental property is a stepping stone to a second, third and even more properties.

So what’s the difference?

How You Deal With The Experiences Learned In Your First Rental Property Is Key

It’s simply how you deal with it. At your first sign of problems is it fight or flight? Is it learn to do it right or get out while the going’s good?

How you react from the challenges you run into, what you take away from those challenges and how you correct them can make all the difference in succeeding or quitting before the race has really begun.

Like anything, being a landlord comes with a learning curve, you can’t be expected to now it all your first day. You need to go in eyes wide open, learn from any problems that come up and adapt so you avoid similar problems in the future.

Think of it as perspective.

With the right perspective you understand it may not necessarily be easy at first, but it does get easier. And hopefully with the resources on this site or that I share on our Facebook page (if you haven’t liked us yet on FaceBook, what’s holding you back? find me here, https://www.facebook.com/TheEducatedLandlord/ ) you’ll be learning even faster what it takes to be an Educated Landlord!

I see many landlords who simply give up when they face the adversity of a bad tenant or a rental property challenge, don’t be that landlord. Be the successful one who fights through the adversity.

The Landlord Mindset – Where Do You Fit?

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I’ve talked to many landlords over the years and we all have our individual reasons for becoming landlords. I’d like to think of these are due to our landlord mindset and that mindset may not always involve a straight path.

What's your landlord mindset?

Some people are using rental properties to create their own retirement income. Others are using it as a vehicle to escape their jobs by creating cash flow right now and others are using it to create long term wealth for not just themselves but their family as well.

All of these are great reasons, but they also require their own unique landlord mindset.

Here are a few of the mindsets I’ve run into along my journey of educating landlords.

Retirement Mindset

For those planning on using their rentals to subsidize their retirement it requires a longer term landlord mindset with plans to use the income and possibly the sale of the property to fund that retirement.

These landlords are primary focus isn’t the now, but the then which could be five ten, twenty years down the road or more!

Day Job Replacement Mindset

In this case your landlord mindset is focused on maximizing cash flow NOW!!

The faster you increase your cash flow, the sooner you can get out of your job. This was where we were at 15 years ago and our focus was acquiring as many properties as possible and getting huge amounts of cash flow coming in.

Long Term Wealth Mindset

This mindset seems to be the landlord mindset that many longer term landlords or Real Estate investors evolve into once they see their portfolio grow and better understand what they’ve created for themselves.

Sometimes it’s by accident, sometimes it’s all part of the master plan!

What’s Your Landlord Mindset?

Of course there are also dozens of other mindsets or combinations of plans that people end up in.

Very common is the accidental landlord who became stuck with a property and tried becoming a landlord (these often don’t end well for the landlord…). There’s also the I Attended a Seminar Landlord, some of whom succeed while others sit on the sidelines forever afraid of pulling the trigger and taking action.

Whatever your actual mindset is, it helps point you towards your eventual goal. Whether it’s the short term or the long term goal, it all starts with that mindset.

If you have a strong plan and a strong goal it becomes far easier to achieve, far easier to articulate to others and even reinforcing to yourself when you share it.

So today’s Friday thought is a question for you. What’s your landlord mindset?

Leave a comment below telling me what your goal is and why and for the brave maybe even share what you’ve learned along the way to help you!

Feeding Off Your Success

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There are few shortcuts in life.the staircase to success

There are even fewer when it comes to succeeding in life, in business and in your landlord business.

You can however increase your chances of succeeding by feeding off your previous successes.

So what does that mean you might be asking?

For that I need to refer to an old question from back in my sales days. That question was, “When is the best time to sell something?” And the answer is, right after you’ve just sold something else!

The rationale behind it is you’re on the top of your game, you’ve just completed a sale, you’re feeling good, your confidence is high and all the factors that contribute to even more success are all lined up.

And This Works With Landlording How?

In a similar vein, if you’ve just put a new tenant in your vacant property or maybe you’ve just completed buying a stellar rental property you need to feed off that high, or maybe you’ve just completed your taxes on your properties, you need to reinforce that positive moment.

This could involve a celebratory dinner for filling the vacancy, maybe it’s an opportunity to tackle another issue, like a renovation project or lease negotiations with another tenant while you’re still in that “winning” mode.

The important part is not to just sit back.

We often forget these little successes that mount up to create our overall success.

If you relish your wins, continuously remind yourself you’re moving forward and make the effort to reinforce your successes, you’ll create a pattern that you’ll want to continue to repeat!

Quick Advice on Becoming A Landlord

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Become A Successful Landlord By Looking Ahead

advice on becoming a landlordI constantly run into people looking for advice on becoming a landlord and the challenge is they want to be successful at it immediately.

But they can’t, because being a successful landlord requires a long term vision and a long term strategy where you’re planning today for tomorrow. And tomorrow is years down the road!

The majority of the time that property you bought last year really won’t start making money for you for five to seven years, so you need patience.

I’m sure many of the readers are a bit confused right now by the five to seven year comment so let me explain what I mean.

During the first several years you own a property, even with good cashflow, you’re really treading water. The problem is if  you needed to liquidate your property in those first five years, in most markets you’ll simply break even.

Even if the property has gone up a few percent in value after paying Realtor fees, legal fees, and penalties or additional costs associated with the mortgage you often only end up with a little bit of money left over. We’re talking less than $10,000 in normal markets.

Over five years that works out to only a couple grand a year and I’m sure the time and energy you put in over five years was worth more than $2,000 a year.

Long Term Success

Fortunately somewhere around that five year mark the pendulum starts to swing over to your favor. You’ve reached a break even point and now any appreciation starts working in your favor and doesn’t simply go to Realtors and fees.

Also your mortgage is moving to a point where less of the payment is going to interest and more of it is going to your principal.

Suddenly, or not so suddenly if you’re not planning long term, in that seven to ten year range many different factors start working towards your benefit.

Rents have started drifting higher over time, values may move up and down but over the long haul tend to migrate upwards and you’re making an even bigger dent in that mortgage.

Now your friends start telling you how lucky you were to invest in Real Estate and you’ve become an overnight success…

They seem to forget the years where you were breaking even and putting in your time to educate yourself, to get the right tenants in place and to make sure your property was well maintained.

You just smile and nod and go yep, lucky.

My Advice On Becoming A Landlord

So what’s my advice on becoming a landlord, or more importantly a successful landlord?

How about, don’t be in a hurry, just buckle in for the long term and continue to educate yourself along the way.

What are your thoughts? Do you agree, or disagree? Leave a comment, share with other landlords and let’s hear what people think.

 

Accidental Landlords Can Become Expert Landlords

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Important Lessons For Accidental Landlords

Accidental Landlords can become Expert LandlordsThe last couple of weeks have put me in direct contact with a couple of accidental landlords and it’s been both good, and bad. Which is actually good!

You see, many of these landlords have ended up with properties they never intended to manage. That they never intended to be landlords of and that they really had no skills for!

But they did a couple of very important things.

First they took action.

They put their heads down, they jumped in without full regards to how deep the water was and they started moving forward. Which is where some of the bad appears.

Obviously if you’re brand new you make mistakes, but if you don’t take action to make the mistakes you never learn to correct them.

In a perfect world we would never make mistakes but unfortunately we don’t live in that world so mistakes often teach us valuable lessons that turn us into experts.

We learn by doing and we improve by learning from the mistakes we make along the way,
think about that for a minute!

Second they looked for resources to help them.

Like this site (he smiles broadly as he types that!).

We often hear talk about self made millionaires or overnight successes, yet the reality is none of them were self made and very few were overnight.

They became who they were due to the experiences they had and the people around them. Their parents their friends, their spouses, (if you’re a landlord hopefully me) and more.

The more resources, the more help and the more support you get along the way the sooner those accidental landlords can move forward to become expert landlords!

If you’re hoping to improve as a landlord, as a person or in just about anything, surround yourself with others already doing it, others who can support you and others who believe in you.

Now quick discussion, if you’re a landlord who has ever made a mistake, leave a comment below and share that mistake. If you learned a lesson from that mistake could you share that as well to help support more of those accidental landlords and to help them avoid making the same mistake!

Be a Fair Landlord, But a Firm Landlord

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It’s important to be a fair landlord with your tenants, but many times this opens the door for a tenant to take advantage of a landlord who is too nice, so you also need to know when to be a firm landlord at times!

A firm landlord know when to draw a lineI was reminded of this last night as I was on a consulting call with a very nice landlord who was being too nice!

Now I’m not saying it’s a bad thing to be nice, you just need to know that there are people who will take advantage of this niceness, so you need to know when and where to draw the line in the sand and be a firm landlord. And trust me, it’s not restricted to just landlording, there are people who will simply try to take advantage of you anywhere!!

If you find yourself often on the short end of dealing with tenants because you are a nice person, here’s a quick tip to turn you into a firm landlord without confrontation.

Don’t let the tenants know you’re the owner!

Yep, only let them know you are the property manager (which is true, you just manage it for yourself).

Now if the tenants try to take advantage of a situation you can simply reply, “Oh, I’m sorry I can’t make that decision, I’ll have to check with the owner”.

This gives you time to make a better decision rather than being pressured into a bad decision on the spot.

And yes, you can use this even if they know you are the owner, just change it to something like “I’m not sure if that will work, let me look into it and get back to you. Again buying you time to make a smart decision rather than a situation where you are taken advantage of.

What are your thoughts, are you a fair landlord? Or a firm landlord? Do tenants take advantage of you being to nice? Leave me a comment below as I’d like to hear your thoughts and whether you think this could help you!