What is your investment vehicle?

If you read the last post , do you now understand why we have such a sour spot for tenants?
Last post, we were talking about real estate as a viable source of monthly cash flow and a good, if not great vehicle for investment. But, as we were discussing last time, you haven't made a move yet. What is your reason for not taking that first step? Is it fear? Is it perhaps no extra money? Maybe it is a current or previous credit problem? How about scepticism? Lack of experience and knowledge? How about friends and family? Are they telling you that real estate will not make you money?
Let's talk about each one of these individually.
FEAR - The dictionary describes it as a distressing emotion aroused by impending danger, evil, pain, etc., whether the threat is real or imagined; the feeling or condition of being afraid.
If you notice in the above definition, fear is an emotion. Fear is also caused by the unknown. If you would find yourself in a helicopter or airplane, with a parachute strapped to your back for the first time, you would be apprehensive because you never jumped before, and do not know what to expect, and have no experience to keep the butterflies at bay. Your first real estate deal is going to be very similar to this. Since you have no experience to draw from, and limited knowledge of the industry, of course you will be fearful. Now, I am not saying that the fear will go away the more transactions that you do, but it will certainly subside. The same would go for jumping out of a plane with a parachute. There is always the risk factor. But, once you see the benefits of buying an investment, and develop experience and knowledge, you will be less and less fearful as time goes on.

LITTLE OR NO MONEY FOR INVESTMENT - This can be solved in any number of ways which we will touch in another post. But, just for ideas for this post, you could refinance your existing house and pull cash out to invest, contact the bank for a personal loan secured on personal property, talk to sellers of property and arrange a deal. You could borrow money from a relative, friend, credit union, or employer. There really are lots of options for accessing cash to purchase an investment, and we will talk about all of these in the future.

CREDIT PROBLEMS - If you have credit problems like late payments, delinquencies, bankruptcy, or just low credit scores, you first need to find out exactly what the issues are by pulling your own credit report. Thereafter, you will have the knowledge on what you need to repair. I will cover credit issues in a future post also, since there are so many reasons for credit issues. Also, it is important to note that the credit reporting bureaus are getting tougher and their method of calculating credit scores are getting more stringent than they were before. I just talked with a lender that told me that she is seeing more potential customers within the last couple of months with less than 680 credit scores. What she is seeing now, is people with good credit (no late payments, no delinquencies, no bankruptcies, no mortgage lates, etc.) with low credit scores. Since the lenders are using the credit scores as their first criteria for loan approval, they are turning more and more people down.

SKEPTICISM AND INPUT FROM FRIENDS AND RELATIVES - These can go hand and hand, since many times, you will hear from friends and relatives that buying real estate as an investment is just not going to work out for you. They have had friends that have bought properties, and since they only heard the negative aspect of real estate from their friend, and never saw the numbers that have occurred, they only had a very one-sided view, and they are passing that along to you. If you have a mentor for your new business, as we spoke about in a previous post, then you will be hearing both sides of the coin. There are definitely negative sides as well as positive sides to everything that you decide to do. The key is to have the backup from knowledge, experience (mentor), and current market conditions to enable you to overcome the negative, and build on the positive. There are a tremendous amounts of positive in real estate, and I will tell you from experience, that I would do this all over again if I were required to do so!

I just love buying properties, and know of many investors of the same mindset. Every one of these investors would never leave real estate as an investment because they now have the experience and knowledge to make wonderful amounts of money for their retirement and monthly cash flow.