Good Investments, Bad Investments, and what’s in Between
There is much to learn when contemplating your first real-estate investment. For newer investors, the glut of information to consider and learn can be overwhelming. I often connect with new or will-be-soon investors through Bigger Pockets and my local REIA. It's common to sense that same trepidation that many of us have worked against at some point in our investing careers. I’m not saying that a level of skepticism isn’t warranted when approaching any deal, but a healthy reality check is also warranted. Will you lose all of your savings? Not likely. Will your new investment sit empty with no qualified renter forever? Again, not likely. I’m not a fan of such generalizations, but I often find myself using this one with my team time and time again. I will take the 85% deal right now instead of the 100% deal never.
My first deal was something that I wouldn’t touch today, and while this is true it certainly doesn’t do the deal justice because I made money on that deal. It started my family’s path toward building wealth through the power of leveraged real-estate, and I learned a ton. Maybe not as much as I should have, but a ton nonetheless. Would it stand up to my current style of evaluating a deal? No, I don't even remember having any sort of underwriting formula besides rent minus mortgage payment, but for first time investor me, it made sense.
It’s difficult to get to a perfect deal. What might we call a perfect deal anyway? It changes with the passage of time, with our investing goals, and with our continued learning. Does that mean we allow ourselves to be derailed from our path to building a real-estate portfolio? It definitely doesn’t. I certainly made the deal, and like some guy somewhere once said “that has made all the difference”.
Analysis can be a wonderful exercise. Scholarship applied to investing in real estate is never wasted time. Having said that, if you want to learn how to play the piano, you can study all of the piano lessons you want to, but eventually you have to buy a piano. Take care, use reasonable caution, and set legitimate goals. Home runs are great for the highlight reel, but like much in life, incremental improvements and discipline are the real keys to success.