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You are here: Home / I am a Reluctant Landlord / Encouragement for Discouraged Landlords

Encouragement for Discouraged Landlords

December 24, 2014 by Elizabeth Bennett Colegrove Leave a Comment

This post may contain affiliate links.

Have headlines and naysayers made you biased?

Headlines are always sensational and designed to stir up strong feelings. The recent housing crash has created many victims, and the headlines we read can cause us to feel fear and back away from the real estate industry all together.

Encouragement for Discouraged Landlords

In many areas, we are on the upswing — people are buying again and prices have risen. At the same time, there are still those that whisper fear and angst into the young buyer. While it is important to learn from others’ mistakes, we cannot let those who have failed prevent us from rising from the ashes.

Landlords: Don’t Be Scared Away

There is more to landlording than the horror stories or being a real estate mogul. In this industry, I find that the naysayers or those who have been totally screwed seem to be the loudest. Yes, you can lose your shirt and bankrupt yourself, but you can do those same things in any other industry.

How many times has the stock market fallen in your lifetime? How many Enron or other corporations have fallen and those who invested or had pensions with them are penniless? Unhappy people exist in every industry. Don’t be turned away from investing because of these situations. Instead, learn from them.

Real estate doesn’t have to be the BEST or WORST decision. It can be a neutral decision, and your house investment can be just another way of building value for retirement and other goals. Remember, you only lose money when you sell the investment.

The real estate market is very cyclical. In most to all neighborhoods, houses aren’t the same price they were 10 years ago. So selling now is like selling stock at its lowest value. But unlike the stock market, there are options for landlords such as renting while the market recovers.

Many people want to get rich fast in their investments. They want to see a sudden increase for their return. If this is the case for you, real estate is not for you.

Real estate costs 9.5% to sell (6% – agent fees, 3.5% – closing cost for buyers), so this isn’t a product that flips quickly or can be cashed out quickly. On the other hand, how many investments other than real estate can you buy so much with so little? You can buy with 0% down (VA loan) to 5% down (Conventional) and leverage the rest.

Due to the current market many people can rent their home out for more than the market. Therefore, this is a great time to get a slow building investment that essentially pays itself off. It can be stressful, but so are kids, husbands, military deployments, etc.

While houses do increase in value over time, there are things you can do to make sure that doesn’t become a problem.

  • Buy houses that are lower in value and not pushing the limit of market.
  • Buy in a great neighborhood in the best school system.
  • Make sure you can rent it based on current rent versus mortgage.
  • Being the most upgraded house isn’t always the best.

Remember until you sell the house, you haven’t lost any money. So make sure you have an exit strategy. For us, we buy distressed property, below market value. The houses at time of purchase are always able to be rented. This way, no matter what we can have someone else cover our mortgage.

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Filed Under: I am a Reluctant Landlord, I am a Small Time Landlord, I am an Empire Builder, Self Management

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