One’s real estate investing is merely a reflection upon one’s own life. As I sit poolside enjoying a sunny weekend afternoon, I am reminded of two powerful thoughts with my phases of real estate rentals. While most fall for the thoughts of ‘passive real estate investing’ (as even I), the truth is that real estate needs to be a labor of love (filled with passion) and requires persistent patience -as one discovers what they have and cultivates it throughout the years of life. Time heals all wounds, develops maturity, and the ability to enjoy.
I had a conversation with a fellow real estate veteran (of 20 years) yesterday and we were discussing the parallels of our two paths and even though there’s been some divergence, our paths remain the same. We reflected on how ‘back in the day’ our greatest success in building a portfolio of rentals occurred from finding ‘old-time landlords’ whom just let there rentals run on auto-pilot. Marketing to the same ol’ clientele and allowing their properties to fall behind the times in up fit and corresponding rental rates.
You know.., those properties that you drive by and they just look run-down…
Both of us worked full-time corporate jobs and aggressively acquired and rehabbed rentals. Often on days like today we would both be working the weekend on the rentals after an exhausting week at work. As I remembered: pulling out of my driveway while my fellow friends still slept in or enjoyed a cup of coffee & newspaper on the front porch. We were young, filled with energy and dreams -but lacked the maturity and patience to fully comprehend that the foundation we were building would take time to fully harvest -let alone the realization that complete “passive investing” –never occurs.
You see.., while over time with hard work, luck, and perseverance one can begin to sit back and enjoy the fruits of one’s labors, the requirement of continuous re-examination of one’s rentals and reinvesting is never ending. Certainly nothing compared to the passive investing of stocks, bonds, and mutual funds -all of which invisibly drain your return on investment while those whom run those investments do the work for you (both in labor and capital).
Think about it -it never ends; unless, you become that old time landlord.
We all have ups & downs both personally and professionally. The highs are high and the lows are low… Over time we build up our portfolio’s that are mere reflections of us in our dreams and desires. Building up, rehabbing, cultivating, and re-investing. Sometimes we fast forward in growth and new directions. Sometimes we re-access pulling back out of necessity and/or desire. I have always enjoyed rentals where I can target the young filled with dreams and desires based on enjoying life and revitalizing it. Ironic as I’ve never known anything but a narrow minded focus of work and re-investment to enjoy another day. Funny -as I think in all reality, I subconsciously desired that too -but didn’t know what (or how) it took to do.
There has been an underlying current of rental rate inflation the past 2-3 years and we have seen a certain double digit rate of increase locally in Charlotte, North Carolina this past year -not truly seen since the late 1990’s (via just normal appreciation versus forced). It is truly amazing how everything cycles -both up & down -yet over time the onward march is upward.
You know how my beliefs focus on rentals as retirement packages and that other real estate ventures such as: building, rehabbing, lending, wholesaling, Realtors, lawyers, or any other business type structures are operations built for present cash flow and living on.
You see we lost our natural double-digit rate of rental rate inflation going into the early 2000’s when mortgage money was easy to achieve and everyone wanted a home (for personal ownership, wealth creation, and the American Dream). My fellow investing friend went the route of becoming a developer of condo, home, and town home projects and I added the profession of a “hard-money lender” to my resume. We both jumped on the next wave of high growth and created businesses with which to derive an income and correspondingly left our corporate worlds.
Fortunately -we both held onto a base of rentals. It would of been easy to cash-out from the greed of the hot growth ‘go-go days’ of real estate price appreciation while we were frustrated with low-rates of rental rate appreciation and above average expenses.
So here we were… Both reflecting on how ‘we had become that old time landlord’. The thought that our $500-600 rentals with the right capital improvement now becoming $850-1000 rentals just seems unbelievable (at times). Yet -simultaneously and unannounced to one another we were testing the waters (or literally our rental markets) and discovering it was so.
Had we turned a blind-eye towards our rentals!?! Somewhat -yes.
We both have been fortunate to make this realization, had the patience and fortitude (over the years) to continue onward, and the ability to position (or start to move the pieces in place) our rental portfolios for the next leg of growth -onward & upward. That old boring route of “Rentals” became in vogue again. Forcing ourselves to look at ourselves and that which we have to prune, re-develop, and move on for the next cycle of life…
No matter how difficult or easy the journey is.., stay focused on your dreams & desires. Adjust as needed for those avenues that just don’t work -but don’t just throw out everything along the journey… Use your passion and patience to achieve your dreams.
For me – I always reflect on the young. Filled with energy, dreams, and desires. Yet -rely on my experience to seperate fact from fiction and execute. Don’t get me wrong -my rentals are certainly passive in one perspective (as I don’t lift a paint brush these days) but it’s never ending and shouldn’t be…, If it’s your passion….