Of Magic Beans and Real Estate Investments

Growing up, I remember hearing the story of Jack and the Beanstalk. The story begins with a poor farmer, Jack, investing his money in a bag of magic beans. No one believed him that the beans were magic, and it wasn’t until he climbed a beanstalk, fought a giant, and chopped down the aforementioned beanstalk that his investment really paid off. Our experience in investment property financing has taught us that real estate investment is a lot like that. It will be adventurous, scary, frustrating, and so much more…but the return can be like getting a goose that lays financially golden eggs.

But before you go counting chickens before they hatch, here are five frustrating things about real estate investing that you need to consider for this financial journey:

It’s not going to happen overnight.

This isn’t a slot machine with instant payouts. It’s about being patient and taking care of your investment. Wealth building is a slow process. If you are expecting overnight returns on your real estate investments, you are in for an unpleasant surprise.

This is not a hobby.

To put it bluntly, real estate investing is a lifestyle. Depending on whether you are investing in a rental property or a fix-and-flip, you will have to dedicate incredible amounts of time and focus to this investment. This is why our investment property financing programs are handled by professionals with an eye for detail and the experience to know what to look for.

Your people skills will be put to the test.

You will be dealing with many people, from real estate agents to appraisers to county clerks to brokers and so many more. Not all of them will have the best attitudes or the perfect desire to work with you. This is one time in your life when you will have to have the patience of Job because you will be tested. We suggest a desktop copy of “How to Win Friends and Influence People.”

You are going to kill some trees.

If you have not done this before, you will be shocked at how much paperwork you accumulate during this process. Although technology has eliminated much of the paper, the work is still there, requiring what seems like endless signatures and initials. Make sure you have someone with you who can quickly and clearly explain each of these documents before you sign them because your signature means you have the responsibility to know what each document is for.

You will need to become a forensic accountant.

Well, almost. Once you finish the paperwork that needs to be signed at closing, you should be ready to face even a larger and scarier giant. That giant is keeping up with all of your renovation expenses. Failing to do so means you lose control of your project. If you don’t know what you are spending, you don’t know how much money is left in your rehab budget and, ultimately, whether you are making money or not.

Your investment may go south.

There is always an element of risk in any investment. You and any other stakeholders involved need to be clear about the level of risk the investment requires. Nothing is ever 100%, and it is best to be realistic about one’s expectations. The best-laid plans of mice and men often go awry. Let us help you plan your investment property financing for maximum success. Call us today at 240-436-2340 or fill in our online application form.