This is a guest post from the legendary investor and owner of www.frommilitarytomillionaire.com, David Pere. David is an active duty marine, a blogger, and still finds time to buy profitable real estate. He wanted to share some of his controversial thoughts on MY site because he was too scared to do it on HIS site. I’m happy to oblige! Enjoy!
An ego-crushing argument against accidental landlords
By now I’m sure you have figured out that I like real estate investing. I also love networking with real estate investors! I don’t, however, love networking with people that pretend to be a real estate investor just to say “look at me!”
For this reason I have concluded that owning a rental property doesn’t make you a real estate investor. Sure, it would be great if deciding to invest was all you needed to do, but it isn’t. Deciding to play professional baseball doesn’t make you a Major League Baseball player, and yet people are very quick to claim the title “real estate investor.”
Hear me out before you get upset, and if you disagree let me know in the comments below…debate me!
There is an entire Facebook group dedicated to the reluctant landlords of the world. The term reluctant landlord refers to people who ended up as a landlord unintentionally. This could be for many reasons, inherited the property, had to relocate, Couldn’t sell the property, etc.
Becoming a landlord unintentionally is not bad, but if you’re going to be miserable the entire time, and the property isn’t cash-flowing…dump it, and stop being a landlord. Take control of your situation and fix it.
I have found a lot of reluctant landlords (not talking about the facebook group) are close-minded to those who discuss actively investing in real estate. They are negative, and all too willing to inform you of all the things that will go wrong, and reasons you will fail. I assure you, if you look hard enough, there is always something that can go wrong with your investment.
Focusing on everything that could go wrong is not an investor mindset, it is a victim mentality, and not conducive to your success.
Buying a primary residence at the right time, and gaining accidental equity is not investing, it is luck. Forcing appreciation through improvements, is completely different than buying a house, and the market going up.
Don’t get me wrong, there are people who buy at the bottom of the market, and purchase their property as an investment. That is great! What drives me bonkers, is hearing somebody talk about how they bought a house, and it went up in value, therefore they’re a great real estate investor…no, you had good timing. Your house isn’t an asset, unless it earns you money. That can be cash-flow, forced appreciation, zoning-manipulation, etc.
I have run into many people that hear I’m a real estate investor and immediately make it a point to boast about how much money their house is worth, and how much they bought it for. While that is great, I have then watched them insist on renting it for negative cash-flow (because it will keep going up in value) and then the market goes down, or something happens, and they end up losing money.
Buying a house is great, but it doesn’t make you an investor…buying an investment does.
Become an Intentional Investor
Real estate investors are intentional. They look for deals, negotiate purchase prices. They don’t just buy a primary residence and hope for appreciation.
Become intentional, perfect your craft, learn, network, and take action!
Clarification, all of these things can be good.
Okay, rant over. My point with this is that I love talking to new investors, but if you’re a new investor it is okay to act like it. It feels like people hunt me down to tell me they bought a house, and made X money in appreciation. While I appreciate the zeal, I don’t appreciate the unnecessary bragging. Eat a piece of humble pie, and learn to be an investor.
Becoming a reluctant landlord can be a blessing…if you learn from it, and utilize it as a stepping stone to success. Accidental equity is a gift from the heavens…and a great bonus. Learning the language of real estate takes time, and we don’t expect you to be fluent overnight.
I didn’t consider myself a real estate investor until I had purchased my 10-unit apartment complex. That is because our single family house wasn’t originally bought as an investment (and doesn’t really cash-flow much), and although my duplex was an investment, I didn’t want to walk around acting like I was a hot-shot unless I at least knew what I was talking about.
I was always too cocky as a kid, and I have worked hard to subdue that…sometimes maybe a little too hard. I don’t expect you to wait until you own 13 rentals to consider yourself a real estate investor…but I would appreciate if you understand that becoming a real estate investor takes work. Reading one book, and deciding you like real estate, does NOT make you an investor…it makes you aspiring.