Good points - Posted by B.L.Renfrow
Posted by B.L.Renfrow on September 06, 2003 at 14:13:11:
It can’t be said often enough in this business that very real risks do exist, and that bad (or unexpected) things can and will happen.
Knowing how to plan for these situations, in my opinion, is one of the foundations for success in real estate investing, creative or otherwise. It’s often said, and not without merit, that most courses and gurus either don’t mention this or breeze past it in favor of the “make fabulous riches” sentiments.
One thing which I think is especially tough for the new investor to understand is this: one presumably gets involved in REI for money, which is the bottom line. Sure, you can say you like to help people, you enjoy putting deals together, you like to solve problems – all of which may be true – but the bottom-line motivator is money.
So here’s a newbie, perhaps with no cash and no credit, not necessarily looking to be an overnight millioniare, but looking for a better and more comfortable existence and more freedom. He reads a few books and perhaps comes across this site, and thinks, “I could do this too.” And he learns all these ideas and techniques which he never knew existed, and perhaps starts doing a few deals. Now he’s making profits, just as the courses and books said! But wait. He sees posts like yours above from time to time, saying in essense, you can’t (or shouldn’t) spend the money you’ve earned. You should save it and build a reserve fund, or use it to do more deals.
Well, just a darn minute here! How is it I’m supposed to be able to quit my job (which most on here speak of in derogatory tones) or make a better life for myself or my family if I’m not supposed to use any of the money I’m earning for my usual expenses?
See the conundrum here? It took me years, and some very painful and expensive lessons to figure this out. Now, maybe I’m just denser than others, but I don’t think so.
Preaching caution, endless study, a conservative approach and cash reserves isn’t sexy and it doesn’t have the appeal of saying “anyone can do it.” But it’s absolutely vital to success in the business. Just ask me how I know that.