Is The Security Worth The Risk?

Real estate investing takes a little bit of risk.  But why do we take that risk?  Because we are seeking security. 

I thought of this last night at 2:54 am when my three year old came running down the hallway crying.  She entered our room and jumped up on the bed and crawled in between her mom and I.  Seems she had a bad dream that there were spiders in her room and they were “getting” her.  (Hey, she’s three.) 

istock_000003399436xsmall_1.jpgSo she risked getting out of the safety of her covers to run down the hall where she knew she would be secure.  Secure between her mom and dad she knew nothing would dare touch her there.  Every parent knows what I’m talking about.

Do we ever really grow up?

One of the most common situations I face as a real estate investment adviser is when a husband and wife come in to meet for the first time.  One or the other will not be 100% on board.  And usually the more willing of the participants is looking to me to help convince the spouse.

Sorry, I don’t do marriage counseling.  🙂

But I am more than willing to layout the risk versus reward factors.  Is the risk and the additional work you are taking on worth the security you are seeking?  Security for a Retirement Worth Having.  Only the couple, together, can answer that. 

There are ways, of course, to minimize the risks you take when buying your first income property.  Find a real estate agent that understands residential real estate investing.  Understand the numbers of a neighborhood.  (Vacancy rates, rental rates, turn-around times, appreciation rates, etc.) Understand the numbers of the financing choices available.  Understand entry and exit strategies.  Have ready cash reserves

Sooner or later everyone needs to decide what they are going to do about their financial future.  I commend the the 20-33 year olds who are already moving on their future.  But in fairness, that’s a group more ready to embrace risk.  It’s the 35-50’s that have earned something, have assets in play and are deciding on whether to risk those assets or not that I’m talking to here. 

Evaluate the risk.  And decide it it’s worth the security you will have later down the road if all goes well. 

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