I bought my first property (a duplex that I moved into) when I was 21 years old. It was a HUD house with a sealed-bid offer process, listed at $36,000.
I had a pre-qualification of up to $40,000 (for a stated-income, high-interest loan, of course – this was 1999 and I was a bartender) and I offered all of it (plus a little) on this ancient, broken-down duplex in the Ventura Village neighborhood of Minneapolis.
The attic windows had long gone missing, providing convenient entry for the mob of pigeons who took up residence in the house. It was a mess.
And then my offer got accepted.
And the panic set in.
I will never forget the gut-wrenching fear which seized my entire body and mind and wrung it out several times over during that period between offer execution and closing. I spent many nights crying.
You are not alone
Buyer’s remorse is common. Many people experience it (including Realtors and investors) and it involves second-guessing the decision we made to purchase. Sometimes it happens after the sale has closed, yet more often it’s after we get word of an accepted purchase agreement. Sometimes the fear is so strong that it causes a buyer to back out of a sale.
I have now been a Realtor for twelve years and worked with hundreds of clients. And what I’ve observed is that simply knowing that buyer’s remorse is a thing helps us to feel it less and work through it.
You see, fear is strongest when we feel isolated and alone.
In my case, NOBODY agreed with my decision to purchase that beat-up old duplex in the Phillips neighborhood. Not my boyfriend. Not my parents. Not my friends. One person actually told me that they would not come and visit me if I lived in that neighborhood. And all of this scared me and caused me to doubt my decision.
Had I known others who were going through the same thing as me, or even heard stories about such people, it would have made the emotional road less rocky. (And by the way, I did find those people later, and that helped me to keep going and buy more properties.)
Why did you want this in the first place?
Some of never even get to the part about the buyer’s remorse, because fear prevents us from even taking the first step to make an offer on a property.
Have you ever thought that you would like to buy investment property, yet fear got in the way? If so, you are not alone. And hopefully just knowing that, and realizing that it’s natural to feel fear, is the beginning of moving through it.
What I’ve found extremely helpful over the years is to return to motivation. This helps both with the initial fear of taking a step, AND with the second-guessing buyer’s remorse.
There are many different reasons to move forward with investing in real estate, and some will resonate more than others.
Here are my top three:
Passive Income
This is a very relevant motivation for buying and holding investment property. I mean, who doesn’t want to get passive income? Passive income is amazing!! And yet I’ll challenge anyone who has this motivation to go even deeper.
Why is the passive income important?
What will you do with it?
What will it enable you to do or become in your life?
For me, I’ve always had a passion for writing, and my dream has been to have the freedom in my life to pursue it. And, like everyone, I also have bills to pay. I have a family, and many obligations.
Every cash-flow-positive investment property that we secure gets us one step closer to financial freedom and that, in my mind, makes it safer for me to consider a life that is filled with writing.
(Yes I know that there are other ways to become a writer, and that writing itself might actually earn money, yet I still find great comfort in knowing that there will be passive income from rental properties just in case my writing does not actually result in income.)
Wealth-Building for the Future
About five years ago I woke up and realized that I didn’t have any plan for retirement. I’m not sure what triggered this realization – perhaps a conversation or a book I had read. Yet it was a moment of fear.
I realized that if I had spent the last fifteen years at a “regular” job with a 401k, or even if I had been thoughtful enough to have started an IRA (um, or not liquidated it to buy real estate) and regularly contributed a modest amount, I would have (should have?) had close to $100,000 in savings by that time. And I had zero.
Oops.
So in that moment, I decided that the most effective path for me personally, given who I am, would be to start buying investment properties and also make a plan to pay them off aggressively. I figured that if I could have at least one property paid off and cash-flowing in fifteen years, my family would have some decent income, as well as an asset that could be sold or leveraged if need be. So we bought one, and then another, and then another.
Then I also realized that my husband and I had a kid but no plan for how to pay for college (presuming that a) college still exists, and b) he chooses to go when the time comes.) So using the same logic, I suggested that we should have a property which is earmarked for our son’s education.
Whether he chooses to live in it, rent it or sell it, it can provide for his higher education, and/or give him a jump-start on his own wealth-building journey.
Providing Beautiful Housing
Another aspect which motivates me in owning income property is that I take pride in providing quality housing and continuing to work toward becoming the best landlord that I can be.
Having seen many owners in my neighborhood treat their properties like cash machines, constantly withdrawing, seldom depositing, I had a conviction that I would be different.
I would like to make my properties as beautiful as I could possibly afford to do, and also to treat my tenants with a high level of respect and care – something I observed to be missing in a lot of property management over the years. This gives me tremendous satisfaction. (Note that I am not saying most landlords are bad, nor am I suggesting that I am anywhere near perfect – we all have room to grow, always!)
Recognize that there will always be some pain
Focusing on these motivations does not erase fear by any means, yet it gives context to the fear, and can help us to move through it.
There are a million things that can go wrong with an investment property, ranging from the small and annoying to the large and distressing. This is true for anything that is worthwhile in life.
It’s like going to the dentist or delivering a baby. We know there is a high chance that some pain will be involved, yet when we focus on the wonderful outcome (healthy teeth and having a beautiful child) it gives meaning to any suffering that might naturally be included in the process.
If you’ve been considering buying a rental property and yet haven’t made the move yet, reach out to me. Let’s have a conversation about YOUR motivations and how we can help you accomplish your goals.