RE INVESTING - ADDICTION?

Question

Hey Experienced Investors,

Looking for your thoughts -- I am New to the investing game however, I do a lot of research and live and breath real estate for the past 3 yrs. Last year, I bought my first property- 3 unit house hacking that has provided so much opportunity to scale and/or to stand still without worrying about mortgage payments. 8. months later I was HOT- I mean I was already looking for my second place and bought it A nice SFH in a good area in MI- Now, that I am about 2 months from making this place a cash cow - I am already anxious about my next place! However, I know that I am not there yet and my partner who has been instrumental in my success is asking me to chill- I notice that RE can be addictive - I am looking at markets outside MI or Chicago, and man there is some gooooood stuff to buy- RE Expert Investors how do you maintain discipline when you know you can jump into good deals by just doing some work!.. Any advice will be appreciated!

Doug Smith · Answer

I love your post. I know it was a Jim Collins book (Good to Great, Great By Choice, or one of his books) that discussed in detail not getting too far in front of your skis. It's really hard to stay disciplined and not extend your resources beyond what you can handle. I live in Tampa and I'm a Buccaneer's fan. Last year, they had a rookie punter with a powerful leg that would punt the ball so far that his coverage unit couldn't get to the punt returner in time to tackle him before the other team could set up a return. He could "out-kick his coverage". One key is to make sure you have a very well defined exit strategy for every deal you do. Build in contingencies if your plan doesn't work out. I've been guilty of out kicking my coverage a few times and I have to remind myself to maintain my discipline. It's hard to balance being overly aggressive and having paralysis by analysis. It's not much advice, but I do have a grey beard...lol.

Jonathan Klemm · Answer

Hey @Jesus Santoyo - Congrats on all your work brother!  You obviously doing things right.

My mom always told me everything in moderation aka balance.  Real estate is definitely a slow and steady wins the race type of event.

I don't think there is anything wrong AT ALL with moving quickly as long as you have crystal clear criteria and are following it tightly.  We are definitely in a recession which is the best time to keep buying because everyone else is getting scared - the key is to just stay disciplined.

Chicago is an awesome market for investing because it has so many old multifamily buildings that need renovation.  Happy to connect if you are ever in the city!

Jesus Santoyo · Answer

Thank you for your kind and insightful words. Working in the food industry for the past decade plus has really help me stay grounded and looking at the bigger picture. It is nice to hear it from others who are have similar goals and objectives. I appreciate you all putting the time to give insightful information. Let me know how I can help you..

Aaron Francl · Answer

Great topic @Jesus Santoyo

I can absolutely understand that as well. I bought two properties inside a fairly short window and I've been itching to take down another soon. That fear of stagnation can be a real thing.

I think what you're asking is something that every single investor should not only keep in mind but actively discuss. You hear these crazy stories about people expanding rapidly, scaling, growing, etc. and while those stories are cool for podcasts, that sort of rapid rise isn't for everyone nor should it be thought of as the norm in this business.

Always, always, always keep your "big why" front and center in both big and small decisions you make. If you have idle capital or equity and you've established a strong team and systematized your portfolio, then growth discussions should be happening. The thing most people don't want to hear is "it just depends" but it's often the best answer for most real estate related questions. Follow the numbers and your gut and more times than not, the right answer is within your grasp.

Nick Fadden · Answer

Hi Jesus. I haven’t had the opportunity to invest yet, but for what it’s worth, I don’t think it’s a problem to want to keep going and buy more RE. The quicker you buy, the quicker you’ll get results. But don’t let your excitement run you into a bad deal, or multiple bad deals. I think the only discipline you need is for learning and taking action, and it seems that’s what you’ve been doing. Good job and good luck!

Scott E. · Answer

The remedy for what you are experiencing when it comes to real estate investing or any other form of investing is to leave emotion out of the equation.

This is not a hobby. It's a business. It's natural to get a rush of adrenaline when you're in negotiation on a deal, or to feel a sense of accomplishment when you receive a rent check. But just remember that passion and emotion are 2 different things. If you stay passionate, but not emotional, you will do well.