Warren Buffet Would Think I'm Stoopid

[Brooks Rembert]

Have you ever heard Warren Buffet's 2 rules of investing?

Number 1 - Don't lose money.

Number 2 - Never forget rule number 1.

Me on the other hand?

I've accidentally ignored rule number 1 plenty in my life.

Particularly when it comes to one area of investing.

It has a special place in my heart... though it often will stomp on and rip my heart open.

It's real estate.

My wife and I own a few rental properties and I KNOW in the long-term, they'll be fantastic investments.

But in the short-term, day to day of life... they cause me plenty of heartburn and seem to be a bottomless money pit.

Take for example one particular townhouse we own.

We bought if for a good price... spent about $10,000 fixing it up... and put it on the market for rent.

My wife, being much more financially conservative than me, started to get worried after 2 weeks went by without a signed lease.

So when the next applicant came along, with a whopping 590 credit score, and against my better judgement, we let them move it.

And of course, immediately, problems started.

Late rent was a common occurrence (There isn't anything much more frustrating than chasing a tenant around trying to get them to pay rent).

Plumbing issues (upon further inspection... caused by hair extensions and 'do rags flushed down the toilet).

A busted clothes dryer (I swear they tried to dry a stack of bricks in there).

Anyway... needless to say, that particular property has been a money loser for us.

We're now on our 3rd tenant and hopefully, it'll be drama free and we can start going cash flow positive.

If we can right the ship, it'll be paid off in about 4-5 years and then we should see some great cash flow (fingers crossed).

So what does this have to do with you?

Ah, plenty my young friend.

You see... with all the different ways there are to make money in this world, I still believe real estate is the best way there is.

Rather than just following some recommendation of a loud-mouthed talking head on TV to buy this stock or that... you use leverage (i.e. debt) very smartly to build equity in something while your renters actually pay the debt for you.

Whoa!

Anyway. Rant over.

Have a great weekend and let's go find some deals.