How NOT to Pysch yourself out

Question

Ok - So I've been getting ready to get into REI like most people on this forum.  I want to start buying multi-families up in and around the state I live in.  I wrote up a business plan and starting to form a LLC - Now that I'm almost ready I'm getting cold feet.

My wife and I are expecting our first child and while we are really pysch we are now scaried to take risk with our money.

What are some other peoples thoughts.

Maiko Miyake · Answer

hey Tucker, have you had your child yet?  if so, congratulations!

I agree with esnut that it is actually a good time to think about investment, if you can put things in good perspective.  I couldn't, because my mind was not there - we just bought our first home when our first child was about to arrive.  Also, I must say it was a shocker to see how expensive childcare is in the area where I live, and I was just so focused on paying bills every month.

I have friends who bought investment properties for their children's "college fund" and with a good appreciation rate it proved to be the right decision thus far.  We, on the other hand, put some money aside every month into a saving account "college fund", which gave us pathetic ROI.  At least we can now use that money for investment :))

Eric Medemar · Answer

Whether you believe you can or cant your right.

I cant think of a better time to start investing that when you have your first child.  If you get a good buy, the you have the oppurtunity to pay for a good chunk of your childs education.

Have you ever gotten mad or worried about the thousand that you are not making.  Those are the thousands that I would worry about.  Too many people take, planning and turn it into paralysis.  Dont get me wrong education is important, but its far from rocket science to do real estate.

I cant change oil, I cant change breaks, I cant run a press, in fact there are countless things that I cant do but I can make alot of money in real estate.  Everybody knows how to do something well, you might as well make that something, making money.

If you focus on all the ways not to make it in real estate then you will have those things happen and more than likely you will miss alot of oppurtunity on the way.

Charles Weisinger · Answer

I know what it is like to have small children.
My kids are 12 and 10, so now its a good time to get started for me.
But those first few years it would be impossible for me to start an REI.
My bills, credit and free time were horribile.
Now I am on much firmer fiscally sound feet to begin.

N/A N/A · Answer

I am watching everyone I know suffer because they were going to get rich and oh , interest went up and income is going down. I live in southern California where the big boom was making everyone rich. Well the boom is over. And everyone is working two jobs just to have a place to rest their heads.
Look, good investments are few and far apart, and once everyone is playing,  the suits on top are going to take you for everything you own. There are always going to be a few success stories. Like the three card molly guys in the ghetto they always have their stooges win a few bucks to get the crowd going.
I'm a Capitalist but what you have in America is a con game. Your being played baby. You got to look at the big picture. When I was a kid just about everyone owned their own home, now, no one owns their home. Just because the bank lent you the bazillion bucks to buy the home, you don't own it, you have certain rights to it but you don't own it. You break your leg and your out. On the streets, it happens every day. 
The good news is the game's in play you got to go for it or be left behind. The bad news is the game's in play you got to go for it or be left behind.

There are going to be a few winners but a  load of losers. Homes are not a place to live any more they're an investment. With any investment there are going to be losers but these losers get to sleep in the street.

Cat Stevens wrote a song "Where are the children going to play" with our greed we have changed that to "Where are the children going to live".

I see the lower end dropping every day in San Diego. Like flies being hit with deadly spray. Who are the winners? The banks. When too many people go into foreclosure because of the lax lending practices the banks are pushing down every ones throat, well the tax payer will have to bail them out or the country suffer.

The joke is the only reason a house is worth what it is today is because there is a bank to lend the money and an idiot to take the bait.

There is so much free land in America it's not funny. And the land that is used, is not used even close to its fullest potential.

I'm not a doom and glum guy this is just reality, the big boys have a good game going so you should be able to make money for a while.

Let me give you one example of the many things you need to watch.
Lets say our government does manage to control illegal immigration. Well that's 11 million or more people that will get kicked out of America. Our economy would stop in it's tracks, And property would die in the areas where all these people were located. This would have a ripple effect that would effect the whole real estate sector. All you need is another idiot in the White House.

I know I'm just a crazy man but oooops the .commers are gone and oooops Wall Street is in the dump, many people lost big time. And now were talking about stopping illegal immigration and the baby boomers are going to start dieing off who's going to be there to pump up the realestate prices.

Like I said, good investments are few and far apart and only a few know about them. Once the herd starts to move the end id near.

Now don't get me wrong there are many people making big bucks off of real estate, and it is the only real investment out there. But games are being played and the people making the big bucks have all their ducks in a row.

The middle class in this country are having a hard time of it because they are not street wise. There are no give aways, you need to learn history to know whats coming, everything that has happened to the middle class in recent years is old news, it's been done through out history. These are not new thing.

We gave up our unions, we allowed the gov to end the controls on big biz and now were paying the price. Our fore fathers fought and died for these protections, for us. So with all the wealth these protections got us we went to college and got stupid.

Ryan Webber · Answer

For my personal budget I use Quicken.  Now I started out with a piece of paper and pencil so don't complicate it too much.

N/A N/A · Answer

Thanks - that's sound advise.  We are working on getting our expenses down and using budgeting software to help with that - do you recommand any.  Microsoft Money or Quicken?

Ryan Webber · Answer

Depending on your investment strategy investing can suck your capital dry quickly.  If you are expecting additional expenses in the near future then I would definitely budget for those.  Factor in increased living allowances into your budget (hopefully you have a personal budget) and then take a look at where you are financially.  If your current income will cover your increased expenses and you were planning on using a nest egg to invest then you will probably be alright.  I would say that you might want to set some of that nest egg aside for personal emergencies, but I would guess your fear comes from somewhere else.

It is extremely common for new investors to find a reason why they should wait to start investing.  It does not really matter what the reason is or how valid it is, we all have our reasons if we want to find them.  The key is to focus on why now IS the time to start investing.

I had my third child two or three months after I bought my first property.  I was not making much money from my investing or my side jobs, but my wife had a steady enough income to be able to carry us through for awhile.  Nobody would have knocked me if I said that I just didn't have the money to start investing right then, but in my mind I didn't have enough money to NOT be investing.  How stupid could I be to just keep on going and not start using what little money I had to build a future with.  I was eating my seed instead of planting it, and it was killing me in the long run.

You will need to make a decision for yourself about your future and what risks you are willing to take.  I would recommend that you not allow fear to dictate your decisions, but focus on making wise financial choices.