The Danger of the Midas Touch

If you started investing in real estate in the last decade, like I did, there is real potential that you have had success with all of your real estate deals. Let's face it, the market has seen appreciation, rent growth and a great credit environment for financing deals over the last decade.

I purchased my first home in 2009 at the ripe old age of 23, made some money when I sold in 2012 and put that down on my next home.  Made more money on that one when i sold in 2016.  Flipped a 100 year old house as a newbie and squeaked out a profit in 2015/16 before getting into buy & hold and acquiring 15 doors over the last few years.  The level of success has varied by deal but all of my real estate endeavors have done well.  Well enough in fact that I quit my job in 2016, a really good job at that, to work as a real estate agent and invest full time.

I don't say any of this to brag, in fact it's not really a unique story.  There are tons of people on and off BiggerPockets that have had greater success during this 10 year period of real estate opportunity.  The real lesson here is that while I have worked very hard to do well, the environment of the last 10 years has had a huge impact on my results and ignoring that fact can lead to a really dangerous thought... The thought that you have the "Midas Touch", the thought that everything you touch turns to gold and makes money because you are just sooooo darn good at this.  About the time I started to believe I had the midas touch BiggerPockets came through for me...  I remember listening to a podcast guest talk about this phenomenon a few years back.. how did he know the dangers?  He lost everything after thinking he had the midas touch and getting too aggressive and too risky before the last crash.   

I try to remember that story whenever I am spending too much time patting myself on the back or considering a deal that doesn't quite work but I'm telling myself I can make it work anyway.  As you work to grow your real estate empire(or just buy your first/next deal) don't get sucked into bad decisions by your past success, by the success of people at your local REIA or those you see on social media(you usually aren't getting the full story there anyway).  Every time I want to overextend myself to buy that next deal, I consider over leveraging my properties to grow faster or I consider a marginal(or bad) deal I have to remind myself I don't have the midas touch.  I'm just a dude, a regular dude - no golden touch here.  I've been fortunate to be investing at a good time, to enjoy what I do and to have just enough challenges to know that success is not guaranteed and I'd better plan to work for it.

If you are in this for the long run, and you want to build long term wealth and security be sure to ask yourself occasionally... "Am I getting carried away and acting like I have the midas touch or am I still doing the things that got me here and will keep me here for years to come and through different market cycles?"

It's a good reminder for me and if you haven't learned this through experience, take note...  Run your numbers, be humble, do your homework and work your butt off, that works in all markets.