This is a tough post to write for me, but I think I need to say it.
I really need to re-evaluate what it is I want to do regarding REI in the future. Life has a funny way of dictating things for you even when you have a strong desire to forge in another direction. I'm at one of those critical points in life where I have to make some tough decisions, and re-evaluate my goals (and, more importantly, how to achieve them).
I knew last year that from this year on I would have a rough time with setting seeds for my REI endeavors. My wife and I were blessed with the news that we would have twin boys coming into our lives, so I knew I would be severely limited with time (as if I wasn't already). I'm experiencing now the pnnacle of the mental tug-of-war I knew would come one day. I need to get House #2 in a state of marketability, but it is taking a lot of my time away from the family. In hindsight (and foresight now), I realize I could have hired a handyman for most, if not all, of the repair work I am doing. And perhaps that may be a big part of my re-evaluation.
However, more importantly, I am beginning to come to the realization that all my efforts in achieving my goals may be for naught, anyway. If I were to sell these two houses today, I would pocket around $40,000 at closing. I haven't stepped back to see exactly how that would transform into net profit yet, but I figure in the neighbrohood of $25,000 (give or take $5k or so). Nice, you may say, and I would be in full agreement. But that money will be here today and gone tomorrow as my wife's vision of buying, fixing, and selling houses differs in mine to the point that I wonder if I will ever "make it" in REI. After painstakenly showing her time and time again of the rewards REI has to offer, I have still not convinced her of the financial independence I strive while doing it. She envisions this as more a supportive income rather than a path to building wealth, which is evident by her wish to use the money as disposable income rather than for reinvesting.
I won't say I will get out of REI completely or even partially, but I need to re-evaluate my goals and what it is I not only want and dream, but that I can realistically achieve given the obstacles in life (good and bad) that I have both inherited and created. It's a struggle, but I have persevered worse things.
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7 comments:
Thanks Brian. A PM company would alleviate some of the time/stress as would a handyman/"make ready" person to handle the things I'm currently doing. Both would eat into any profits, but there is a definate time/money equation one must balance, and I'm beginning to side more with time now.
The bigger issue is with the differing goals my wife and I have about this venture. Even if I could spend a lot less time doing more, I am still back at square one with the issue of the resulting monies made. I have tried repeatedly to tell my wife that my/our ultimate goal is to provide a stream of income over time until it can be self-sustaining. She seems more inent on using it as supportive income, which not only "raises the bar" so-to-speak, but takes the adulation of doing REI at all.
It's tough. Maybe I'm just caught in a temporary stage where things have climaxed (i.e., tenants move out of House #1 and trying to get House #2 ready). I'm hoping this is the case.
Steve,
Been lurking for about a month now. Just wanted to echo the sentiments of bginvestor and say... Don't give up!
It's difficult enough to manage a rehab project while working a corporate job, let alone doing the work yourself.
It sounds to me like you and your wife view money and financial independence differently. I'm not sure how to address this, but I can see why it would be difficult to keep going when your priorities are misaligned. I've heard good things about "Smart Couples Finish Rich," but I'm still waiting for the next available hold on the book from the library. I've heard it focuses more on differences in spending and savings mentalities in partnerships, but it should be applicable to your situation.
My husband and I have dabbled in real estate a few years back, while both working corporate jobs. Trust me, every investor goes through what you're going through. It's especially difficult during transition times - when you have an empty house, when you have to kick a tenant out, when there are no leads coming in... These times of high-stress make the situation worse.
3 months ago, my husband committed to doing REI full-time (out of necessity from job loss over a year go), and we've been doing some amazing deals. I don't think he will ever look back, but it took a year of my nagging and a lot of introspective analysis on his part to get back in the game.
We all have struggles and difficulties in our lives, perhaps challenges and situations beyond our control. You need to ask yourself if you're committed to providing a better life for yourself and your family. Real estate works! Stick with it, be smart about it, and it work for you. Please don't let your dreams of financial freedom slip away.
All the best!
Anne
I've lurked your blog and watched with curiousity as to how long it would take you to reach this point.
Not sticking my nose into your business, but here's my two cents worth......
I've been looking at the Austin area to purchase a house and stumbled across your blog. I'm getting offer after offer of discounts from builders and watching price reductions on a weekly basis. Actual sales vs listing price are below 85%....do the math for your case.
You've posted EVERYTHING that would make your bargaining position so weak, it's stunning you would share such details. I, as anyone else who's read it, know your cost basis, your fears, your goals, your insecurity, and etc.
Should a sharp negotiator come along he can yank your chain so hard your head will spin. Should a scam artist come along, you are ripe for the picking.
Everything you've done has put you in debt, more debt, and even more debt without a penny of REAL profit. All your projections are just that....paper profits....and that's a great ticket to bankruptcy should the market turn just a little.
I'm not telling you to stop, to change, to do anything; just sharing an observation. I was in business for over 30 years and won some and lost some; but made enough to retire in comfort at an early age....NOT through real estate. I'd not be in my position had I not taken risks. You want a better life for yourself and your family. A great goal! Please look at your present situation and put a pencil to what you REALLY can expect to make out of this, divide by your time, and multiply by your risk. Is it worth it? Doubtful. There's a lot of ways to make great money other than all the hype real estate has received over the past few years. Those who are getting in now will wear the "bigger fool" hat. Some will get out; others will go down with the market. From my experience, the time to get OUT is when amateurs get in. I love cashing their checks as the price of admission.
I salute your drive and ambition.
I am very, very concerned a good man with a great family is heading for a financial train wreck.
Regards
luckylily -
Thanks for the words of encouragement. You are correct in just about everything you said. It's tough to balance family, work, personal issues, AND real estate investing - especially when it seems like everything is pulling you twice as hard all at once. Brian has been an inspiration as he is in somewhat the same boat as I (i.e., new addition to the family), and your input makes the future look brighter as well.
I don't mean to sound so negative, and perhaps I've blown it a bit out of proportion due to having a rough week in almost every facet of my life right now. Believe me when I say I've endured a LOT worse things in my life and persevered.
Thanks again!
anon -
The internet is an interesting form of media in that people can interpret things based solely on bits on a screen. You read my blog and instantly know my life's story, yet I only scratch the surface of things that go on in my life. So, I'm headed for finanacial train wreck? If you say so. I make nearly 6-figures in my JOB alone, and have several savings vehicles established long before deciding to give REI a try. Even if I were to lose my job today, I would still be self-sufficient for many months WITHOUT income from another source, so I am far from worrying that I am headed for any kind of financial catastrophe. I do appreciate the concern, though. It's nice to know people are willing to help a stranger. (BTW, stay tuned for my next post.)
Steve,
It's understandable to doubt yourself every once in a while. Glad to hear you're feeling better about things.
I just wanted to add a bit of perspective, so I don't look like just a sideline cheerleader. =)
Our one great deal back when we were both working full-time netted us $60k+, before taxes. It was a short sale/ sub 2 / retail sale. Our currrent rehab, estimated to be done by January should net us at least $40k. We're closing on a property next week and another next month (both multi-units), expecting $3k cash flow per month combined once the units are fixed up and rented out.
At this rate, I think we should easily surpass my husband's previous 6-figure JOB income next year (although his was largely commission based and unpredictable). I'm not saying it's all roses; we have had our share of setbacks, but we won't let that stop us.
Anon - Sure, you can make lots of money doing other things. A lot of people feel that real estate wealth is just hype. I know it's not. There will be ups and downs, as in any business. Have a solid business plan, always making your money buying "right," and you'll increase your chances of success.
End of rant...
Thanks again, luckylily. My single most fear (if you can call it that) with doing this is that I'll work myself up in relevency. IOW, let's say I make $100,000 now. Next year I make $25,000 selling homes on the side. Instead of making $100,000 and using the $25,000, my wife now sees it as making $125,000. Now I am theoretically making $125,000, and make $30,000 the following year sellign houses. Now my income is perceived to be $130,000/yr. And so on. IOW, I'm never able to get out of the income/spend cycle to invest.
Hopefully, that's a little clearer. I think much of it has to do with the fact we are carrying some personal debt. Maybe if we get that to a good level, things will be different (I hope).
Hello Steve,
Not much more to add here, but did want to suggest striking a deal/compromise with your wife, perhaps a percentage split of net profits after the deal is done? I suppose if you got so discouraged that your stopped REI, all of that extrta "income" would be gone.
Good luck. I enjoy your blog.
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