The Costs Of Real Estate Investing Are High These Days — Get Over It
Posted @ 9:14 pm - Filed under 1031 Exchanges, BawldGuy Axiom, Buying Income Property, Capital Growth, Cash Flow, Financing, Investment Lessons, Real Estate Investing, Retirement Income
Until the last couple years, our clients, for the most part, have been able to acquire their investment real estate without paying loan points. As change in the markets took hold, things began to change. How’s that for understatement? The lender problems emerged big time. Underwriting changed even more, and lenders changed the way they viewed investor loans. To all this you may all now roll yer eyes while in unison saying, Duh. I know, I know. When yer used to no points and read closing statements these days, it can be chilling.
How ’bout goin’ from loan fees totaling less than $2,000 for a fourplex purchase, to $5,000 sans processing for a duplex? Ouch and a half.
Yesterday we learned investor loan costs have risen — again. My response?
So what.
Real estate investing is, in so many ways almost perfectly analogous to baseball, the perfect sport. (And no, we’re not gonna waste time debating that assertion, as there’s no point in doing so.) And the first rule in baseball is the same as in real estate investing:
There’s no crying.
Imagine you just paid stoopid loan costs to acquire several small income properties on which you were able to apply prudent leverage. Think loooooong term, OK? It’s a decade down the road and you’ve long ago traded those properties for a very handsome capital gain into even more property. Quick now — The first thing you think of is how nice all that profit was OR Dang it all, wish I hadn’t had to pay that extra few grand in loan costs 10 YEARS AGO. What seems painful now, is merely a cost of doin’ bidness. Is there a point at which you should walk away ‘cuz of loan points? Absolutely. But the reality is, you’ll literally forget a few thousand bucks 10 years down the road.
It’s all about the net — the long term net. As in net worth. Keep yer eye on that ball.
This is a gentle reminder to remain objective when your lender gives you the news. The analysis is what it is, and if it says your costs kill the deal? Then the deal’s dead. Turn the page. Get over it. Eat some chocolate. Bang a drum. Scream into a pillow. But, at all costs, keep yer eye on the right ball.
Something to ponder.
We keep score in terms of capital growth, or cash flow, and ultimately net worth and retirement income. Costs? It’s something you laugh about 20 years later over a beer.
But remember…
BawldGuy Axiom: There’s no cryin’ in real estate investing. Walk it off.
Let’s have a conversation. Click on Contact BawldGuy and before ya know it, you’ll hear, “This is Jeff.” It’s at that point you and I can get the ball rollin’ your way. We’ll be talkin’ about capital growth far more than loan costs.
This entry was posted on Thursday, August 14th, 2008 at 9:14 pm and is filed under 1031 Exchanges, BawldGuy Axiom, Buying Income Property, Capital Growth, Cash Flow, Financing, Investment Lessons, Real Estate Investing, Retirement Income. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Of course, when I was young… Oh, never mind. 
