The Challenges of Landlording ~ Plus, Why Real Estate Agents Have the Upper Hand!

The Challenges of Landlording

The other day a client of mine asked me: What are the negatives of buying income property?

I thought that question would be an excellent topic for me to discuss on my blog.

The first thing that came to mind above everything else: Maintenance. An investor needs to have a reserve for any potential problems that can and will arise.

For example, take me for instance, at this time in my game, I have to deal with...

a bathroom remodel in California,
an eviction in Arizona,
a broken water heater in Texas,
a vacancy in New Mexico,
and a kitchen leak in Louisiana!

Thankfully, I am cash flowing on all my properties, except one. Anyway, because I have a cash inflow (the term financial planners use), I can absorb those nasty little nuisances that sometimes come along with the territory of owning income property. If you don't cash flow on your property(ies), then you will go into a negative situation -- which, sometimes is not a bad thing, more on this at a later date.

But the financial positives of owning income property, particularly apartment units, will by far exceed the emotional, mental, financial, and physical hardships that an investor may have to endure.

The only way to win in the game of real estate, as in life, is to transform challenges into opportunities.

Challenges make us grow. They force us to get even better at our game. Challenges cast a viel of darkness, an illusionary projection screen, which exists as a backdrop for us to create and project our own reality.

Agents & Brokers Have the Upper Hand in Investing

What's the best thing about being a real estate agent?

We make money when we purchase property!

That is why I, and numerous other real estate agents/investors/mentors, encourage other RE professionals to become investors. It is for this same reason that I also believe an investor should acquire their real estate sales license, which is actually fairly easy to get -- just a bit of study and you can pass the exam.

When you, as licensed agent, buy property you can ask other agents and brokers to "kick back" or "float back" a percentage of the commission to you. Put this in your bank account!

Plus, remember that your first months' income on your purchase is a net positive, minus the monthly tax bill and property management fee. (The insurance is normally pre-paid the first year.) And, typically the first mortgage is not due till the second month of ownership, so you can keep this money as a reserve.

Add this amount to the "kick back" on the commission and you're looking at a nice little figure, especially if you do this over and over again like most of us do.

Plus, even if you don't buy a property, perhaps a client, friend, family member or colleague will. If you plant a seed in their brain to invest out-of-state and you refer them to www.CashFlowCows.com, you will be paid a referral fee just because you have a real estate license!

One agent in Orange County stands to make $7,000 in referral fees for about six weeks worth of work -- not too bad for making a few phone calls!

Also, let's not forget that a real estate agent has the advantage of being able to do market research and property comparables beyond someone that doesn't have formal training in that industry.

The beauty of real estate is that the bigger the property, the more money you, as an agent, stand to make in the referral commission system. But because life is full of paradoxes: The bigger the deal, the more money you, as an investor, could potentially lose.

So invest cautiously, but by all means, INVEST. I'm Hispanic and we have the traditional tendency of keeping our cash in a stash under the mattress. If that is the case in your situation then you are working for your money, you are not allowing your money work for you.

Change that mentality, otherwise you will never be financially free. The key is in the compounding. When you invest, your money starts to generate income; then even the interest generates more interest.

If you choose not to invest in real estate then invest in something that you believe strongly in: Treasury Bills, Mutual Funds, REITs, CDs, Securities, Municipal Bonds, Sector Funds, etc,... Just remember: Seven out of 10 millionaires in the United States acquired the majority of their wealth through real estate. And, no, your primary home doesn't count!

I want you to declare this affirmation, before you read any further:

I do not work for money; my money works for me!

Say it loudly, like you mean it. Believe it, act like it is so. If you plant this in your consciousness and in your thoughts, it will manifest in your life.

And remember, the more challenges that come your way, the greater your chance for success! Laugh off your failures and keep that smile on, you're next big break could be a day away.

I hope this column was informative and helpful in your quest for prosperity.

All the best,
Linda Pliagas, C.Ht.

*** Agents & Brokers: Start Creating Your Wealth Today! ***

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No part of this blog may be reproduced or transmitted in any form or by any means, electronic or mechanical without prior written permission except by a member of the media who wishes to quote brief passages for inclusion in a magazine, newspaper or broadcast. The advise in this blog is solely based on personal opinion. Always seek the advise of a trusted attorney, broker, financial planner, accountant or other professional before investing in real estate.