In last month’s blog post, I talked about downsizing. It was necessitated primarily by the seismic shifts in both real-estate and capital markets.
For those of us who invested our retirement funds into real estate and suffered the severe consequences several years later, most of the conventional wisdom regarding real estate and capital markets went out the window. Here is a list of some of the conventional wisdom that did not hold up – at least for me:
- Conventional wisdom #1: There is no need to worry about the down turn in the real-estate market if you are buying and holding the property for the long haul – because the real estate always goes up in value over time.
- Conventional wisdom #2: Putting at least 20% down toward the purchase of your property ensures positive monthly cash flow.
- Conventional wisdom #3: Rental rates always go up year over year.
- Conventional wisdom #4: If you have an average credit score of around 800, you would have no problem borrowing money from the bank.
I made real-estate-investment decisions based on conventional wisdom, and yet lost most of what was supposed to be my retirement funds.
For a long while, I was in a quandary. In the past, when I saw advertisements such as, “Invest in real estate with no money or credit,” I instantly dismissed them. In fact, I ignored this type of message for over a decade. My immediate reaction was always, “There is no way you can acquire real estate with no money or credit. I know that’s a gimmick.”
Then it happened. Despite all of the losses of funds and investment properties, I was still determined to remain financially independent for the rest of my life. Due to necessity, finally, I became more willing to find out what it meant to “Invest in real estate with no money or credit.” It is much easier to be open-minded when necessity dictates it. It was humbling to learn how little I knew.
From today’s vantage point, losing almost everything was perhaps a blessing in disguise. There was no way my stubborn brain was going to be able to accept anything other than the conventional wisdom otherwise. This paradigm shift happened only because the conventional wisdom failed me miserably in protecting my own retirement funds.
During the past decade, we certainly learned a lot in terms of what not to do when investing in real estate. Today, thanks to those who are willing to share their knowledge in terms of how to invest in real estate with no money or credit, we are finally learning how to not only make money but keep it. The best part is that David and I are now in a position to be able to help solve people’s real-estate problems because of all of the headaches we have lived through with our own investments. Thank goodness, not all of the disappointments of the past decade were a complete waste.
As the lyrics from a popular song goes, “What doesn’t kill you makes you stronger.” For sure, investing outside of Wall Street is not for the faint of heart. But the rewards of having put ourselves through the learning curve are priceless. By any stretch of imagination, we are not yet completely out of the woods but we now know how to redeem ourselves. It took us over a decade to get here – but better late than never!
