RAISING KIDS IS A LITTLE LIKE “RAISING” YOUR BUY & HOLD
Ok, now we’ve done it! We’ve taken this analogy thing too far!! How can anyone compare kids to houses? Well, we’re going to make it worse! We think raising kids and nurturing our fur-babies are BOTH comparable to raising a Buy and Hold property.
In the beginning, we’re all in love with the new baby, the new puppy, or the new acquisition. In the early days, every small growth and success feels like a great win. Babies grow and start to smile, crawl, walk and talk. Eventually puppies will obey simple commands, learn to use the outdoor facilities, and work into our daily routines. New properties often have a kink or two to work out in the early days, then they normalize; our tenants pay, and cashflow appears to flow in almost magically.
Then there are times when kids, pets and properties cost more money. Our real estate asset may need repairs, or a storm may cause damage, or we may struggle to find the next great tenant for that unit. Yes, just like kids break bones, or pets eat some crazy object and need a vet, houses have things that break down from time to time too. If we keep that property long enough, eventually it will need bigger items (furnace, roof, etc…). If we keep those kids long enough, they also need bigger ticket items (cars, university, wedding gifts, …). A key difference here is that our cashflow and/or reserve fund pays for the property items!
Raising kids also takes a bigger time investment in some seasons. For example, many parents needed to spend more time with their kids during Covid. Funny, many investors spent a little extra time with tenants and properties during Covid as well. However, each problem finds a solution, and then we all move on. The “terrible two’s” or “tyrant three’s” feel like they last forever, but then a decade goes by and almost all of those tantrums are forgiven. In one of our properties, the sewer backed up less than a month after the tenant moved in. Clearly it wasn’t their fault! Hours of muck and mess later, the problem was resolved, and that property has been draining beautifully for years now.
There are undeniably some key differences between kids/pets and properties. We don’t choose our kids; however, we spend hours choosing our fur-babies and months sourcing our properties. And we certainly can’t simply sell off that challenging teenager! When real estate investing is done well, there should also be much less emotional investment than with our children and fur-babies.
After about 25 years our children and our properties “mature.” Some kids move out sooner, and some properties are paid off faster. Some kids come back, and some properties are re-financed. At this time, we are comparing a paid-off-nest to an empty nest. Launching those children means they’re off to create a life of their own. Theoretically, parents then have more time and money to create their own next chapter.
Raising a Buy-and-Hold property means having a paid-off asset in 25 years. Yes, there are variations on this strategy, but if we stay the course on a simple investment, the mortgage is paid, the house is debt-free. Most of us know at least one Baby Boomer who bought a house for $XXX.00. Today that house might be worth double, triple, or more. That is wealth creation. As an investment property, today that house will have cashflow and minimum expenses. For some people, that house provides a supplement to their pension, or simply some “play” money for retirement. The equity in that house is available for a crisis, for a life insurance plan, for their succession plan, …. Now, imagine if that Baby Boomer owned 3 investment properties, all paid off completely!
As parents and pet-lovers, we grow our family. As real estate investors, we are growing our financial legacy. And as working partners, we are really excited to be bringing friends and family along on the real estate investing journey with us. Contact us at any time to learn more about our opportunities. https://mountainsedgedevelopments.com/
