FEAR OF MISSING OUT = FOMO
Go, go, go! Buy, buy, buy! Get those doors before supply runs out! Invest before interest rates go up! The time is now!
STOP. Take a breath.
Southern Alberta investors are going to hear a lot of Rainbows, Roses and Unicorns stories next week. When the February real estate stats come out, there will be A LOT of good news. The provincial budget is already out, and its good news (relative to any budget since 2014). Real estate is up, jobs are up, vacancies are down, building stats are up, immigration is up, ….
We will simply admit that it is luxurious to be surrounded by positive economic and real estate news. It is easy to get caught up in multiple offer scenarios these days. And the temptation is to ride the appreciation wave that we haven’t seen for sooo very long.
Stop, take a breath.
Yes, this is absolutely a fabulous time for action! No doubt about it.
Now, let’s take a step back, for just a minute.
As a real estate investor, does that next door, or building, or property truly bring you closer to your why? Are you following strong investing principles? Or are you caught up in someone else’s agenda? Maybe even keeping up with the Jones’? And how will that investment fit into your current life?
Why are we being extreme party poopers this week? Well, most of you already know that we do renovations and invest in real estate. It’s a unique perspective some days.
We are seeing investors who are buying negative cash-flowing properties, and banking on the appreciation to make a good profit in a few years. We are seeing out-of-province buyers who are investing in tough neighbourhoods, and expecting things will work the same as “back home.” We are seeing flippers who are over-paying for houses in rough shape.
As active renovators, we need to be clear: renovations are currently more complex and expensive than we have ever seen – in 14 years. For example, it took over 50 emails and phone calls to get gas restored to an addition project (related to current Covid cases of key personnel, unknown bureaucratic nonsense, as well as staff changes). Another example: we have a client into month 15 of waiting for an appliance package – unfortunately, a true story! Lumber prices? Labour shortages? We should probably stop talking now!
For a different perspective, I am reminded of one of my favourite real estate presenters ever: Don R Campbell. I don’t remember his exact words, but one of his messages was basically, “Stop freaking out about missing the bus. Another bus will come along.” The moral of his story was about keeping emotions (fear or greed in this case) out of your investing journey.
If we stay grounded in our why, then buying a negative cash-flowing property doesn’t make sense, for us. If we focus on our financial freedom plan, then over-bidding on a flip is more risk than we are comfortable with. None of our life or business goals involve keeping up with the Jones’.
We’re continuing to make offers, look for deals, and manage the living daylights out of our existing properties. We’re continuing to educate, listen and learn every day. And we’re ready for action when those deals appear. But we’re certainly not panicking about an interest rate of 3% or 4% if we wait a bit. And we’re not buying the last anything on the lot; that’s just fomo marketing. We’re looking for solid deals, with the potential for a variety of exit strategies, and a strong likelihood of positive cashflow. Not as simple in 2022, but a worthy goal for our financial freedom.
