SECRET
Separate the emotional from the financial. Avoid emotional impulses. Identify, clarify, and separate emotions from your financial goals and motives.
Personal versus Financial
Did you quickly dismiss the idea of buying a fourplex? Was it a gut emotional decision, such as “I don’t want to call an apartment building home— even if I amthe owner”? Or, did you look at the money that you could make and decide that even with an extra profit of $100,000, it’s not worth it?
Subtle Distinction
Emotional decision makers quickly decide an issue according to their whims of superficial likes and dislikes. They pass by future fortunes for present comfort. For example, do you know people who drive new or nearly new cars with big loans but can’t afford to save or invest in property? How many people turn down bargain-priced fixers because they don’t want to make the repairs? How many renters remain long-term renters because buying would give them a longer commute or place them in a neighborhood that seems less desirable than where they currently live?
Just recently, I erred along these lines. (Yes, even pros can make mistakes—especially when they forget to follow their own buying rules.) Emotional Delay (or Withdrawal)
In this case, the pro was me. I evaluated an investment property (a singlefamily house). The owner agreed to finance the property with just 5 percent down. The property was located in a neighborhood of professionals; it suffered no problems of disrepair or deferred maintenance. However, notwithstanding these advantages, a couple of features in the house turned me off. I hesitated to make an offer. Rather than quickly weighing all advantages and disadvantages, I focused only on what I didn’t like. That was a big mistake. The next investor who looked at the property bought it.Myfailure to quickly size up the opportunity costmean excellent property that was offered with terrific seller financing.
Avoid Mistakes Similar to Mine
Separate the financial from the emotional—only then will you judge fairly whether the decision exposes you to more cost than benefit. As humans, we seem to be hardwired with emotional response. Yet, to build your financial future you can’t let emotions control. Persistently weigh and consider. Yes,
AFFORDABILITY DEPENDS ON YOU—NOT A LENDER
identify what you like and don’t like, what you want and don’t want. Then attach a dollar price tag. Don’t think here and now. Think of your future returns.
Throughout Mortgage Secrets you’ll discover dozens of property purchase and financing techniques. Each of these offers trade-offs. Some require effort, inconvenience, or discomfort that at first glance may seem unappealing. Please, though, leave that possibility in view until you’ve examined it closely. Do now what most people won’t do. In 10 years, you’ll do what most people never can.
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