What is the Cost of NOT Taking Action?

30 Mar What is the Cost of NOT Taking Action?

Evaluate the cost of buying an investment property. And also evaluate the cost of not buying it.

If you’re considering an investment property, it’s fairly simple to calculate the cost of buying and owning it. You can determine the approximate After Repair Value using a Realtor’s analysis and supporting it with algorithms (Zillow, Realtor.com, Movoto, to name a few) plus your own knowledge of the area. If you conduct a home inspection, you can assess what needs to be fixed and when. You can calculate renovation costs with a contractor’s estimate or even with computing the cost of materials if you’re doing the work yourself. Your Realtor or a title company can tell you the closing costs. You can figure out the approximate cost of utilities you’ll incur before you sell or rent the property. Your insurance agent can tell you the amount of the premium. Even other costs can be determined in advance, such as the cost of a survey, building permits, and equipment rentals. All of these numbers can be calculated before you complete the purchase, thus giving you more certainty. While every project has unanticipated twists and turns, your investing business is far more predictable and stable by performing the proper due diligence on every deal.

You can calculate the cost of taking action. But can you calculate the cost of not taking action?

I’ve observed thousands of investors and aspiring investors. I know many people who never bought a property due to fear of making mistakes, analysis paralysis, and a need to try to find the perfect deal. I know many who bought one or two properties and then stopped acquiring more. I also know people who bought hundreds of units.

If you want to build wealth through real estate, you have to take action. You will make mistakes, and those mistakes will likely be your best teacher. You learn more from your losses than from your victories. There is value in taking action, and there is a cost to not taking action.

Landlords who buy in desirable, growing areas enjoy long-term cash flow, tax deductions, and price appreciation. Maybe the deals they acquired weren’t perfect up front, but time and good management turned them into fantastic deals. Don’t wait to buy real estate; buy real estate and wait.

House flippers who take action will likely make mistakes on many of their projects. Yet they’ll learn. If they’re off course, they take corrective action. Did you know that an airplane is typically off course about 90% of the time? Yet the pilot and auto-pilot make numerous adjustments mid-flight so the plane can land at its intended destination at a predictable time. If you don’t take off, you can’t reach your destination.

If you want to build wealth through real estate, you have to acquire properties. The cost of not taking action includes:

• Not learning as much as you could.
• Not building up as big a network of people who can help you find more deals, provide great service, and assist you in ways you hadn’t thought of before.
• Not letting appreciation and depreciation work for you.
• Not receiving rental income.
• Not locking in loans when interest rates are lower.

Calculating the cost of taking action is tangible and therefore simpler than figuring out the cost of not taking action, which is intangible. If you’re hearing the whispers of destiny yet feel stuck, try this rocking chair test. Imagine being 80 years old and sitting in a rocking chair. Would you at 80 tell your current self to take more risks? Would your 80-year old self feel regret over having not done more in their younger days? What would your 80-year old self tell you right now?

Drop me a line to let me know what your 80-year old self in the rocking chair is telling you to do!

Tai DeSa is a graduate of The Wharton School of the University of Pennsylvania.  He became a full-time real estate investor in 2004 after serving in the U.S. Navy.  Tai made colossal mistakes in investing (and learned some things along the way).  Tai has coached hundreds of entrepreneurs, real estate investors, and real estate agents on how to increase their income and net worth. He has helped hundreds of homeowners avoid foreclosure through successful short sales. Check out Tai’s books on Amazon.com. Tai may be available for coaching and speaking engagements on a variety of real estate topics.  Send an email to tai@investandtransform.com.