Too scared to buy? That's OK … just jump in, anyway!

With anything that has a big upside, there is usually the fear of the downside, but I say:

No pain, no gain!

Think back (or forward) to your first real-estate acquisition – it probably was (will be) your own home. 

Fear? Sure … in a ‘down market’ there are perhaps well-founded fears that prices could go even lower.

Does this mean that you shouldn’t buy a house? That’s up to you.

But, here’s what I think:

First, you should always seek out and listen to expert advice … that is advice that comes from:

(a) Somebody who understands the game – that would be a Realtor, and

(b) Somebody who has made a lot of money in real-estate – that would be me 😉

Follow what your Realtor says, but don’t be paralysed with fear …

If you find THE house that you like AND you can afford the payments, go ahead and BUY.

Just be sure to lock in a loooong (say, 35 year) mortgage at current rates (still a very low 6%).

Time – and low current interest rates (which is why you MUST lock in for as long as you can) – will ‘cure’ any mistakes that you do make … after all, mistakes can happen despite following all of the good advice that others will give you.

But, real-estate is (perhaps, surprisingly, to new investors) very forgiving if you have a long-term view …

And, I am a firm believer that owning your own home is the START of your path to wealth.

Even so, it’s OK to feel at least a little FEAR and TREPIDATION when you submit that offer …

… so that you will feel at least a little better, let me tell you about the real-estate transaction that scared me the most:

About 5 years ago, I decided to move offices. Even though I had already made some smaller real-estate investments, I had always rented my office space.

My accountant suggested that for this move, I should BUY my own office building!

Now, my business was just beginning to make  (still very, very little) money after years and years of losses, so you can understand my first words to my accountant: “Say what, Fool?” 😉

On top of that, the building that we had targeted was selling at auction … and, there were a ton of people at the on-site auction, all looking very intimidating and all looking like they wanted to – and, could afford to – buy … holy sh*t … scary stuff!

Now, I don’t recommend that anybody (bar an expert) buy at auction – just too many unknowns to deal with – but, I somehow ended up with this piece of real-estate for more than $1.25 million …

… and, it still needed another $500,000 in renovations and office fit-out before I could use it!


We bought the building with 25% down and we leased all of the renovations and fit-out.

I sweated every payment for the next couple of years, until the cash-flow in the business caught up with (and, thankfully, eventually overtook) the mortgage and lease payments.

Just a few short years later, I sold that business, then the building … I made a cool million dollars on the sale of the building alone; that’s $1 million that I would NOT have had if I hadn’t made the leap to buy it.

In parallel, I kept building my real-estate portfolio, using the ‘spare cash’ that my other businesses produced … most of which I still own (the real-estate, not the businesses … I usually don’t advocate buy-to-sell for real-estate … the office building was an exception).

But, that office building was still my scariest – yet, one of my best – Real Estate transactions, to date.

So, if you are thinking of buying some real-estate (be it your own home, own office, or a rental) and can afford the payments, I say:

Go ahead and jump right in … after the inital shock, the water’s fine 🙂

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3 thoughts on “Too scared to buy? That's OK … just jump in, anyway!

  1. That’s quite the story. I actually bought my first house while still in college, just before I graduated. I was moving away to take a job, but I wanted to own a rental so I bought it anyway. I figured the worst case scenario was that I’d have to cover all the payments which I could do with the new job.

    I’m now selling that little house for about 25% more than what I paid for it, and I’m going to be putting up my current house for rent when we move again to go back to school. I have definitely enjoyed being in the game.

  2. AJC,
    Great blog, I have been scouring it for the last few days. This entry sparked my interest to leave a comment, specifically where you say
    “… I usually don’t advocate buy-to-sell for real-estate …”

    I wanted to know where you are physically located and which state(s) you have your investment real estate in.
    I am located in California (Sacramento area), and while prices are a long ways off their all time high, it is still very difficult to find a property that can rent cash flow positive.
    What are your thoughts on this? Mind you, its getting pretty close to rent cash flow positive, but using something like the following form to account for everything, you are still looking at $1-200 a month net loss.

  3. @ Fiscal – why are you selling? Maybe you can find a way to stay in the game while you are back at school?

    @ Chris – Positive cashflow on residential, I have found to be almost impossible … if you can cover the negative and you can hold for a very long time, I have an upcoming post that says “buy anyway”

    BTW: I don’t post personal details so that I can remain free to post the important stuff (i.e. the numbers). 🙂

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