Posted by Dave on August 17, 2010
I had a very odd week last week – two people asked me to become involved in real estate deals. I don’t know if I had given the impression that I had a bunch of cash laying around, or I just look like someone who would like to own Real Estate but on the weekend, my step-brother asked if I was interested in getting involved in flipping a house with him – he had located a property that required some work, but thought it could be bought for approximately $150,000 and sold for $250,000+ as soon as the work was complete.
On Wednesday night, my dad called telling me about this great property next door to his house that was a steal and I should think of buying. This property was 50 acres, with a large pond, woodlot and about 8 acres of “workable” land and would cost me $135,000. My dad thought that within around 5 years this place may double in value as there are very few small plots of land like this in the area (Most are either only 1 acre lots, or significantly larger farms).
I turned down both “opportunities” politely, for the following reasons:
1.) I don’t have any money sitting around – all available income is going towards paying down my mortgage and saving for a new car that needs to be purchased at some point in the next 8 to 10 months (my wife would like to learn to drive but will not drive my 5-speed manual transmission).
2.) At this point in my financial plan I’m more interested in reducing my fixed monthly expenses than I am in making significant cash gains in Real Estate.
3.) I barely have time to look after my own house right now, let alone another property. My current house is a condominium which allows me to basically come and go and not have to worry about cutting grass, shovelling snow, or looking after the exterior. Taking on a new property would mean I would have to give up some of my weekend activities, which is something I’m not all that interested in doing.
My wife and I are not adverse to making money – we just thought we’d get more enjoyment in five years having no mortgage than we would making the investments in real estate right now.
What my money decision basically came down to was that I have a plan that I am comfortable with and getting away from this plan, although not catastrophic, could lead to a delay in my goal of financial independence. I am willing to forgo what could perhaps be significant gains in order to stay on my original (and somewhat boring) path to early retirement.
In the end, saying no might be the wrong decision, but I’m comfortable not taking the risk at this point in my “plan”. I may be missing out on great opportunities. Both deals have the potential of leading to significant profits, the house flip within a year or so, and the other property within about 3-5 years. I could be missing out on money that would lead to being several years closer to financial independence.
What do you think – by turning down these investment opportunities, am I missing out? Would you do it, given the opportunity?