Real estate can be fun if things are going well for you. However, it can really be a drag if you’ve gotten yourself into a bad situation and made life difficult for yourself. And by that I mean maybe you bought a house to rehab and it took a lot longer and cost a lot more than you thought it would and now you can’t sell it enough to break even. Or that you’ve bought land that has too many problems, like green belts, to make a profit, and now what do you do?

There are ways to avoid problems and I strongly believe that the issue should be addressed. It’s basically going “on a limb” with a property by being too optimistic. Sometimes you’ll feel like something is “not right” with a property, but you’ll rationalize it, like, “The payments are going to be too high…but I can make some improvements and raise the rents.”

However, “Access to this parcel of land is only a 20′ easement but I can purchase a larger easement for a small amount of money.” Or, “These aren’t the best terms and conditions, but I can live with the arrangement.”
There is no reason to continue with the examples as I am sure you understand what I am talking about.

Think about this; don’t let your optimistic personality lead you to rationalize anything that basically made you uncomfortable. If some of the pieces don’t fit together too well, back off or get better terms, etc. You don’t want to be a pessimistic individual, but at some point you should be pessimistic and question the arrangement you’re getting into more.

You see, it’s much better to pass up a “great deal” if you feel like it might complicate your life. Suppose you are not in real estate and you have a good income and life is good. Then you jump into a “really great deal” and all of a sudden your cash flow has changed drastically and before you know it you’re having trouble falling asleep at night because you have a 90-day note that’s due and not not having the sales to generate the payment. So you will have to take funds from the family budget… and then face the music!

You don’t want to risk putting yourself in a position of financial exposure, as that limb could be severed. She had decided to go into developing land and had just paved a road when Saddam invaded Kuwait and all of a sudden we all thought we were going to enter the “mother of all wars”. My lot sales stopped completely for several months and that was no fun. And the thing is, I didn’t have to go into real estate, since I had a full-time job not related to real estate. Also, I certainly didn’t have to pave streets, but I did and made my life difficult.

I’ve gotten into trouble more than once with real estate and my philosophy now is “control it but don’t own it” and don’t use bank loans…and don’t go to closings. It’s a different way of looking at real estate, but it’s one that can prevent financial risk, especially with uncultivated land.