In 2009 numerous people said they wanted to start flipping or rent real estate. They believed it was the right time to get into the game because housing values in most parts of the United States had been reduced up to 40% off their 2006 record high levels. They heard that others were doing this very thing and were able to get foreclosed homes at even lower prices. Some heard banks were selling many foreclosed houses for as little as one dollar. It was true some banks reduced prices to get out from under foreclosed houses that cost them a great deal of money to sit on because they would have to maintain the properties and pay taxes while trying to wait for many years for the market to come back up in speculation that they could then sell to someone at much higher prices. However, it was an exaggeration that they were basically giving away very sound houses for next to nothing.
Even with the much lower housing prices many people paid more than their income and assets could handle. They also often had to make tens of thousands of dollars in cosmetic improvements and sometimes more in structural repairs. They filled their lives up with loans and many raided the little bit they had in retirement accounts to get fixer-uppers. They lost lots of money and owed huge sums when they did not have enough money to make needed repairs and thus could not sell the homes or rent them. Many were not good landlords and could not keep trustworthy renters in the places or demand enough rent even on fixed up places to cover the mortgages on the properties. They also did not have enough income or assets to maintain the properties and pay mortgages for many months or years when they were unable to flip or rent them. They needed a huge amount of cash saved in order to make these deals work. Many who had no understanding of how such investment works and/or did not have the necessary skill fell into foreclosure and/or bankruptcy just like many of those from whom the houses were previously taken.
This story was told from the standpoint of flipping and rental real estate investments but relates to other types of investment for which one needs to obtain a deeper knowledge base and understanding of its operation and how to profit before wading in. There are some people uniquely skilled with a calling to invest in this type of venture. However, there are also some people who are not skilled and called to flipping, being a landlord, investing in commodities and futures, etc. and should not engage them until such time as they sit down with gifted people who have been profitable in these areas and truly understand how to become profitable themselves. In the meantime, they should work to become totally debt-free and save money well beyond their three to six-month emergency fund so that when the day comes they can with wisdom wade into investments that have a much higher possibility for growth. They also should consistently be investing at least 10% of gross monthly income (and make sure they get all 401k employer match money) with the bulk of it in a diversified portfolio of total U.S. market no load low expense stock index mutual funds and a pinch of it in U.S. no load low expense bond index funds.
If you have seriously prayed about an investment or business venture and feel that God has directed you to make such an investment, by all means you should at some point do it. Yet, you should not do it on a spur of the moment, throwing all understanding and wisdom to the wind hoping to get rich quick. You should research the methods and processes that successful people have utilized. This will help you determine:
1. The position you need to be in
2. The plan you need to craft
3. The actions you need to take, and
4. The time you are likely to have to wait before it becomes profitable for you.
During this time, you should be utilizing budgeting which is a working, giving, saving, and spending plan that helps you put yourself in position to invest a substantial amount of money in the venture. If you’re in really bad financial condition, it may take you a couple of years to save the money necessary to invest but you’ll be better prepared and better off in the long run having made such preparations. Proverbs 27:12 says, “A prudent man sees danger and sidesteps it but the simple-minded walk right into it and suffer.” So, don’t be hasty to be rich. Instead:
A. Believe that you will prosper
B. Research the venture through which you want to prosper
C. Write a plan identifying your macro vision of the venture that details the methods you’ll use
D. Take action to achieve the desired results, and
E. Have patience while you reach each step on the ladder to the prosperous future that awaits you.
Please pray for this ministry and email me with any questions. May the LORD bless you richly as you follow His plan!
Proverbs 21:5, 23:4-5, 28:20, Habakkuk 2:2-4, Luke 14:28-32, 1Timothy 6:9-11
Please forward these bondage-breaking articles to other people who can use helpful insight!
You can find books authored by Randy Parlor and Karen Parlor at www.Amazon.com
You can find many other MoneyWalk articles on Facebook by looking at the NOTES created by Randy Parlor at https://www.facebook.com/#!/profile.php?id=100000444069041&sk=notes.
You can connect with Randy Parlor on Twitter and Linkedin
You can also view and/or listen to MoneyWalk articles at https://www.youtube.com/channel/UCXnztOIesOKIrSd_H6c-8mQ
No comments:
Post a Comment