My Inner Real Estate Investor Self…out of the Closet

Something happens to you when you reach middle age (mid life crisis?!?) when you start to crave better things in life.  We get consumed with the notion, that since we’ve lived more than 40 years of our life, we DESERVE a better house, a better car, a better body, a BETTER EVERYTHING!  Yet, when we look at the bank account, we realize we have FINITE resources trying to match an INFINITE amount of wants.  WHAT TO DO?

Mind you, I have been better at making prudent capital purchases of late (I think I am doubting that statement); I’ve bought a 2 year old car versus new, paid down all of my consumer debt (we’re debt free in the world of Dave Ramsey) and don’t owe a dime to anyone for our “stuff.” I do have mortgage debt; I have half of my real estate paid for and the other half leveraged. I will talk about my goals overall in future posts.

There does come a time where you feel deserving, after years of saving and prudent spending, that it’s time to buy a treat.  This overwhelming feeling manifested itself on a craving for a used a Ferrari F430 (come on, this is an investmentJ). After all, it’s been 11 years since I bought my Porsche and it’s time for an upgrade.  As I was perusing  Fchat (Ferrari forum) looking for a good example of a F430 and looking at prices, I started to weigh the pros and cons of such a purchase.  These are still priced in the 6 figures, and do I really want that to hit pocket book that I built with blood, sweat and tears! I tried to reason to myself that it is an investment, and an asset that can go up in value; but the immortal words of Kiyosaki started to dance in my head.  What is an asset, what is a liability?  This Ferrari is not an asset, it is a liability. Have you priced a simple oil change on an F430, ouch!

I do feel we should draw some inspiration for the finer things in life.  God put us on this earth not only to serve him but to take our share of abundance out there; yet, I still was not comfortable making this purchase. Rather, I was thinking, how can I afford a car like this without taking a hit to my net worth?

About a year ago, I was so inspired by the first dollar I earned from renting my vacation condo in the beautiful islands of the Philippines; so much so that I valued that dollar more than my paycheck for that month. I was so inspired, the light bulb clicked simply because of the fact that I did not trade my time for that dollar.   Since then, the revenue I generate from this small little condo in the Philippines reach over 5 figures for the year; which allowed my family to use this “new money” to pay for our vacation and travel budget for 2015.   In essence, my tenants PAID for our vacation to the Philippines this past January.  Well, can’t I do the same thing…have my tenants pay for my toys and eventually…my FINANCIAL FREEDOM?

Act and act decisively I did.  I will write about each project I undertake, discuss and educate on the “numbers” that make good and make bad deals.  I will create a “diary of sorts” of my real estate ventures. For now, in just the last 2 months alone, I invested in 3 Single Family Residences, 1 Duplex, and a conversion of my former primary residence in California into a rental. The beauty of this, I used my rental income from my vacation condo (via Airbnb) to pay for a lot of these conversion expenses. What a novel  idea! I will now increase my net worth by buying the “right” real estate investments, and have my tenants pay for my toys.

As a Private Wealth Manager and Certified Financial Planner ® in California, this experience gave me a side benefit.  I realized that many clients I serve have real estate investment portfolios; yet, my advice and conversations around this portfolio was way too generic, textbook and lacking of substance.  Now, it becomes a rich conversation, we compare deals, we discuss how real estate fits into their overall wealth and freedom building strategy. I can now talk with the best of them to calculate CAP ratios, Cash on Cash, Net operating income, Capex, etc…Whew! What great learning the last 3 months.  I LOVE IT!

So I am proud to say as of July 2015, I am officially out of the closet, and in the world of real estate investing! Stay tuned and I will share everything I have learned and now know.

Hopefully, sooner rather than later, I will have a blog of post of a new (to me) Ferrari 430 J

-Rollan Dizon, CFP ®

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