Real estate investing offers both unlimited potential and inherent risk. But staying motivated while pursuing your investing goals can sometimes become difficult. This is particularly true when purchasing rental properties with cash. It may seem like a cash sale is the ideal way to buy rental properties, but this approach can actually have a negative impact on your personal motivation. Without the right amount of leverage in your real estate investments, you may struggle to maximize your earning potential.
Life coaches and motivational speakers often cite the importance of personal leverage for those seeking personal and financial success. The concept of personal leverage can be loosely defined as a process through which you attempt to understand what motivates you and then use that motivator to help you set and achieve important goals. Leadership gurus such as Tony Robbins and Jeremy Watkins have described the way that our culture places great emphasis on achievement and success without always connecting the win to the qualities that made success possible.
Personal motivators are different for each individual, and can vary widely. But in some ways they also often share a common quality: the fear of loss. It is also generally true that the higher the stakes of that loss, the greater your motivation to actively guard against it by doing things that contribute to your success. For example, many investors view buying a rental property as one step toward saving for retirement or growing personal wealth. This is a solid plan, and one that has been proven to offer returns that are higher than other types of investments.
For investors with the ability to pay cash for a rental property, they may think that once they hold title to the house that there is nothing else to do but wait for the property to appreciate. This mentality may work with low-risk – and low return – investments like bonds and savings accounts, and perhaps even when investing in the stock market. Such options typically offer returns equal to the amount of effort required to set them up, and often fail to meet expectations.
Growing personal wealth is not a passive activity, and neither is real estate investing. Having the right leverage is an important part of making sure that you reach your investing goals. Unlike completing individual cash sales, investing in multiple rental properties through the use of mortgages can be a powerful motivator to keep your investing on track. By placing demands on yourself, such as loan payments that must be met and different properties to maintain and improve, you can create the personal leverage you need to keep your real estate investing goals on track.
Personal leverage is an important part of success, in real estate investing and in life. When questions arise about how and whether to use leverage to help you achieve your goals, you need people on your investing team with real experience and expertise. The professionals at Real Property Management are ready to help. We work with property investors to build leveraged business strategies designed to grow personal wealth. No matter what your investing goals are, we can help by making owning quality rental homes a streamlined and profitable endeavor.
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