Investors are not evil. I know sometimes we get a bad rep on the media for being hungry vultures feeding on the less fortunate. For instance, it’s natural for a person to get mad at an investor that makes a low ball offer on a house they bought during a boom. I don’t blame them. If I bought a house for $500,000, but then could only get $250,000 from an investor, I’d be just as frustrated as anyone else.
But there’s another side that gives a better picture. As an investor, if I buy a house and rent it out, in the long run it does much more good than bad. The way I see it, our economy functions based on the flow of cash from one hand to multiple hands. If money doesn’t move, we’re in trouble, and that’s exactly what happened when Americans were strapped for cash starting in 2008.
When I buy a house and before it is rented out, multiple people get paid before I make any cash:
- Broker on the selling and buying side
- Bank or seller that can get rid of the troubling asset if it is a foreclosure or short sale
- Escrow company
- Title company
- Mortgage company and/or broker
- Home Warranty company
- General contractor
- Cleaning crew
- Property Inspector
- plus a few more I might have forgotten
Behind each of these bullet points is a person or multiple people. Some may have a family or kids. When I pay them money, they can in turn spend money or pay their employees, thus shifting the cash from their hands to another hand, and so forth and so on with the next person.
By the time it is rented out, these people get paid on a regular basis when I collect the rent check:
- Property Manager
- Any sort of maintenance person (when needed)
- Homeowner Association (when applicable)
- Home Warranty
When you look at it this way, quite a bit happens just on one property purchase. Money moves from one hand to multiple hands on the initial purchase and at an on-going basis afterwards. If the investment purchase doesn’t happen, none of the bullet points above will happen.
When we have more people that think this way about their investments, my feeling is we can do a lot for the country to bring our economy back to prosperity. Keep it simple – it doesn’t take much except for a bit of courage and conviction to make a difference and also grow our assets. Granted not all investors are like this, but I am. I strongly believe that my actions, combined with others with the same mindset, will contribute to making our economy more competitive in this global environment.