People who are “renters” are typically the ones who say to me, “Rachel, why would I want to buy a house?” At first I was completely bewildered at this statement thinking “how are they NOT already investing in real estate, instead they’re wasting money renting!” But then I remembered that I used to share this mindset too!
I had rented for much of my life but purchased a fancy condo in the heart of Denver in 2008, that I would sell only 2 years later. Part of the reason I sold was because I quit my job and started my own company. I quickly wondered how keeping this asset with my new ambitious self-employed status and income was going to benefit me. How was I going to afford mortgage payments with my fancy new start-up lifestyle and travel? I began to think of my home as a liability. I failed to see how owning this asset was going to fit in with my new life. Instead, I sold everything, moved to the mountains and relinquished all my possessions so that I could again be free. At least I thought so, until after another decade of renting and not building any sort of retirement nest egg, I suddenly woke up one day and thought to myself, “WTF am I doing? I have nothing!”
So, what changed? And better yet, how do other people go from never wanting to own to not wanting to ever rent again?
Well, first let me acknowledge the fact that at the time I bought my condo, making money renting out a room or entire home on Airbnb and short-term renting was not even on the radar. All I could do to rent out my place was try to find a long-term renter on craigslist and lose entire access to my 1 bedroom condo for at least 3-6 months. Nowadays it so easy to make money renting a guest room in your home for a night or two (or week) on Airbnb to offset some or all of your mortgage, and even produce enough extra income to save, travel.
Robert Kiyosaki sums up brilliantly, “The true path to wealth is investing in cash flowing assets” versus renting where you are essentially throwing your dollars away. Therefore, it makes sense not only to OWN your asset, but find creative ways to CASH FLOW off of it. This is the biggest way I tend to overcome any objection, by demonstrating how Airbnb is a reliable, tested and proven cash flowing system that anyone can implement. And if for any reason someone needed to stop using Airbnb, they could always get a roommate to help cover a mortgage. In some cities, rent is so high that homeowners are making more than enough to cover a mortgage with just a roommate or two. But in my case, I never wanted to have another roommate again, and Airbnb affords me and many others this privilege. With a roommate as our default if all else fails, millions of hosts are able to offset their mortgage payments and earn extra income in their own home.
In retrospect, the problems I foresaw being a homeowner over a decade ago (especially a single homeowner) are the same as the ones of the people I run into today. Therefore, before being able to “convince” any renter of the benefits of buying over renting in today’s market, I first just ask what is the reasoning behind the mindset. Perhaps once we understand why we feel like owning is more of a burden then blessing can we begin to shift our mindset from what we don’t want and start focusing on what we do. Common renter mindset barriers:
- May not be focused in a career yet and are still searching for a career
- May like to travel often or don’t want to feel tied down
- May have family members preventing them in some way
- May be currently renting in a lease or have a great deal on a lease
- May not know enough to buy
- May not set life goals
- May not understand the benefits of owning a home vs the liability
- May live more of a transactional lifestyle (more hand to mouth)
- May not have a lot of savings for a downpayment or extra expenses to afford a house
- May NOT know their credit score or think it would make them ineligible to buy
- May suffer(ed) a health issue or life crisis or bankruptcy
- May not be ready for the responsibility
- May not understand how to or be disciplined to save
- May not understand the real estate tax benefit or how the government rewards retirement savings plans
- May not have been taught how to be invest in or leverage real estate estate
While these are all valid reasons NOT to buy real estate, I believe that these are generally mindsets that can be overcome with education, like most things in life. While there is a lot of responsibility and risk that comes with home ownership, any of the great thinkers and motivational speakers will tell you, there is responsibility and risk in anything worthwhile. But in my utmost opinion, the pros truly outweigh the cons. If you relate to one of these mindsets, then you are not alone! Sign up to be get my free Airbnb kit and you will get instant access to my free webinar to learn how to start overcoming these objections and discover quickly whether Airbnb is a solution for you!! Or if you wish for a free coaching call please schedule one with me here: https://rentalpreneur.drift.com/letstalk
In the likelihood you just own your home asset and live in it without cash flowing it by renting a part of it, than that is still a healthy investment strategy since you may have the benefit of appreciation over time. If you do not have cash to buy a home right away or do not qualify for a home loan, then the next best step would be to get on a 5 year plan towards buying a home. As the old Chinese proverb says, “the best time to plant a tree was 20 years ago and the next best time in now.”
Again, if you relate to one of these mindsets, then you are not alone! Sign up to be get my free Airbnb kit and start learning whether Airbnb is a solution for you!!
About the Author:
Rachel Prince is a licensed real estate broker living in Indianapolis, Indiana. Rachel works as an Associate Broker for F.C. Tucker & Company at the downtown Mass. Ave. office located in the heart of downtown Indianapolis. She helps her clients make smart Airbnb Home investment decisions. She can be reached for consults here.
F.C. Tucker Company
Indianapolis, IN 46204
Stay tuned for my next blog: Airbnb Property Management Hack