Paralysis of Analysis

Hey readers, Pete Pessetto here with some thoughts about getting over the hump on that first purchase...

You know that guy, everyone knows someone like that, someone who just can’t pull the trigger on anything. He thinks about it, over analyzes it, but can’t get out of his own way long enough to do it. He suffers from Paralysis of Analysis. We struggle watching that person knowing that no matter how much we help he’ll never do anything. Maybe this is what Phil Knight, CEO of Nike was thinking when he brought us the great “Just do It” campaign. He knew that guy too, and wanted to give him a little encouragement … if not a swift kick.

Investment is action. You are taking action today making the most informed decision you can, in an effort to get a greater return tomorrow. We see this every single day, people making smart decisions and taking action on those decisions. What do they know that everyone else doesn’t? Nothing. They chose to take action. If you are currently an owner of a property you have already chosen to act once. Was it scary? Or was it one of the better decisions you’ve made? Do you wish you could buy more? Did you buy more? If it was someone’s first property then maybe they realized that they would learn far more by owning a property than they ever would from a book with a pretty cover. Put down the latte, get out of the book shop, and get out into the market.

Investment is about the time value of money. Real estate today is, comparatively, cheaper than it ever will be in the future because the present day dollar is stronger than the future dollar. Have you ever driven by a home, or a property, and thought “If only I had bought that home then when it was worth $, its worth $$$ now and that’s so much.” Guess what, that home that was worth $, and now is worth $$$, is probably going to be worth $$$$$ down the road. It’s still cheaper now, than it will be then.

There are few other niches in which you can use your “Sweat equity” to build long term wealth, and additional income streams. Let’s put this in real sweat equity terms. You purchase a duplex for $200,000. You put down 10%, or $20,000, and finance it for 30 years. Let’s say that you run it revenue neutral for the life of the property, you never make anything but your mortgage payment is covered and all repairs to the property are covered by the rent you receive. Assuming zero appreciation on that home, in 30 years you will have a property worth $200,000 paid for with $20,000, and a little sweat equity. I’ll take it. Now lets assume your $200,000 duplex is paid for and the $2,500 a month coming in from rents is all yours to play with. When your financial planner asks you the famous question “When you retire, from where will your next check come?” Give him the address of your duplex.

Now, how many duplex incomes do you need to retire and how soon could you get there?

Working in real estate on a daily basis, and seeing all that I do, the best piece of advice I can possibly give is: Act.