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In this episode of the Cash Flow Guys Podcast I will be covering the topic of doubt and why many people fail to see real estate investing as a viable strategy.
This episode was inspired by a new member of our Facebook group, the Cash Flow Guys community. To join the community for free go to http://CashFlowGuys.com/group
Rachel asked ”What would you experts do if you wanted to get involved in real estate investing but your spouse is against it?”
The first question I have is “Why” is your spouse against it? It’s critical to figure out the specific reason in order to effectively address the situation.
Often you will discover that there really is no obvious single reason as to why doubt exists. Other times, there is a very specific reason; either way we have to figure out the source of the problem to be able to correct it.
I have been very fortunate that my wife Jill is a thousand percent on board with our endeavors in real estate and has been since day one. Even though that’s the case for me this question comes up time and time again from students of ours and listeners of the show so I’m glad to have the opportunity to discuss in further detail.
First off, I want to caution you to not use the word convince, a wise man once said: “a man convinced against his will is of the same opinion still”. This means that we really cannot truly convince anyone of anything. Instead, we need to take the time to hear why they don’t believe something or are not on board with a specific idea and give them the opportunity to verbalize their concerns or questions.
Most often it with real estate investing it comes to either two things: 1) they have been personally burned or know somebody who’s been personally but burned or 2) they fear their ability to be successful.
Most stories I hear about people being burnt in real estate investing all revolve around short-term get-rich-quick type arrangements. House flippers, wholesalers, any sort of short turnaround high-profit scenario often leads to some story of somebody getting burned. Unfortunately, these stories get more attention than the success stories. When people hear that other people had massive losses it terrifies them and keeps them from making the same decisions themselves.
Often, the fear of being successful in real estate investing comes from what I like to call the origins of “The Great American Lie”. For those of you that don’t know the “Great American Lie” is you’re supposed to go to school get a degree get a good job and then retire and be happy. The reality of that is that you go to school, get a job you hate, sometimes get fired laid off or separated from your employment and then live a life of retirement in poverty, or at least at a reduced lifestyle from what you have now.
When you have a life partner, spouse, husband, wife who is dead against you both getting into real estate investing ask yourself this question, is this something you could just do yourself with your own money?
Stay with me here for a second I know that you want to do this with your spouse but let’s go ahead and flesh out the worst case scenario. Let’s say your spouse is 100% against real estate investing of any kind and is simply unwilling to hear any reason behind it or even discuss the matter. Unfortunately this is not uncommon in fact it is quite common in today’s society. It’s important to realize that even though despite your spouse is not on board, it doesn’t mean that you have to exist in poverty too. Allow me to explain:
My grandmother on my mother’s side wanted to earn her own income and not have to be dependent on my grandfather to support the family. Although my grandfather was very successful in the meat business back in the day my grandmother did not want to have to depend on any other person for her income. It’s that fierce independence that was instilled in my mother growing up and me growing up. Luckily for me, my wife’s mother raised Jill the same way, therefore why she is on board with real estate investing as a strategy.
My grandmother wanting to exercise that entrepreneurial spirit open the beauty shop catering only to the ultra-wealthy and celebrities of the Western New York area. She built a very successful business that ironically my grandfather never knew about. It’s because back then society \dictated that a woman should be obedient to her man. The irony here is that my grandmother actually wound up making more money than my grandfather albeit totally in secret. Part of the reason my grandmother never told my grandfather this is because he would feel threatened if he knew that she was actually the real breadwinner of the family and that his income although quite generous was insignificant.
The one mistake my grandmother made that she admitted later in life is that she never took the time to educate my grandfather on why it was so important for her to be financially independent. She told me when I was young to always make sure I make decisions based first on what’s best for me and second what’s best for everybody else in my family. The reason she explained, was that for me to be able to help anyone else in my family I first needed to be in good mental, emotional, and financial shape.
For those of you that have a spouse that is dead against real estate investing perhaps having a conversation with them about how important financial freedom is to you may do the trick. Although this seems like very obvious advice I am quite confident that most of you listening to this that have this problem with your spouse not wanting to get involved in investing have not really sat down and had a face-to-face heartfelt conversation about how important this is to you. The reality is my grandmother realized that had my grandfather been given the opportunity to be educated on how important this was to her, that he really would’ve been quite supportive in the end.
I’ll be the first to admit that I am not professionally qualified to give relationship advice, after all, I’ve been divorced too and I have certainly made my share of relationship mistakes over the years. I do however know emphatically that effective nonjudgmental communication goes a long way in any relationship. I also believe that no one person should control another, that said you should always feel free to do whatever it is that is important to you or that you are passionate about.
I often find that the people that are the most against real estate investing are also the least educated on it. I believe in order to get anybody on board with the idea of real estate investing any conversation should focus more on financial freedom and financial independence that it should the actual act of investing in real estate.
Please understand that even mainstream media favors stocks, bonds, mutual funds, annuities, infinite banking, and all the other gimmicks that are out there. Therefore, the influences that we see in everyday society leads us toward what most people invest in which is paper assets from stocks and other such “investments”.What we all must understand is that media outlets have a great financial benefit coming to them by endorsing those type of investments. Many of the media sources that we all know and love have shareholders that are heavily invested in the media channels message being favored towards stock and other “wall street” type investments.
In the example that inspired this specific podcast episode, the spouse fears losing money and fears a market correction could cost them money or loss of equity. The spouse also fears the tenants damaging the property or general failure of the endeavor as a whole.
I would begin by saying his fears are 100% realistic, is valid and thinking about each and every one of these things. One of the biggest mistakes that we tend to make is trying to convince other people of a specific thing instead of providing them with the educational resources in order for them to make up their own mind.
In this specific case perhaps it would be worthwhile for the husband to read a copy of Rich dad poor dad at the request of his wife. It’s quite likely he has already read this book and if so then needs to read The CashFlow Quadrant also by Robert Kiyosaki. Once the husband is done reading the books ask them to help you in making a plan that will help both of you escape the rat race. That plan does not have to include real estate although it’s something worth at least investigating further.
It’s easy to go down a rabbit hole in real estate investing and therefore get distracted. In order to be successful at anything, you must be able to focus on and with that said focus specifically on one thing. When the husband is put in a position to make a plan which will help the couple escape the rat race any outcome becomes his idea, therefore, a good one in his mind. If you approach this from a logical low to no risk standpoint most people can get onboard with the logic of buy and hold investing.
If you sit down and write out a specific plan of action involving buying a rental property and holding it for the long-term even the most stubborn would be investor would have a difficult time arguing the reality of passive income realized through real estate investing. Also, have the husband read the book Tax-Free Wealth from Tom Wheelwright.
The husband must also understand that by currently earning a W-2 income he is working the first five months of every year specifically to pay taxes. One of the few tax-advantaged investments available today happens to be buy-and-hold real estate investing.
As with any negotiation, it is most important to allow the other person to come to certain realizations on their own in order for them to get on board with your offer or line of thinking. Most arguments, disagreements, or other issues that happen in today’s society come from a lack of education or clear understanding on a specific topic. If you truly want your special someone to get on board you have to focus on providing them the resources either directly or indirectly to be educated enough so that they can come up with the brilliant idea that was actually yours, to begin with.