HEY news flash guys – did you know big circles are really hard to fit inside small rectangles?
After 2 hours of trying, MrsFrugalSamurai-to-be and I know now.
Yep, that’s the scenario that confronted her and I when one of her good friends’ generously offered a barely-used dining table to us.
With hindsight, I should have figured out something was slightly amiss when she said that the table was a “demountable”.
The only experience I’ve had with demountables are mobile classrooms and other really really big structures that can fit whole adults inside them.
I tried to quiz MrsFrugalSamurai-to-be on how big the table was BEFORE we left to pick it up – but was met with a look of utter incredulity.
“It’s a dining table geez – don’t worry, just bring your car”.
Funny how cars have doors which can’t fit large tables…
All good guys, we’re stronger for the experience. Just had to get that off my chest.
Speaking of experience – I’d like to thank you for coming back and reading on the second part in the series on investing in real estate!
It’s a topic which I am very much passionate about so let’s jump straight in!
So where do we start? Well, how about 4 key pillars?
Firstly, in my opinion – investing in real estate is all about having the right mindset. With any sort of investment, fear holds back many people. Fear of the unknown, fear of uncertainty, fear of risk, fear of monetary loss, fear of debt, and much much more.
I was petrified as well, just the thought of lumping around six figure loans for 30 years made me feel woozy. Like bloody chains around my neck.
Fact is though – fear is a part of life.
You will never be 100% comfortable with any major decision you make because you don’t know the consequences, you can’t time travel so how can you?
So if you’re someone who is gripped by fear or aversion or hesitancy – ask yourself the big question – why are you even doing this?
Why real estate? Why not shares? Why invest at all? Why, why why HUH?!
Sorry, got carried away there.
Understanding the why helps a long way when it comes to overcoming your fears.
Everyone’s why is different, but ultimately in the investment game, the why inevitably leads to making money.
That’s fact – we invest because we want to make money.
I’ve yet to meet anybody who has expressed otherwise.
Personally, why I started is I was more scared of receiving $894.40 per fortnight from the government pension in my old age than potentially losing money in real estate.
Besides, worse case is I do end up receiving that $894.40 – that’s a safety net.
What is it?
So you’ve worked on your mindset, you’ve worked on your why, you’ve worked on yourself by coming back to this blog, but have you worked on what is actually meant by investing in real estate?
What do you mean TheFrugalSamurai?
Well, the easiest way to explain investing in real estate is to imagine that:
- There’s a plot of land
- Someone’s built a dwelling on it.
- People move into that dwelling to either live or trade.
- If you own the land and dwelling, people pay you a sum for the right to live or trade there.
Simple enough in theory and in my view – that’s pretty much it.
Sure there are particular cases where you can own bits and pieces of the land, dwelling or both. You can enter into complex arrangements to do this and that with the land, dwelling or both.
But why over-complicate things?
Oh and do you notice one crucial piece of the pie? Someone needs to be able to build on that land. Someone needs to be able to move into that dwelling. Someone needs to be able to pay for the privilege of moving into that dwelling.
That’s why it comes back to the good ol supply versus demand equation.
Supply vs Demand.
Over ten years ago, I fell in love.
I remember sitting near the back of the university auditorium listening to the Microeconomics 1101 lecturer introduce a concept called Supply vs Demand.
Sure I had heard about it during the final year of high school, but school was a time for teenage love, Counterstrike and Mario Kart 64. Why would a 17 year old care about supply or demand?
That day however, the world made a whole lot more sense.
Essentially, the law of supply and demand explains price movement. Generally the lower the supply and higher the demand – price increases. In contrast, higher the supply and lower the demand – price decreases.
I strongly believe this is the essence of real estate investing.
If you can truly grasp this concept and more importantly consciously apply it to day-to-day life, real estate investing just became a whole lot easier.
Think about why some property are more “valuable” than others? Is it because of its location? How many people want to buy it? How easily it can be replaced?
Supply and demand baby – works like a charm.
Those are the main pillars which in my opinion underpin investing in real estate, stay tuned as I’ll be going more nitty gritty in the future posts!
What do you think? Did you enjoy this post? Please help me out if you enjoyed this and click on the little “follow” button at the bottom right and be a follower. This way, you’ll never miss my words of awesomeness!
P.S. As always, the posts are opinions and thoughts of yours truly only – always, always do your own research before making any decisions, but do come back for more TheFrugalSamurai if you like my writings!
P.S.S. Does anyone own a truck to transport a demountable dining table…