Why Real Estate Control kim kiyosaki

Why Real Estate? Control!

3 ways rental properties put you in the driver's seat of your investment portfolio

Are you a control freak? Do you like being in charge of your own destiny? Does being involved with decision-making and details help you sleep better at night and feel more satisfied during the day? Then congratulations, because we’ve zeroed in on your investment “spirit animal” — real estate investing. And, as you’ve probably guessed by now, it happens to be my investment spirit animal, too.

Real estate is my favorite investment vehicle for many reasons: it's fun, profitable, and it gives me the freedom to control my own investment. Yes, in real estate, you actually have a tremendous amount of control over your investment. Unlike in other investment classes (such as stocks or commodities), in real estate you play a starring role in your investment's success.

Let’s face it: Money is one of the most stressful parts of life for most people. And the biggest reason why is that oftentimes, people feel like they don't have any control over their money. It seems as though everyone is clamoring for your money — whether it’s your utilities, insurance, mortgage or taxes, everyone wants a piece of your pie. Many times, you don't even have a say in where your money goes.

You also have limited control over the money you invest. You can choose where to invest, picking your preferred asset class. But even the savviest investors with tremendous financial knowledge are limited in their power to control how an investment performs.

Why control is music to my ears

And this brings me to why real estate is so enticing. When you invest in real estate, you have 100% control over your investment. You do the research, you call the shots, and you profit from the results of your hard work.

When you invest your money in a company or buy a share of their stock, you have little say or impact on the success and value of that investment. In most cases, you give the business your money and then stand by on the sidelines, watching and waiting to see if it succeeds. You can do your homework and study market trends, but at the end of these day companies are run by people who aren't you. They make decisions that affect your money. If you want to personally increase the value of the company, there's really not a whole lot you can do. If it starts to fail, there's not a lot you can do besides sell your share. Basically, you're in the passenger seat just along for the ride.

In real estate, on the other hand, you are in the driver's seat throughout the entire process. If I buy a piece of real estate, I can personally increase its value. I have the power to make changes to the physical building, market it with increased signage, make improvements to the landscape, add amenities, or bring in better management. The possibilities are endless. There's a lot I can do and it's all within my control. The power is in my hands, and so are the profits.

Fear of control

Believe it or not, there are a lot of people who are afraid of having that much control over their investment. For starters, it's a lot of work. If you want to improve your investment, you have to do the work and make the arrangements, which can take a lot of time and effort.

And if your investment fails, the only person you have to blame is yourself. That can be a lot of pressure, and that fear of failing stops a lot of people from investing in real estate, despite how lucrative it can be.

Some people might even prefer handing their money over to others to invest it for them, taking themselves out of the driver's seat by choice.

Be in control of your money

Leaving your money to chance is not a solid financial plan. At the end of the day, don't you want to be in the driver's seat when it comes to your money and your future?

Below are three things you get to control when you invest in real estate. Remember: All of these decisions are within your power, and the profits you make become extra cash that you can do whatever you want with.

  1. How you profit

    When investing in real estate, there are two things you can invest for: cash flow and capital gains. My preferred method of investing is for cash flow. When you invest for cash flow, you invest in properties for the long-term because they will provide a steady stream of income each month that you can pocket. Investing for capital gains, on the other hand, involves buying a property and then selling it for a one-time payoff.

    When you buy a real estate investment, this choice is yours to make. What will you invest for? Do you want to make a long-term investment, and profit off the steady flow of cash each month? Or do you want to flip the property quickly, and invest for a one-time sum?

    Both strategies can be lucrative when executed correctly. And the great thing is, you have direct control over how you will receive your returns.

    Most other investment vehicles don't give you a choice in how you will profit. Or if they do, there are a lot of rules dictating when and how you will receive your returns.

    But with real estate, you have more flexibility to earn the profits when and how you want to. You can set rent, and buy and sell properties when you want to, without anyone dictating how you profit.

  2. Your investment's value

    You have the power to directly increase your real estate investment's value. Almost no other asset class lets you have this type of impact or control. Like I mentioned earlier, you have no say in how stocks will perform or what commodities are worth. So many external factors, from politics to war to economy cycles, can impact your other investments — and this leaves many people feeling powerless.

    But in real estate, you can take action that will directly reflect in your profits. You can make improvements on the property, increase the square footage, get creative with the property lot, and increase the efficiency of the property's operations, all to increase your ROI.

    How many other investments can say that? If you invest in a company, that doesn't mean you can start rearranging their business operations to make it more profitable. You have no power to increase or decrease the price of oil so that you get better returns.

    But with real estate, the power is in your hands. And while it can be a huge responsibility, it also symbolizes sweet freedom to those who recognize its power.

  3. Who you work with

    If you invest in a business, or purchase a share of a company's stock, do they call you up every time they decide to hire a new employee? Of course not!

    But when you invest in real estate, the choice of tenant is yours to make. You get to choose whether you rent your house to a group of rowdy college kids or a nice newlywed couple.

    You also control who you invest with. One of the best parts of real estate investing is getting to use other people's money (OPM) to purchase your investment. That’s right! You don't have to fund the whole investment by yourself, because there are at least 6 ways beginners can find investment money. One way is to approach other investors to help you purchase the property.

    If you put together a strong deal, you will attract plenty of investors who want to give you their money. The best part is that you get to choose who you work with.

    Finding and building the right team of investors is vital to your investment strategy, which is why you need to work with people you trust. Not all investments allow you that choice. Other people's actions and choices affect your money all the time. Real estate investing is one area where you have some say in the people who surround your investment, so enjoy that perk.

Freedom of choice

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There are so many aspects of life we don’t have any control over — but money should be one of them. If you're looking to take back control of your investments, it might be time to turn to real estate. Before you make up your mind or dive into your first property purchase, continue increasing your financial IQ by researching other pros and cons of real estate investing. The more knowledge you amass prior to taking action, the better prepared you’ll be for the responsibility of stepping into that driver’s seat.

Original publish date: January 25, 2017