The Problem of Greed in Real Estate Investing

The Problem of Greed in Real Estate Investing

by Judson Voss

We live in a world that offers temptations at every turn. It is easy to ruin a great thing as the result of greed. However, if you are careful from the beginning you can establish your real estate investment business in a manner that encourages and even rewards altruism rather than breeding an environment that is ripe for greed to take hold.

The problem with real estate is that in order to get the really good deals we sometimes have to be a little unfeeling'. That doesn't mean that you can't be compassionate or identify with the feelings of those selling their homes, particularly if they are at risk of losing their homes and/or any equity they may have had in their homes. At the same time you must harden your heart to some degree in order to get the best value for your money. This isn't to say that you should ever forget that there are real people on the other side of those numbers who have not only a financial investment in their homes (when you are making a purchase) but also an emotional attachment that price tags can never match.

Of course we want to make as much money as possible from our real estate investments but we also need to be able to look ourselves in the eye the next morning when we face the mirror. Deal honestly with people and while it could cost you a few extra dollars of profit on the front end it will return itself in spades over time as you gain a reputation for handling people with respect and having integrity in a business that is increasingly filled with sharks.

There are a few other areas where greed can cost you big however. Those most often come when it's time to sell or rent a home. If you have ever flipped a house you know what a monumental task that can be. If not, be forewarned this is not a task for the faint hearted. However, you need to seriously consider the offers you are turning down before you turn them down. Can you really afford to wait for a better offer? Carrying costs are expensive and the longer a house sits on the market the harder it seems to sell. For this reason you need to really thing long and hard before holding out for more money�"especially if there is already a profit involved and you are just holding out for a bigger profit.

If you make money on a deal and learn a lesson in the process, then you've had a successful flip. However, if you hold onto the property in hopes of a bigger pay off it could sit empty for months or even years. In other words, greed can lose every ounce of profit on a property and place you in a negative cash flow situation. This is one place you do not want to be when investing in real estate, especially when it could have been so easily avoided. Don't take a loss on a property and try to recover some compensation for your time and effort, but don't allow greed to place a price tag on a property that the local market cannot recoup.

Rather than allowing greed to light your path when it comes to asking and selling prices it might be a wise plan to hire a professional realtor to give you a reality check as you go. Keeping things in perspective and not charging according to your personal, and often emotional investment in the property in question.