This week, I will be doing a series of themed shows on what I consider to be the four deadly real estate sins. These are the most important mistakes and pitfalls that people fall into in this industry, and I don’t think they’re talked about enough.
Today, I will be discussing the third deadly real estate sin: lust.
When I talk about lust in real estate, I am specifically talking about having lust towards a property. I’m not sure that I’ve ever been guilty of this, but I have definitely seen even experienced investors fall into this trap.
You find a house, and you fall in love with it: you love the house, its location, its style, the curb appeal, the neighborhood, the school system. It’s a house that you can really see yourself living in personally. The moment you fall in love with a house, you stop making business decisions; you’re making decisions based on emotion instead. Emotion, or lust, in real estate will absolutely kill you. Here are three ways in which lust can affect your business negatively:
- You’re so excited about a house that you pay too much for it. You get the house because you love it so much, even though it’s not the best deal. Maybe the margins are thin, or the room for error is really thin, but beyond any rational reasoning, you feel like you have to buy it.
- Lust can make your ARV go higher than it should, because you’re just not calculating it objectively.
- Lust can make you rehab a house in a way that isn’t profitable. You might start putting in high-end extras that aren’t going to make the house sell for more, because you love the house and want it to look like you would want it to look if you were actually going to live there.
When you fall in love with a house, you lose sight of the fact that it’s a business investment. You lust over a property, a deal, or the idea of buying a property in a certain neighborhood to the point that you stop making business decisions. You cannot fall in love with a deal and you cannot get emotional about a deal. As soon as you get emotional, you’re not rational, and that’s going to end up costing you and even your investors money.
Don’t let lust ruin your business.