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Last Month I closed on my 9th house. This house was a quaint little remodeled starter home in Milwaukee, Wisconsin; built in the 1950’s, it contained three bedrooms, one bathroom, and a small basement. I’ve been investing in property for a while now, and I’ve slowly been buying up remodeled starter homes, placing them under property management, renting them out, and earning a nice little income on the side. It’s not huge money, maybe $250-350 per month, but I’m hoping that my growing real estate portfolio will help me out as I transition into retired life over the next few years.
But there was something very unique about this purchase that I’d like to share.
This was a house I’d never seen, in a neighborhood that I’d never walked, in a city that I’d never been to, and from two people I met online. Although I’d done a number of real estate transactions, never had I spent so much money merely on an act of faith.
Why was this a good idea?
As I considered this deal the doubting side of my brain pestered me with questions: “Is this wise?”, “Are you about to get scammed?”, “Who are these guys anyway?”, “Am I going to lose my shirt on this deal?”, “What would my parents say?”, and “What do I tell my buddies if this falls through?” As I continued to wrestle with these questions, one word balanced out all of those fears.
Unlike in the stock market where every investment clearly states that “past performance is no indication of future returns,” when it comes to reputation, past performance IS a direct indicator of future performance.
You see this connection everywhere you look.
The care my son takes in mowing my lawns is a direct reflection of how careful he will be the first time I let him drive my car. The diligence that a division officer shows while leading his first ship shows the level of aptitude he has for command. The Petty Officer who has trouble getting to work on time is the same one who will have trouble properly completing his maintenance checks, and that aircraft that was down all last week will probably be the same hanger queen down next week. The reputation of those two buyers is what made me confident in my latest real estate deal, and I don’t regret it.
Why? Because a good reputation does not happen overnight.
No matter how good a company’s website looks, how slick their sales pitch is, or how big a salesman’s smile, it all boils down to reputation. In fact, companies with good reputations are perceived as providing more value to consumers, and reap the benefits of more loyal customers who spend more widely on said company’s products. A good reputation is a precious thing, one that “takes 20 years to build and five minutes to ruin,” according to multi-billionaire Warren Buffet.
That is exactly what I had in mind when I bought my 9th house from two Naval Officers Stu and David and their company Storehouse 3:10.
The great thing about reputation is that it can transfer laterally across professional fields. An Army Infantry Officer with high ethical standards while in uniform will still hold that reputation when he transfers out of the Army and works for Boeing. I high school kid who does a good job washing cars is the type of kid I want working for me in my business. And two professional and successful Naval Officers will hold that reputation when they build a real estate business based on giving, service to God, family and customers.
What a great goal to strive for and what a great honor to have achieved, to have such a solid reputation that near strangers are willing to hand over significant portions of their life savings to you based only on your reputation.
Some have reasonable doubts about the significance of reputation, especially when it comes to powerful corporations in essential sectors like finance and transport. However, I believe that even if a company or individual glides out of a mishandled situation or cuts corners to achieve their goals, the truth of their character will eventually shine through, and that will affect consumer interest. For many employers, those attitudes are enough of an indicator to stay away. “If I take care of my character, then my reputation will take care of me,” states Dwight L. Moody, a popular American theologian. So don’t be afraid to go out on a limb and take a chance on someone who’s built up their character, and thus reputation, for the better.
If you are interested in real estate investing your first step is to build a budget. I’ve used mint previously and recommend their budgeting tool as your first step. A free budget template is a smart choice to get you started. Mint’s tool will help you get started and help you understand the money you have coming in and going out. Once you have your budget feel free to reach out to me and I’d be happy to share my experience with this house and my other properties.