04 Apr MAKING SURE YOUR REAL ESTATE MONEY IS WORKING HARD BY AVOIDING PRIVATE CLUBS
One of my neighbors came by my house recently to urge us to join a nearby country club. I have never been eager to live the country club life. Clubs are expensive, perpetually in need of cash and filled with people who have fewer assets than we do. Plus there is the snob factor.
MAKING SURE YOUR REAL ESTATE MONEY IS WORKING HARD BY AVOIDING PRIVATE CLUBS
It seems like a big waste of money.
I get that we MIGHT profit from being with what passes for the cream de la cream of social contacts in our area, but that is of doubtful benefit in that most people who belong to the club are retirees, not investors in any real sense.
We are not retired and have considerable demands on our time that have to do with making money and investing. We don’t have time for golf, cards or long drunken dinners from an expensive, but limited menu.
We explained to our neighbor that we like to see our money working at least as hard as we do and that means any investment we make should deliver decent returns. That means we expect money to make more money, particularly when you are using other peoples money and even more particularly when it’s an expensive real estate loan like a quick bridge funding used by many real estate investors.
Think of the home you currently inhabit. It’s an expense until you sell it. Then you have to get another place to live which will probably cost more than the home you just sold, plus you will probably have to pay finance costs.
But if you purchase rental property you may make a profit off of renters. If you do it right you can make a profit even if you finance the property.
Most businesses that are successful produce income, unlike club memberships.
One might argue that the social aspects of being in a club are very nice and something people want.
But what if you are not a real extrovert and like to spend a lot of time alone and working on various projects, none of which are games of chance involving cards or sports? Sure investing is always a gamble, but it’s much more compelling and varied.
I was on a plane to Las Vegas and spoke with a professional gambler. He played cards ALL the time. To me, cards are pretty boring. We each agreed we had our own addictions to risk but neither of us wanted to take the other person’s path.
So we never join private clubs. When and if we ever retire we might consider it, but it lacks the mental stimulation and the income that might attract us.
It is also interesting that the people one meets at “The Club” are not always the quality of person one might expect. I once knew a widow who met a man at her club who married her and then took every dime she had on the honeymoon and left her stranded in a hotel. Other members of the club vouched for him and never had to confront her because she was never again able to afford any club membership.