Risk v Reward

Must be the week for hot button issues. Personal productivity yesterday and the Risk-Reward tradeoff today.

I was having coffee (the usual: venti house blend – three creams) a while back with a very close friend and his wife. We were talking about doing some business together, and in particular he wanted to pick my brain about my particular method of buying, renting, and refinancing rentals such that I generally end up with none of my own money left in a property. I was also explaining to him a strategy that I had developed that would increase his Net Worth by $250,000 in the next 90 to 120 days, with little or no work on his part.**

He was listening very intently, which I expected, because he’s one of the smartest people that I know. To my surprise she was listening too. But – while his head was nodding one way, hers was shaking in the other.

Bad sign (for him).

What do you think were the first words out of her mouth?

You guessed it – “But then we’d have to deal with RENTERS”. She said, her voice dripping with sarcasm and utter disgust. “I can’t even IMAGINE having to deal with tenants. They don’t pay, they call you all the time. It’s just not worth it. It’s just too much work.”

I bit my tongue, harder than usual, because this was the wife of one of my closest and dearest friends. And I just let her continue, because I knew that meant that in that instant his window of opportunity slammed shut on his fingers.


That conversation took place a little over two years ago.

And do you know what? The last two years have proven that she was EXACTLY right! I have had one eviction. I have had a water heater fail. I have had a gutter fall off due to heavy ice. And I have one set of tenants get a divorce and move abruptly. So yeah, sometimes they don’t pay. Often they lie. They don’t call nearly as often as I had expected, but guess what? Having rentals is WORK.

How’s that for a newsflash. Maybe someone should call 60 Minutes or something.

But what I can’t understand is WHY I keep hearing this stuff about tenants all the time. Of course it’s work. But what everybody conveniently forgets is that the RISK and the WORK is in direct proportion to the REWARD. What do I mean? How about that in one batch of mail last week I received checks totaling just over $3,650.

And that wasn’t even all of the checks for the month.

And that’s not to mention the tax benefits and monstrous increases in your Net Worth that happen as a very nice side benefit.

Here’s another news flash – you don’t get checks as a result of cowering in your comfort zone.

Actually it’s just the opposite.

In my experience you get checks based on the size of the discomfort that you feel doing something new. The greater the discomfort, the bigger the check.


And what of my friend? He’s two years older. Same job. Same wife J.

But guess what? The unbreakable RISK-REWARD tradeoff worked for him too.

He took zero risk. He earned zero reward.

The bottom line is that the time is going to pass the same whether you decide to act or not.


** Visit http://www.NetWorthMultiplier.com