As many of you may know, Brad and I bought our first rental property when I was 20 and Brad was 22. We were broke college students with a baby. When I say broke, I mean like, we would sometimes have $40 in our bank account and would need to make it through for a week on beans and rice. While I’m not sure I’d ever want to go back to those days, I know that those difficult times allowed us to take the risks that we never would have done otherwise. There are several reasons why being broke helped make us who we are today.
You Have Nothing to Lose
The truly freeing aspect of being broke is that you have nothing to lose. Like in our situation, we were already broke college students that had a child, so we figured why not try something crazy like invest in real estate? The worst thing that would happen would be that we would fail and have to go out and get real jobs like all of our friends were doing anyway, so the downside didn’t seem that bad.
You Work Harder
We didn’t focus on what would happen if we failed, because we didn’t think we would. I know that may sound naïve, but when we bought our first property, we just had the attitude that this was going to work. This was the path that we had chosen so we were all in. I think that sometimes people make a choice and then get scared or try to talk themselves out of it. We didn’t make that an option for ourselves, and were willing to do whatever we could to make it work.
Since we had very little money, we used one thing we did have: time. We put in a good many hours of sweat equity into our first few properties. This not only saved us money, but now that we hire out many of our property jobs, we know what we want and are less likely to get taken advantage of.
You Get Creative
Sometimes constraints can free you up to be more creative. If you have an unlimited budget and unlimited time, it becomes almost overwhelming with all the choices you would have. You would get so overwhelmed with all of the things that you COULD do, that you never end up doing anything. It’s kind of like Netflix. I love Netflix, but I think I actually spend more time scrolling through the entire list of movie options than I actually do watching movies. Why? So many choices.
When you have no money, you get creative with how you are going to accomplish your goal. This applied to us in our real estate adventures. We would figure out creative ways to finance a property. Our first property deal was great structurally, but was ugly on the inside. We spent the little money that we had on paint and refinishing hardwood floors that we found under old, nasty carpet. That first deal would not have happened if we weren’t broke, because we wouldn’t have had the constraints forcing the use of our creativity.
Success Can Be Redefined
Sometimes being successful is not always measured in dollars. There is value in learning, and to us the property that we invested in (among other businesses we tried) was a huge education. We were both taking classes in business at the time, but those were more theory than substance. There really was no better business education for us than the business projects that we were working on when we were broke. We still own those first few properties, and the lessons that we have learned from them have brought us to where we are today.