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Abstract

two miles from where we currently lived. The condo was almost identical to where we were living at the time. Instead of carpet, the condo had freshly polished wood floors that made the place looked 10 times better than where we were currently.<figure id="23da"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*WJhnUNCdS399VwW2ss4hrA.jpeg"><figcaption>Photo by <a href="https://unsplash.com/@naomish?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Naomi Hébert</a> on <a href="https://unsplash.com/s/photos/hawaii-real-estate?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText">Unsplash</a></figcaption></figure>The only downside was the dog on the first floor who barked at everyone as soon as you walked by. Maybe that’s why the condo hadn’t sold since we made an offer about a month after we looked at it the first time.We closed on the condo for $180,000 and used the Federal Housing Administration (FHA) loan. The FHA loan allowed us to buy the property with very little money down. This is only available for first time home buyers.As soon as we moved into the property, my wife and I were told to get ready to deploy. At the time, my wife and I were both in the Army. The US was already in Afghanistan fighting against the Taliban and trying to find Bin Laden. Then President Bush started another war in nearby Iraq.I was excited since every military force was seeing action in one of the two combat zones. Finally, our unit was given the order to deploy. The only problem was my wife and I just bought a condo that we barely lived in.I told my wife let’s make the place a rental. There were a lot of concerns but I said let’s rent it with Warren who we rented the other condo with. We knew how he operated and he would make a great property manager.Fast forward 10 years later, the property rented for most of the years that we owned it. Since there was a noisy dog that barked at everyone, it chased away a lot of prospective tenants. We were never able to get the full price for the condo since the property manager had to offer a lower price to get a tenant.With the association fee that kept going up, we were barely making money. After the 2008 crash, the Hawaii real estate market was barely affected. With the low amount of houses available, properties sold very fast. Also, the price of the condo we bought had appreciated over the years. My wife finally said let’s sell.<h1 id="6039">Sold one property only to buy another</h1>Landlords grow rich in their sleep.John Stuart MillI gave in and said fine. When the condo sold for$ 320,000 and we walked away with $140,000. A few months after the sale of the condo, we decided to close on a hou

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se of our own a few blocks away.My son was in a good school and we liked the area. We finally found a home that fit perfectly within our budget. Some of the money from the sale of the condo was used as a down payment on the new house. The house came with a pool and that was one of my non-negotiables with my wife. I figured I could swim in the pool and also it would make great exercise for the kids.If I had planned this better, I would have reinvested more of the money we kept in savings. I broke a cardinal rule of my own and didn’t reinvest the money. A lot of the money went to the new house, a car for my wife, a playground for the kids, furniture for the house, and you get the picture.The $140,000 was gone before you know it. You would think$ 140,000 is a lot of money but it really isn’t. You can spend six figures without even blinking an eye, that’s how fast you can spend it.<h1 id="779d">Take two</h1>Successful investing is about managing risk, not avoiding it.Benjamin GrahamThinking about this property gives me a lot of ideas. After selling the property, some good and bad mistakes were made. You see the same thing with athletes and movie stars when they come into a lot of money. In a few years, they’re broke and their millions are gone. You wonder how it happens but this can happen to anyone.In this case, everything happened so fast. I was busy. My wife was busy. We had two kids starting new schools. This wasn’t a total loss. We live in a nice home that we bought under market value. The previous owner was desperately trying to sell and the home sat for a few months with no legitimate offers.Next time I come into a lot of money, I would do the following:<ul><li>Talk to my wife to get her on board. If you’re married, communication is key. Your days of being single are over. It took me a while to figure this out.</li><li>I would invest the money and buy stocks or another rental property.</li><li>Since I know about cryptocurrencies now, some money would go into this investment.</li></ul>Coming into a lot of money is like playing a game of chess. Any move you make can be good or bad. You’ll keep your king longer and win the game. The other option is you could lose your king in a few bad moves. A lot of thinking has to go into your pot of money. What you do with your money can have a lot of effects on your life.Have you ever made bad money mistakes before?<a href="https://medium.com/@tomhandy1">Tom Handy</a> is a top writer on Medium, former Quora writer, and father of two kids. He retired from the Army and sits on several non-profit boards. You can find him on Twitter<a href="http://www.twitter.com/tomhandy1"> @tomhandy1</a>.</article></body>

Why Making $100,000 From an Attractive Investment Means Nothing

Lessons you should know when you come into a lot of money

A few years ago, I sold a rental property and walked away with over $100,000 free and clear. Don’t confuse me with tax evaders who try to cheat the system — I pay my taxes. Within a year or two, the money was gone. Just like that.

Looking back, I wonder where did all that money go? Between my wife and I, we were making pretty good money from our job. Yet, the $100,000 was gone just as fast as we received it.

If this were to happen again, I would have a better plan. I didn’t since everything went very quickly. We had just moved and I was busy at my new job in the Army. Selling the rental wasn’t my idea, this was my wife’s idea and I didn’t have time to sit back and think about our next move with the money coming in.

The rental wasn’t a cash cow

Don’t work for money, make it work for you.

Robert Kiyosaki

Let me back up a little and bring you up to speed about the rental. My wife and I bought our first property while we were in Hawaii. We were about 20 minutes from Waikiki or 30 minutes from North Shore. So we were in a pretty good location either way.

After two years of renting a condo, the owner wanted to raise the rent. I told my wife, let’s buy a place instead. Personally, I didn’t like paying someone else’s mortgage. During this time in 2003, I was reading and watching videos with the most popular man of rental real estate, Robert Kiyosaki.

I was buying anything I could get my hands on to understand the process and the mindset of a real estate investor. Robert made everything sound easy, almost too easy.

1. Kiyosaki said if you plan to buy a rental, make sure it’s an area you wouldn’t mind living in. If it didn’t fit this criteria, then don’t buy it.

2. Kiyosaki added that you should buy the worst house in the best neighborhood. The property has a better chance of appreciating over time with minor repairs and touching up the place.

After looking at different houses in the area, we finally decided to buy a second-floor condo that was about two miles from where we currently lived. The condo was almost identical to where we were living at the time. Instead of carpet, the condo had freshly polished wood floors that made the place looked 10 times better than where we were currently.

The only downside was the dog on the first floor who barked at everyone as soon as you walked by. Maybe that’s why the condo hadn’t sold since we made an offer about a month after we looked at it the first time.

We closed on the condo for $180,000 and used the Federal Housing Administration (FHA) loan. The FHA loan allowed us to buy the property with very little money down. This is only available for first time home buyers.

As soon as we moved into the property, my wife and I were told to get ready to deploy. At the time, my wife and I were both in the Army. The US was already in Afghanistan fighting against the Taliban and trying to find Bin Laden. Then President Bush started another war in nearby Iraq.

I was excited since every military force was seeing action in one of the two combat zones. Finally, our unit was given the order to deploy. The only problem was my wife and I just bought a condo that we barely lived in.

I told my wife let’s make the place a rental. There were a lot of concerns but I said let’s rent it with Warren who we rented the other condo with. We knew how he operated and he would make a great property manager.

Fast forward 10 years later, the property rented for most of the years that we owned it. Since there was a noisy dog that barked at everyone, it chased away a lot of prospective tenants. We were never able to get the full price for the condo since the property manager had to offer a lower price to get a tenant.

With the association fee that kept going up, we were barely making money. After the 2008 crash, the Hawaii real estate market was barely affected. With the low amount of houses available, properties sold very fast. Also, the price of the condo we bought had appreciated over the years. My wife finally said let’s sell.

Sold one property only to buy another

Landlords grow rich in their sleep.

John Stuart Mill

I gave in and said fine. When the condo sold for $320,000 and we walked away with $140,000. A few months after the sale of the condo, we decided to close on a house of our own a few blocks away.

My son was in a good school and we liked the area. We finally found a home that fit perfectly within our budget. Some of the money from the sale of the condo was used as a down payment on the new house. The house came with a pool and that was one of my non-negotiables with my wife. I figured I could swim in the pool and also it would make great exercise for the kids.

If I had planned this better, I would have reinvested more of the money we kept in savings. I broke a cardinal rule of my own and didn’t reinvest the money. A lot of the money went to the new house, a car for my wife, a playground for the kids, furniture for the house, and you get the picture.

The $140,000 was gone before you know it. You would think $140,000 is a lot of money but it really isn’t. You can spend six figures without even blinking an eye, that’s how fast you can spend it.

Take two

Successful investing is about managing risk, not avoiding it.

Benjamin Graham

Thinking about this property gives me a lot of ideas. After selling the property, some good and bad mistakes were made. You see the same thing with athletes and movie stars when they come into a lot of money. In a few years, they’re broke and their millions are gone. You wonder how it happens but this can happen to anyone.

In this case, everything happened so fast. I was busy. My wife was busy. We had two kids starting new schools. This wasn’t a total loss. We live in a nice home that we bought under market value. The previous owner was desperately trying to sell and the home sat for a few months with no legitimate offers.

Next time I come into a lot of money, I would do the following:

Talk to my wife to get her on board. If you’re married, communication is key. Your days of being single are over. It took me a while to figure this out.
I would invest the money and buy stocks or another rental property.
Since I know about cryptocurrencies now, some money would go into this investment.

Coming into a lot of money is like playing a game of chess. Any move you make can be good or bad. You’ll keep your king longer and win the game. The other option is you could lose your king in a few bad moves. A lot of thinking has to go into your pot of money. What you do with your money can have a lot of effects on your life.

Have you ever made bad money mistakes before?

Tom Handy is a top writer on Medium, former Quora writer, and father of two kids. He retired from the Army and sits on several non-profit boards. You can find him on Twitter @tomhandy1.