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Ask Dave

Getting Over The Fear

Tom needs to get over his fear of investing from a deal gone bad, and Dave knows how to help him in a real estate investment.

QUESTION: Tom is on Baby Step 7 but lost money on an investment a few years ago. He wants to get over the fear of investing and roll his $120,000 into a self-directed IRA, and from there buying rental property in a limited partnership. Is that a good idea? Dave has a different approach.

ANSWER: There’s nothing wrong with that, but I wouldn’t do a limited partnership. You must be good at the real estate business. I think your fear of the stock market is something you need to face. Just because it went down one time, does that make it something you shouldn’t be involved in? No it doesn’t. You can’t look at the market on a 1-year or 3-year track. You have to look at investing over a long period of time, like 5 years or more. If you have $120,000 in your name and are inexperienced in real estate, you could lose it as well as gain it. Start thinking long term. You lost confidence because you thought in the short term. If the market never went down, it wouldn’t be good because you couldn’t get in.