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Pet Alligators, and Why You Should Avoid Them

Pet Alligators, and Why You Should Avoid Them

David Shamy has been in the real estate business for a long time. In fact, he made his first real estate transaction as a young man — he bought a vacant lot from a couple that was unloading it due to a divorce.

David didn’t realize it at the time, but he’d just purchased a pet alligator.

What’s a “Pet Alligator”?

No, it’s not a large reptile with a mouth full of deadly teeth. But it’s just about as dangerous, financially speaking.

David says that a pet alligator is a property that costs you more than it brings in. You might love it. You might’ve even picked it up at a great discount from the last guy who owned it (come to think of it, wasn’t that guy missing a few fingers?). But no matter how you feel about your pet alligator, no matter how handsome the alligator is or how great a bargain it was, there’s one problem…

It’s going to eat you.

alligator

The property itself might be great, but it’s bleeding you of your hard-earned money. You’re putting finances into its purchase and upkeep, but it’s not giving you anything in return. It might sound obvious that you should avoid making a purchase like this, but when a great deal comes up… it can be hard to keep focused on the bottom line.

How Do You Avoid Buying a “Pet Alligator”?

Take stock of your finances

Do you have enough money to sustain a few months of vacancy? What about emergency repairs? If you have to fix the place up, will you be able to make ends meet until it starts making money? David’s purchase of the vacant lot was a risk, but luckily he was young and single. He was able to turn it around. Not everyone is that lucky, however.

Do your homework

If you’re looking to get into real estate, be sure that you research the area in which you’re purchasing property. Are you speculating the neighborhood that the potential alligator is in will go up in value? If so, are there good reasons for that? Are you purchasing something at the crest of a real estate boom, risking that the value will go down instead of up? And if so, do you have at least seven years to wait out the market before selling?

ceiling

Is the property itself a solid investment… or a maintenance nightmare?

A house that has lots of issues can eat your savings, one bite at a time. Make sure that you’ve had a qualified professional go over the property with a fine-toothed comb before you sign on the dotted line. Bad plumbing or electrical wiring, water damage or an aging roof can cost you. A house with a crumbling foundation or a black mold problem can devour your entire savings account in one fell swoop.

Let’s wrap it up…

Pet alligators aren’t just a real estate problem. You can get swept away by the lure of what looks like a great business investment, an amazing stock purchase or a screaming deal on that property you’ve always wanted. The good news is purchasing a “pet” with the potential to eat you can be easily avoided… if you’re careful to let logic lead the way.

With Purpose,

Patrick Gentempo

Patrick Gentempo