It’s a new year—and time for a new YOU.
A new real-estate-investor you, that is.
Real estate investing is a math-based science, but it’s also an art of creative decisions.
Today, we want to help you figure out how to optimize the MATH and the ART of real estate investing to achieve both your inner and external goals.
Your inner goals are what you want for your own life.
Your external goals are what you want for the world around you.
We want to help you answer that big-picture question: How do I take who I am and translate that into what I want to do as a real estate investor?
In our latest episode of the The Real Estate Guys™ radio show we talk about setting goals and what YOU should think about as you start making your plan for the New Year.
You’ll hear from:
- Your juiced-and-jazzed host, Robert Helms
- His fired-up co-host, Russell Gray
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Before anything else, do the math
The first thing we want you to look at when you sit down to set your real estate goals for the New Year is money, plain and simple.
For many investors, investing in real estate means getting out of the rat race.
If you do it right, being an investor can mean you don’t have to trade time for dollars!
That’s an incredible goal.
So before you figure anything else out, do this: figure out your number, the amount of monthly passive income you want or need to live comfortably.
Next, figure out what yield you can anticipate from your equity.
Here’s where it gets a little tricky. Not every real estate investor starts with millions in equity.
In fact, many start with very little. (Don’t feel you’re alone if that’s the case for you!)
If you’re a beginning real estate investor, a critical part of reaching your number is amassing equity.
Here’s an example: Investor John figures out that his number is $10,000/month, or $120,000/year. He knows he can get 5% yield on his equity. That means John needs 2.4 million dollars equity to be comfortable.
Investor John isn’t a millionaire, however. He only has $100,000 to start with. John invests that $100,000 wisely and is able to grow it by 20% each year. In 18 years, John has accumulated 2.6 million dollars and reached critical mass.
18 years might seem … well, it might seem like a lot!
How quickly you grow your equity and reach that critical mass depends on how you leverage your equity. Maybe you’re a conservative investor like John. Or maybe you’re more aggressive?
The approach you take will depend on what you need real estate to do for you.
No matter your approach, here are the most important questions YOU need to ask yourself when you sit down to work out your goals:
- Where am I at right now?
- Where do I want to go?
- What do I have to work with?
- How can I begin to take actionable steps to get to my goal?
Imagine a pinball bouncing around. That’s what you look like without a plan!
Do the math, make a plan, execute your plan, and your chances of success will be much better in the long term.
Master the art of real estate investing
While crunching the numbers may be a doable science, real estate investing requires a certain kind of art: a creative balancing act, if you will.
This is because there is NO one-size-fits-all goal-setting strategy.
An important part of setting goals as a real estate investor is putting your goals (and your assets!) in three different buckets: short-term, mid-term, and long-term.
This is one way to balance conservative and aggressive approaches, to experiment without risking your whole nest egg.
Artfully balancing your assets can allow you to sustain yourself while you grow equity.
Two examples:
- Carol works a day job and invests in real estate part time. She uses the money from her day job for daily living expenses and sets aside the money she earns from real estate investing to re-invest so she can grow her equity.
- Dan has been investing in real estate for a while, but all his equity is invested. He decides to go full time and become a syndicator. He makes a living from the fees and profits he gets as a syndicator without taking any money from his own portfolio.
As you can see, Dan and Carol have COMPLETELY different approaches to real estate investing.
However, both Dan and Carol have figured out how to sustain themselves WITHOUT killing the goose that lays the golden egg, so to speak.
Internal goal setting: What do you want for your life?
A lot of real estate investing comes down to lifestyle decisions.
Ask yourself: How do I want to live? Who do I want to work for? Where do I want to own real estate? What kind of relationships do I want to form? Above all, what’s interesting to me on a daily basis? What makes me tick?
Don’t default into a situation where you’re not interested in what you’re doing.
RIGHT NOW, take a look at what you’re doing. Sit back and ask the ultimate question: Is this really what I want to do?
Your homework today is to take some alone time to imagine your career and your future. Think about how you want to spend your days.
Then sit down with a paper and pencil (or your laptop, typewriter, fountain pen … you get the picture) and make your internal real estate goals.
Like we’ll talk about in our upcoming goals retreat, every goal you make should be two things: specific and measurable.
Some examples:
- How many hours will I devote to education (events, podcasts, reading, conversations with other investors, etc.) each month this year?
- How many properties will I research each month?
- By the end of this year, how many additional properties will I accumulate?
Writing down a number is POWERFUL. And it’s critical to reaching your goals.
Maybe this is not a year of acquisition for you, but a year to get structured, get educated, find your markets, and assemble your team.
That’s okay!
There’s no right or wrong path, as long as you’re working on goals to get ahead.
External goal setting: what are you going to do for the world?
We talk a LOT about what real estate investing can do for you.
Another important component of investing is what are YOU going to do for OTHERS?
Most people want the world to be a better place, even if they don’t always agree on how that should be done.
When you’re creating your business, how are you going to serve the world?
Will you use your free time to volunteer in communities around you? Take your love of real estate and use it to help others?
No matter how much is in your bank account, ask yourself: Is my life rich right now?
As an entrepreneur, you may already be serving the people you work with. Maybe you’re providing clean, affordable housing. Maybe you’re creating housing opportunities where there were none before.
More real estate might increase your cash flow, but it can also help people live better lives.
As Steve Jobs has said, “We’re here to put a dent in the universe.”
Once you have an external goal, combine that with your internal goals in a sound business model with a good financial plan, and you’ll have a winning formula for a successful life.
New year, new you
Your personal goal setting will really come down to what we call zero-based thinking.
Ask yourself: Knowing what I know now, will I continue to do what I’m doing? What will I change?
Reevaluate your past year.
Ask yourself: What did I set out to do? What did I succeed at? Most importantly, where did I fall short and why?
Be BRUTALLY honest with yourself.
Did you fall short because you didn’t have the right people on the bus? Didn’t have the appropriate personal discipline? Or didn’t ACTUALLY want to complete that goal in the first place?
Examine what is possible for you.
Real estate investing should make you “juiced and jazzed,” as Robert says.
You can’t get out of bed and go to work every day if you don’t have something driving you. You need a purpose that’s true for you.
Get out in the real world. Look at other investors. Listen to them. Collect ideas. Go to events where you can meet like-minded investors.
Then get in touch with your inner investor. Develop your personal investment philosophy. Define the market and product types you’re interested in.
Form your big picture of what you want to do for YOU and what you want to do for the WORLD.
Then go out and make some equity happen.
Make this next one an amazing year!
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