Mindset

Bill is a great guy.

He always goes out of his way to say hi in the grocery store.

He volunteers down at the children’s hospital.

He did murder those people a few years back. But 99% of the time he is so nice.

Uh…

You would never judge someone’s morals by what they do 99% of the time. The outlier events matter. A lot.

You could even argue the outlier events define your morals. There is no action you could do 99% of the time to overcome a horrific occasional action.

We are nothing without consistency.

Personal Finance

You can’t be a saver who occasionally buys a Ferrari.

You can’t be an long-term investor who occasionally raids the brokerage account to make a house payment.

One action can wipe out years of accumulated progress.

What you do consistently defines you.

My Day Job

I started a for-profit company in a space that has a lot of non-profits – kids coding education.

Why would I ever do that? Why wouldn’t I just volunteer a couple hours a week?

Consistency.

By starting a for-profit company, I have been able to focus on the problem for 40-50 hours a week for 6+ years. If I volunteered I would have spent a few hours a week doing it, might keep up with it for a year, then move on to something else.

Why It Matters

Enormous goals can’t be accomplished in one day. It takes consistent effort.

You need to figure out the motivation and limitations that will enable you to keep making progress at your goal.

Let’s use a common example. Everyone’s New Year’s Resolution: start working out.

Motivation

Motivation – Why is that your goal? To be healthy. Why be healthy? To live longer. Why live longer? To be there for my family.

If you ask enough whys, you will eventually get to something that is closely tied to your identity. Frequently remind yourself of this and it will give you the motivation to make steady progress.

Limitations

The gym is packed the first week of January because everyone wants to get started on their goal. Unfortunately starting too fast might actually be detrimental to the overall goal.

Instead, start with whatever is sustainable, then expand from there.

What is sustainable for you depends upon your limitations. How much time a week sounds easy to accomplish? Think about your busiest weeks – when was the down time? If you had to consistently get up 30 minutes earlier or stay up 30 minutes later, which would you prefer? If you have to do grocery shopping after work, do you do it on the way home or later?

If you know your personal limitations and preferences, you won’t be trying to fit a square peg into a round hole.

Consistency is Worth Fighting For

Life is a long journey full of impatient travelers.

We naturally compare ourselves to those around us to see who is ahead and moving fastest. It is much harder to compare consistency, so it is often overlooked.

You know your goals won’t be accomplished in one day, one week, or even one year. So don’t worry about where everyone else is and instead focus on making consistent progress.

If you want financial freedom through investing in rental properties, what is your motivation? Go deep on the whys. What are your limitations?

May you live in interesting times.

I open with a well known Chinese curse (with dubious authenticity).

Who wouldn’t want to live in interesting times, why is that a curse?

Well, uninteresting means things are going pretty well.

Just like wishing someone uneventful travels. You don’t want a flight or long car drive to be eventful – boring and safe is perfectly fine.

Whether you like it or not, we live in interesting times!

The Ebbs and Flows of Politics

Each person has their own beliefs, but there are trends that can be tracked over the years.

I’m not talking one party’s beliefs. A much bigger trend.

Isolationism vs. Interventionism

The United States rose out of a hatred of imperialism and a desire to govern ourselves. That way of thinking was applied to others for the next hundred years: don’t get involved in other countries’ fights. The French Revolution, Napoleonic Wars, Crimean War, and several wars with Prussia / Russia / Ottoman Empire. Maybe we cared who won, but we weren’t about to get involved.

Then at some point in the 19th century the United States decided to be a big important country, we had to have a bit of an empire.

Cuba, Puerto Rico, Hawaii, the Philippines, Guam, Samoa, the Panama Canal – we started collecting territories and defending our empire by war (the Spanish-American War and Philippine-American War).

After the First World War, the United States shifted back towards isolationism. Soldiers’ families were left with few answers to what happened to their loved ones if they did not return from the war, making it unbearable. We are lucky that now websites such as Genealogy Bank exist so that they can be tracked down by distant relatives, however, it doesn’t take away the pain of losing them during this time. We did not join the League of Nations with their requirement to defend other nations. We took things further with tariffs on trade to bring the focus back home. We tightened the borders.

We stayed out of World War II until attacked. December 7, 1941 marked a new shift towards interventionism – the United Nations, rebuilding Europe, fighting communism across the world.

Then came 2016. The Brexit and Donald Trump. Did we just witness the start of another multi-decade trend? Or is this just a 4 year policy?

[A couple sources and further reading for all that]

What is the Impact?

No one knows. And that is a little frightening.

Whether or not you agree with the new policy, we can all agree things would be much easier to predict if we kept going with the same old policy. We know more or less what that route brings us.

Predictions are often wrong though. You can’t count on knowing the future, sometimes you just have to react to what happens.

What About Money and Real Estate?

Flexibility is key. Months of living expenses saved, the ability to adjust strategies as things change.

If prices keep going up, awesome. I’ll refinance and double down.

If prices crash, that’s fine too. I always appreciate a good sale and will take advantage of my flexibility to buy at low prices.

Politics aside, how do you think about what to do with your money in the face of uncertainty?

You know all those quotes that arbitrarily divide people into two groups?

There are two types of people in the business community: those who produce results and those who give you reasons why they didn’t.-Peter Drucker

There are basically two types of people. People who accomplish things and people who claim to have accomplished things. The first group is less crowded.-Mark Twain

There are two kinds of people in the world. Those who walk into a room and say, ‘there you are’ and those who say, ‘here I am!’-Abigail Van Buren

Well I’m about to create one of my own!

The Rental Mindset Quote

There are two types of real estate investors. Those who own property and those who claim they are waiting for the right deal.-Brian at Rental Mindset [Tweet It!]

There is no perfect deal. Real estate is a messy game.

There are so many different ways you can go about it, from flipping to wholesaling to AirBnb rentals to syndicated apartments to turnkey single family homes.

Too often someone who has done zero deals wants to do it all. They read all about AirBnb rentals and have never missed an episode of Flip That House. But they don’t end up doing either.

Too often they want to go straight to the big leagues, not realizing they have a lot to learn in the minor leagues first.

When you break it down, two thirds of people are pretenders. They have never made it over the first obstacle and made their first deal.

How Do You Go From Pretender to Contender?

I bet everyone on this website, who doesn’t already own a property, hopes to one day. Let’s call it a goal. Perhaps you’ve got your heart set on one of the spectacular properties you’ve seen in the neighborhoods of Cary, NC, listed online. And who can blame you? Many others are jumping on them as investment opportunities and others who might want to consider doing the same should look at this link – https://findnctrianglehomes.com/neighborhoods/cary/preston/.

Just because I already own a property, I am not going to trivialize it and say it is easy. It is a huge jump, going from never doing it before to writing a massive check.

Huge goals are rarely accomplished. Remember how you were going to go to the gym an hour a day? It seemed so daunting you didn’t even go for 10 minutes. You made up some reason why you didn’t have time today.

The people who know the most about goals and habits say to take baby steps. Start with a tiny habit.

If you want to floss daily for 2 minutes and currently don’t floss at all, you are going to fail miserably if you try to rely on willpower at the end of the day.

Set the goal of flossing one tooth gap, which might only take 5 seconds. Feel proud of the accomplishment and keep going if you want, but you don’t have to. Once that is a habit, you can slowly increase towards your original 2 minute goal.

Apply This Thinking to Rental Property Investing

How can you break down the huge goal of rental property investing to something much smaller?

Unfortunately you can’t start with just 5% of a deal to achieve the benefits of learning and habit forming. There are deals broken into increments (REITS, syndication, crowdfunding) but you aren’t really involved, so aren’t really advancing as a real estate investor. If this sounds like something you might want to start off trying out though, you could look into real estate crowdfunding until you can make enough capital to start investing on your own.

Instead, what is the most approachable deal you can do on your own?

This pointed me to turnkey properties, where someone else does the purchase and rehab, then sells the finished product to an investor. Whilst this might be a good method for some people, others might prefer to find a house themselves to do up. Finding a home in poor condition and redecorating it can bring in a profit. Modern homes can sell for a significant amount, which is why many people try to flip houses and sell them on. However, with all the competition, it can be difficult to sell them on. That’s why some investors have started using trade home programmes to sell the house on their behalf whilst they find their next investment project. Some people like doing that, others prefer to rent their property out. It just depends on the investor’s preferences. If you’re someone who’s interested in investing in real estate without managing property, working with seasoned managing partners who have good relationships in the real estate department is important. Firms like ArborCrowd have a long track record of success and this is important when investing in a deal through a crowdfunding platform.

For others who live in an area with good rental income, they come to a different conclusion on the easiest place to start. They purchase a home to live in, with the intention of moving out within a couple years and keeping it as a rental.

Others buy a duplex, live in half and rent out the other half.

What is easiest for you?

Later You Can Up Your Game

Focus for now. Don’t worry that other people are crushing it in various ways investing in real estate. Just worry about step one, but realize someday you’ll be ready for step two.

I don’t know what step two is yet for me and I already have two rental properties. That is ok. For now I’m going to keep going with my current way of doing things, but slowly research the next thing.

I am getting to know the creators of rental property websites like OB at Out of State Investor. He sources and oversees the rehabs for his deals to save big on the purchase price compared to me.

Alex at Cash Flow Diaries started with turnkey, but just moved to Indianapolis which will allow him to become a more hands on investor.

Dave Miller saves by self-managing his properties from afar with an on-call maintenance company (more details).

Eric Bowlin is a young full-time investor and did things like become a licensed contractor to learn the business inside and out.

Check out what they are doing, and if it resonates with you, set it as a long-term goal. Same with me – if you look at me and think I’m crushing it and you’ll never be where I am, use it as motivation.

Remember to start small. You can always take on more work later.

What tiny step can you take in the next week?