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4 Difficult Questions Every Real Estate Investor Needs to Ask Themselves

by Jaren Barnes on July 2, 2014 · 18 comments

  

As an aspiring real estate investor, there are a ton of things that compete for our attention, our time and our effort.

So many of us can get lured in by the dream that we end up distracted, spread thin or worse, burned out.

Today I’m speaking primarily to those just like me, who are starting out and are either in the rabid “saving phase” for their first rental property, working under a mentor in a wholesale or fix and flip business, or who is in some capacity in the beginning phase of their personal pursuit of real estate investing.

Though this is the case, a lot of you more experienced investors will benefit from this as well, as the following questions will help uncover things we all need to reflect on.

There is a right way and a wrong way to go about this real estate thang, and the needed clarity to move forward starts with asking yourself the right questions.

The 4 Questions Every Investor Needs to Ask Themselves

The following are pretty intense, soul-searching questions that you need to ask yourself, but that can be extremely difficult to answer.

It can be hard to answer them because, honestly, they will most likely mean change and might even go so far as to reveal how much time you’ve wasted.

A wise preacher once said,

“The truth will set you free, but it will first make you mad!” – Rev. Curry Blake JGLM

and it is so true today!

Don’t allow the fear of being wrong or needing to change get in the way of your success and growth… With that, let’s jump into it!

1. What is the Real Reason Behind Why I Want to Invest in Real Estate?

What motivates you?

It is really important to have very clear motivation. Money and “I just want to be rich,” usually don’t cut it either. Speaking from my experience and to give an example of my “why”, I invest in real estate primarily because of two things.

1. I want to get to a point where I don’t have to worry about money so that I can focus the majority of my time on helping people. I used to be really active in Christian ministry, even leading a homeless shelter for a couple of months back when I was 19.

There is nothing that makes me feel more alive than serving people and impacting the lives around me, and I want to be in a position where I can do that on a full time basis without having to worry about taking care of my family’s financial needs.

Real estate can provide that for me, and it can provide that for you…

2. I want my wife to live a spoiled life :-)

My wife grew up in a developing country and has fought hard for what she has. I want to make this real estate thing work, so that she can live VERY comfortably as a stay at home mom (which is her passion and dream).

You see, your motivation can’t simply be “I want to be rich. ” How rich do you want to be? What does “rich” look like to you?

To some it means driving the newest cars (which is awesome) or the ability to travel at will and on the fly. To others, it means living in a 10,000 sq ft house with luxurious design and comforts.

Related: How Real Estate Empowered Me to Buy a Lamborghini (And What It Means for YOU!)

Even more so, to others it looks like being stay at home parents who live 100% off of investments.

The point is, being rich looks different for different people and it’s completely based on what you value and hold dear to your heart.

But do you know what those things are?

What’s important to you, really?

Once you know, you can catch a vision and gain the needed drive to make the dream of being a full-time real estate investor a reality.

2. If I Knew I Only had 1 Year to Live, what Would I Be Doing Different than I am Right Now, and What are the Implications of That?

This question is really sobering because it puts your values into perspective.

I bet, if we were to be honest for a second, that 99% of us would say we’d be spending more time with our friends and family.

A lot of the time when we are “chasing the dream”, we neglect those around us. We justify it saying to ourselves, “once I’m wealthy I’ll be more of an asset to their lives any way…” but this isn’t healthy.

When I was working for the fix and flip company that first exposed me to real estate, I’d work literally 10-15 hour days, 7 days a week. My family and friends didn’t know me, because I was never there.

I’m all for working hard, but there has to be a balance. You only live once and eventually you will die. Be sure to live a life you won’t regret on your death bed.

I don’t know what that looks like for you, but what I’m trying to say is make sure your relationships and values are maintained as you “chase the dream”.

Make sense?

3.  What Kind of Lifestyle Do I Really Want to Live?

Reverse engineering your lifestyle is a crucial component of goal setting.

For example, I spent 9 months of my life working for that fix and flip business I mentioned above, only to realize I care far more about passive income streams and buy-and-hold investing than I do about fixing and flipping, wholesaling or development.

Related: Passive Real Estate Investing: How to Have a True “Four Hour” Real Estate Workweek

If I would have started my approach to real estate with “Okay I want my life to look like X. I want to make X amount of money, in such and such way, and make sure these components are incorporated,” I know now I would have never quit my job and wasted 9 months of my life.

You need to know what you want in life, so you can actually go after it.

Otherwise you’re going to work super hard and end up with something you don’t want, in some crazy mid-life crisis.

4. Do I Even Enjoy the Type of Investing I’m Pursuing?

This question feeds off of number 3, but there is an aspect of it I want to bring to your attention.

I want to free you up a little bit:

It is okay to quit what your doing, if you don’t enjoy it.

Our culture may say otherwise, but don’t base your life on what culture says. You see, I remember feeling really guilty when I realized that I wanted to quit, when I had put so much effort into learning everything I could about fixing and flipping.

I had the mentality, “I have invested so much, I can’t leave now…” but you know what? It was WAY better that I left.

Life is short and precious, don’t squander it with doing things because of obligation or because it’s the “right thing to do”.

Live by passion. Period.

This concludes my article for today.

Did you find this helpful?

Be sure to leave your comments below!

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{ 18 comments… read them below or add one }

Sharon Vornholt July 2, 2014 at 2:13 pm

Jaren –

That’s a terrific post. If every real estate investor had asked themselves those very same questions when they first started out, I’ll bet there would be a lot more “happy, well balanced investors in the group.

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Jaren Barnes July 2, 2014 at 5:12 pm

Thanks Sharon!

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Nzinga H. July 2, 2014 at 4:37 pm

Thanks for sharing the wise encouragement! The last question really spoke to me as I suddenly am moved to switch my entry into investing from a buy-and-hold to lease assignment strategy. It fits my personality more and excites me more to start! All the questions were spot on : )

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Jaren Barnes July 3, 2014 at 8:44 am

Nzinga thank you so much! – These questions are super important you know? Is there anything you or anyone else on here would add to the list?

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Jonna Weber July 2, 2014 at 5:44 pm

Very wise words Jaren! I especially like #4. If you don’t enjoy the sector of investing you are in, chances are you will quit far too early in the race.

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Jaren Barnes July 3, 2014 at 8:45 am

Thanks Jonna!! I 10000% agree. We have to know what we want in life, for sure!

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kris July 2, 2014 at 7:34 pm

I did what you are saying. My step 4 is NNN Walgreens, auto deposit 1st of month. Happy with life, tennis, hike, fiend, family, vacations etc. Thanks

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Jaren Barnes July 3, 2014 at 8:47 am

Wow Kris that’s awesome!! I’d love to learn more about NNN. I feel like it’s the perfect investment vehicle… what are the downsides to it, or the things people need to look out for?

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Amy July 4, 2014 at 12:03 pm

Can you please expand a bit on how you purchase (I assume shares of) the Walgreen’s or any other NNN? Just did a a bit of online research, but am unsure how to proceed. thank you!

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Jorge Navas July 3, 2014 at 12:40 am

First of all, great advise. Thank you.
Very insightful and illuminating, specially if you look at it from not only a Real Estate perspective but from a personal life one.
Keep on writing.
Thanks again

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Jaren Barnes July 3, 2014 at 8:48 am

Jorge thank you! Yea I’ve noticed that sound business advice usually translates to overall life advice… interesting stuff for sure!

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Raj July 3, 2014 at 10:09 am

Great post. I think about this often and all the points made here are very important and all long term investors have to face them and I believe if you want to be in the investment world for long time you have to think about this things will you still do what you do if you had all the money you need. THis article really made me think and keep going strong in buy and hold real estate and hope that lots of young people read articles like this to get them going at young age and use time wisely.

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Uday T July 3, 2014 at 10:16 am

Good job, Jaren. The only thing I would add is that for #1, motivation can be non-monetary as well. I do realize that for most folks its monetary, but every once in a while you will find guys like me who LOVE real estate for the business it is. Not saying my intentions are all altruistic. I do care about the monetary aspects DEEPLY, it is a business after all. But my primary motivation for RE is RE itself. :)

I love #4! :)

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Gregory Braun July 3, 2014 at 10:55 pm

Jason,
Great Things to think about. As a new investor it gives me encouragement that I can try a few different types of RE and move on if something is not a good fit. BTW i don’t think you wasted 9 months of your life. It sounds like that experience helped teach you some of what you posted in this article. Some lessons are learned through mistakes, and most people don’t regret mistakes once they realized what they gained.from the experience. They just wished they had learned sooner!
I will have to reread this and do some serious thinking. Thank you.
Greg

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Priscila Argaez July 4, 2014 at 8:44 am

I agree with Uday, I find a lot of people doing real estate just for the money. It is true that real estate can provide you with financial freedom and wealth which is obviously important to realize your dreams. However, you can make a lot of money in other fields as well such as being an investment banker, a successful entrepreneur, or a best selling author. That is why I think is important for anyone to not only be in real estate for the money but because real estate is fun, challenging, stimulating, beautiful, and so on! You have to be passionate about the real estate game itself!

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J. Harrison July 4, 2014 at 8:42 pm

Great post! Thanks for sharing your thoughts.

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Carrie July 9, 2014 at 11:19 pm

Thanks for Sharing! I really enjoyed #1 & #3 because if you don’t know why you’re in the business then you don’t have the motivation for success and that motivation designs your lifestyle. For those who want to live a certain lifestyle, then real estate is a great investment to be in because your wealth is a reflection your determination in the market. We talk a lot about successful investments and wealth building opportunities on our podcast, Creating Wealth (http://www.jasonhartman.com). Check it out and let me know your thoughts on our topics and conversations.

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Lin Van September 1, 2014 at 12:18 pm

After retirement At age 60…I had a 401 K…that I had no idea how to invest in the stock market.
It went nowhere . We moved to a low cost spot on Central Coast of California. We bought foreclosures and short sales consistently , since 2009. Newer, market entry single family homes, are a Rental Magnet . We are just plain people, happy with old car and Truck, and a modest home in the neighborhood of our Tenants. Anything left over will be inherited by our children.
Grateful for the bounty.

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