A Letter to My “Family” About Real Estate Investing
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I know I am not an expert in real estate—and especially real estate investing. I know I have made many mistakes financially and have failed, in large part, to adequately prepare my financial self for retirement. I have failed to give myself “options” for much of my life and have failed to build up an estate that I can pass on to my kids to ensure they have options later in life.
However, in spite of my past failures, I have educated myself about real estate. I have prepared and challenged myself to right the metaphoric “faltering ship” and focus on the opportune years I have left to build at least a modest real estate portfolio.
I have read many thousands of pages of real estate investing books, listened to hundreds of hours of real estate investing podcasts, and have even obtained my real estate license, all as part of an effort to adequately prepare myself for the realities of real estate investing.
I have stacked the deck in my favor, as much as anyone can, and have carefully established a plan that is not only realistic—but simple—and greatly reduces the personal financial liability that I face. Furthermore, my plan was designed to include others, including my family or team, because one thing I learned during my education phase is that success in this is not something easily done alone.
Therefore, I am offering you the opportunity to invest only yourself and your “sphere of influence” in building something that can improve all of our financial situations during our retirement years. I am not promising riches or even a path to “coasting” during your retirement years; I am simply offering “options.”
I will not ask for money nor even much time from you. All I ask of you is for you to tell everyone you know what we do and what we are looking for and to be ever vigilant for an opportunity to exploit. In return, I will give you equity in each property you locate that we obtain and reward you for each lender who offers to provide private financing.
That’s it—no financial risk to you at all. I simply want to take advantage of your sphere of influence in order to exponentially increase mine.
All that I ask is that you are determined and entirely committed to building our portfolio in order to give each and every one of us in our “family” options by striving to connect with people each and every day.
He Who Is Seeking Options
The Importance of a Village
There is an old saying that it takes a village to raise a child. I will offer that it takes a “village” to build a successful real estate investment business. Anyone and everyone who has listened to Brandon Turner of BiggerPockets has heard him say on numerous podcasts that he built his property portfolio by telling everyone he knows what he is doing.
In my brief few years as a real estate investor, I have found that statement by Brandon truly to be the key to scaling a portfolio. Think of it by using the well-known analogy of dropping a small pebble into a large pond. The corresponding ripples created by the pebble travel farther and farther than the small area the pebble actually touched.
Simply put, I have a small sphere of influence. But if I begin to add the spheres of influence of the people I tell, and then who they tell, and on to others, eventually that sphere becomes exponentially larger.
I am excited about the potential that real estate holds for our company and most importantly, our retirement income, which is the purpose of all of this. My brother and I are building a real estate portfolio not just to amass wealth or property but also as the means to an end—retirement income.
More pointedly, our real estate portfolio will provide options for us later in life.
I tell my children constantly that money, in and of itself, does not make you happy. However, it does give you options in life, and those options can be the catalyst for your happiness. I am not the only one who believes this.
Chris Rock, the actor and comedian, said about wealth, “Wealth is not about having a lot of money; it’s about having a lot of options.”
Who Is Your Family?
The title of this article indicates that it is a letter to my family. In my circumstance, my actual family is not only my current business partners but also my potential business partners. Your “family” may simply be your team that you have built in order to further your real estate goals and build your portfolio.
Whomever you have in your “family,” make sure they are dedicated to the end goals of the whole and not simply the individual.
Look at it this way, you can assemble the best team out there. You can fill all the blanks with experienced people who can deal with any and all potential issues and who are experts in their respective fields. But without commitment to the team and a willingness to always keep that team moving forward, their attributes are greatly diminished.
I will offer that it is better to have a team of like-minded individuals with similar (if not the same) goals and drive as you, who may have far less expertise in their respective field than a group of so-called “experts,” who see you as just a project or a “feel-good” cause.
What Are Your Options?
My brother and I see the options that this business holds for us—the potential. Potential can be explained as the ability to do something; however, you have not quite yet realized that ability yet. In other words, you have the skills, the desire, the dedication, the determination, etc. to succeed. But for whatever reason, you have not put all of those attributes to work in the proper way to realize your full potential.
As I stated earlier, we look at real estate investing as a way of providing options for us later in life. We do not have the luxury of investing for 30 to 40 years before we reach our retirement years. I will be 50 this year.
We are not looking for a home run, but we are focused on “small ball” investing (to use a baseball term). We are looking to score—but not in the same traditional way as many investors.
We understand that time is against us and that our ability to build a portfolio of 100 properties, all paid for in the next 10 to 15 years, will be a difficult undertaking (although far from impossible). However, a portfolio of 20 to 25 properties that we can self-manage until we turn 65 is within our “potential.”
We may not have every property paid for (our business model says we should) by then. But even if we do not, we will have a large amount of equity in those and will be in a position to have the properties managed by someone else. We can then sell them off one by one and pocket the equity in them—or sit back and enjoy the monthly cash flow they provide.
Whether we make $1,000 or $10,000 a month in income, it is more than we would likely make without the property. This income is designed in part to supplement our retirement. But more so, it is designed to help build wealth for our children and grandchildren (at least my wife says we better have grandkids by then!).
I used to play a lot of church league softball and one of the older guys on the team, Lee Englund, was fond of telling the batters that “a walk is as good as a hit.” What he meant was that it really was more important to get on base than worry about how you got on base.
Don’t let your pride get in the way because you wanted to hit a home run. After all, you can’t score runs if you don’t get on base, and if you can’t score runs, you will never win the game!
The Meaning Behind My Letter
I firmly believe that the statement my friend Lee made is applicable to investing—and in this case, real estate investing. The point of this article (finally) is that you need to construct a team that is DEDICATED to the end game and is vested in creating options, not simply wealth.
Furthermore, dedication is just as important—if not more important—than experience. I will offer that you will go further with a dedicated team than an experienced team. Experience is taught or learned; dedication comes from within.
One of the last questions asked on the BiggerPockets Real Estate Podcast each week is what sets successful investors apart from those who fail. My response would be faith.
I am not talking about religious faith, per se. I am speaking about faith from the “family” in the process and the end game. Faith that by increasing the sphere of influence, it can greatly increase the opportunity for success for all the players.
My desire is to motivate my “family” to see things through my eyes, to see the potential that their sphere of influence can create.
This is much like how dropping that small pebble into a pond affected a much larger area than what the pebble actually touched. Essentially, just like that pebble, expanding my sphere of influence outside of what I actually touch provides for the potential to give each and every one of us options.
I am not promising we will hit a grand slam—or even a triple or double. However, if we all are committed, dedicated, and exploit our sphere of influence each and every day, and if we have faith, we will get on base. This, in turn, leads to scoring runs and ultimately provides us with at least the “option” to win the game.
For those of us out there for whom time is waning, remember: A walk is as good as a hit.
Do you agree with my position? Are you and your team tapping into your sphere of influence?
Let’s discuss in the comment section below!