3 Simple Steps to Set Achievable (Yet Ambitious!) Real Estate Goals

by | BiggerPockets.com

Setting great goals is hard. Achieving them is even harder. 

How many times have you made a New Year’s resolution (aka goal) and abandoned it by February?

Maybe you intended to do one of the following:

  • Lose 30 pounds
  • Start eating healthy
  • Spend more time with family
  • Buy your first investment property

But all too often I see newbie—heck, even seasoned!—investors set less-than-stellar real estate investing goals.

They might be something like:

  • My goal is to buy 10 homes this year (meh…)
  • My goal is to buy 10 $100-$150K homes this year (better!)
  • My goal is to buy 10 $100-$150K homes in Kansas City / Indianapolis / Birmingham that each yield $200/monthly in cash flow after all expenses (good… but still lacking)

I’ll tell you a secret. If you’re failing to achieve your goals, it’s probably because you didn’t set the goal correctly in the first place.

Although you may have been striving to wire the above goals according to “S.M.A.R.T.” criteria—meaning specific, measurable, attainable, realistic, and time-bound—you probably didn’t. 

And setting a S.M.A.R.T. goal is imperative, as it helps you understand what it is you need to achieve. However, it lacks two very crucial components for success.

  1. It lacks emotion, personal connection, a compelling, “Why am I doing this?” And this is the very thing that will keep you motivated through the good, bad, and ugly!
  2. It doesn’t specify how you will achieve it—a step known as goal setting to the “now.” (We’ll discuss more below.)

So if setting a S.M.A.R.T. goal isn’t the ideal way to set a big, hairy, audacious goal, let’s explore a better way.

real-estate-goals

Step 1: Identify the “Why”

Let’s go back to our previous examples:

  • My goal is to buy 10 homes this year (meh…)
  • My goal is to buy 10 $100-$150K homes this year (better!)
  • My goal is to buy 10 $100-$150K homes in Kansas City / Indianapolis / Birmingham that each yield $200/monthly in cash flow after all expenses (good… but still lacking)

All three of these statements tell us what we are looking to achieve. But why exactly are we trying to achieve it?

For example, I’m not sure anyone starts out really wanting 10 houses. They want the feeling that 10 houses gives them!

Maybe it’s earning extra income for a vacation, building a larger net worth, or generating enough income to cover expenses.  

Or maybe it is deeper?

When I work with clients and mentees, I challenge them to think even deeper. I urge them to think about the emotion they wish to satisfy in terms of security, independence, freedom, and so on.

What emotion or feeling do you want to have so badly that you can taste it?

Here’s my personal goal: I want to generate $10K a month by the end of 2019, because I want to feel the freedom that comes with getting to choose how I spend my time.

Notice that stating the “why” part of a goal follows a simple template.

I want (X) by (when) because I want to feel (Y).

I could drill down further:

  • I want time to be with family and friends
  • I want to travel
  • I want the opportunity to coach/mentor others to achieve financial independence through real estate
  • Or I just want to do work that excites me

Regardless, this simple “because,” or “why” statement, will be the barometer, keeping me motivated and allowing me to understand if I’m truly on track toward my goal.  

For example, I could go get a job that pays me $10K a month where I have to commute two hours a day, but it is strongly possible that would violate my “because” statement. I wouldn’t be choosing how I spent my time or doing work that excites me.

The beauty of this opening goal statement is it probably won’t change too much over time as you’ve identified how you want to feel.  

investment philosophy, investing goals,

Related: The Key to Reaching Your Personal & Professional Goals: Networking

Step 2: Identify the “What”

Now that you have uncovered the emotion or feeling you are trying to achieve, let’s figure out what you are going to do to reach it!  

(Side note: over time, your “what” and “how” might (and probably should) change as you build your skills, expand your networks, and clarify your direction. That is perfectly OK!)

We need to define our levers that we are going to pull to reach our goal.

Let’s define a couple of terms first:

  • Lead indicator: This is the “how” or the actions you are going to take consistently and persistently to achieve said goal.
  • Lag indicator: This is the “what” and will measure your success in terms of the lead indicator.

In short, setting a good lag indicator will determine the number of transactions at a certain cost/yield that will reach the goal.

So going back to our examples from above, let’s take a moment to consider their “what.”

  • Buy 10 homes this year
    • This only tells us vaguely about the transaction but says nothing about the desired cost we want to see per transaction.
  • Buy 10 $100-$150K homes this year
    • This is better, because we’ve clarified the type of transaction. However, there’s still no specificity about the cost of the transaction.
  • Buy 10 $100-$150K homes in Kansas City / Indianapolis / Birmingham that each yield $200/monthly in cash flow after all expenses
    • This is way better, as we’ve clarified the type of transaction, the cost of the transaction, and even where the transaction will take place!

Here are other examples that follow the goal template:

  • Purchase 10 homes that each yield an average of $200/monthly after all expenses
  • Flip four properties that each yield an average of $15K after all expenses and capital gains
  • Complete 10 wholesales that each yield an average of $10K after setting money aside for taxes

So let’s put the “why” and “what” together. Here’s my personal goal statement:

  • I want to generate $10K a month by the end of 2019, because I want to feel the freedom that comes with getting to choose how I spend my time.
  • I will do this by adding net 15 $100K-$150K BRRRR investments in Kansas City / Indianapolis / Birmingham that each yield an average of $200/monthly in cash flow after all expenses.

Now, I’m not going to sugarcoat it—this is where many get stuck. There are so many things that you could do to reach your passive income goals.  

But what should you do first to get there?

In my case, I could do turnkey, BRRRRs, flips, notes, syndications… but my sweet spot is BRRRRs. I know the process like the back of my hand.  

Therefore, everything else is simply a distraction.

euphoric man motioning that he's won while and watching a tablet in a coffee shop terrace of a port of urbanization with the sea in the background

Related: There is a Major Problem With Your Goals

Step 3: Identify the “How”

If just stating a goal got you there, we’d all be billionaires with amazing beach bodies. (This isn’t the exact quote by American entrepreneur Derek Sivers, but you get the point.)

You actually have to do the work. Enter the lead indicator—or the “how”!

The lead indicator is the consistent and persistent action (or actions) you need to take to achieve the lag indicator. It’s also another place many people go off the rails with their goal setting, as this is the piece that helps us translate where you want to be into daily action.  

Another way to look at this concept is goal setting to the “now.” This is discussed in my my favorite book The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results by Gary Keller and Jay Papasan.

You may have heard BiggerPockets’ own Brandon Turner talk about a LAPS funnel (leads, analyze, propose, success). We are going to follow this structure.

Back to my goal statement:

  • I want to generate $10K a month by the end of 2019, because I want to feel the freedom that comes with getting to choose how I spend my time.
  • I will do this by adding net 15 $100K-$150K BRRRR investments in Kansas City / Indianapolis / Birmingham that each yield an average of $200/monthly in cash flow after all expenses.

So how will I close 15 BRRRR investments?

  • Leads: I’m going to set up a specific search in my three farm areas (KC, Indy, Birmingham). I’ll also let my Realtors and property managers know what I’m looking for so they can bring me off-market or portfolio deals. (If you need help, check out David Greene’s book and look up DealFinder!)
  • Analyze: I will analyze the homes that hit within my price range of 50-75% ARV, desired rehab range, and desired cash flow range. In general, I know I need to analyze about 15-20 deals to find a property I will offer on.
  • Propose: I will offer on the property and negotiate it to a contract. For me, I know two out of three offers tend to close. So to hit 15 deals in a year, I need to be offering on at least two properties a month, which means I need to analyze approximately 40 deals a month, or 10 deal a week.  
  • Success: Close on the contract!

Although you won’t necessarily add the “how” statements into your overall goal statement, set the lead indicator(s) as your mini daily actions—the things that if done consistently will allow you to hit that larger goal.

Conclusion

Even after carefully crafting your “why,” “what,” and “how” for your big, hairy, audacious goals, distractions will be everywhere.

Case in point, I was talking to a fellow BiggerPockets member about our respective businesses. Mid-conversation, it dawned on both of us: if we are picking up 15-plus units in one year, why on earth did we both have flips going? Ouch!

To sum everything up, here are a few quick tips (each could be a massive post of its own): 

  1. Once you have your goal set, say NO to everything else that won’t help you on the path to achieving your goal statement.
  2. Schedule appointments with yourself to do your most important work FIRST (date/time/location). This is where you concentrate on getting your lead indicators done!
  3. Write your goal daily. This will trigger your reticular activating system in your brain and help you see the things around you that will help you move toward your goal.
  4. Practice accountability. You can do this simply by letting everyone know what you are doing and asking them to follow up with you. (Even consider participating in a mastermind group.)

I recommend checking out the 90 Days of Intention Journal for a deep dive, as well.

What’s your goal? Have you specified your “why,” “what,” and “how”? Do you need help doing so?

Let’s discuss in the comment section!

 

About Author

Whitney Hutten

Whitney is a real estate investor and personal finance trainer whose vision is to launch a million families on the path towards financial independence. After purchasing her first rental in 2002, and hitting a homerun, then nearly losing it all on her second deal, Whitney took control and figured out how to invest in real estate the right way. She realized that success must leave clues. So, she studied and replicated the very personal finance and wealth creation strategies the wealthy use to create financial freedom. Today, Whitney is a partner in $240M+ of real estate assets, including 2,050+ residential units (MF, MHP, SFR, and assisted living) and 1,430+ self-storage. Additionally, she has flipped over $1.7M in residential real estate and a solid portfolio of commercial notes. (Don’t tell anyone, though—BRRR investing is still one of her favorite ways to invest—23 units and counting!) In 2018, Whitney founded ASH Capital, where she helps you develop the mindsets, skills, and strategies you need in order to take consistent and persistent action and drive massive progress towards your financial goals.

5 Comments

  1. Larry Russell

    Great article!
    I appreciate you providing us with an example of your stated goals. I recently completed a flip and I now realize how working multiple strategies takes a way from my overall goal of building a massive rental portfolio. My main focus rental properties and this flip was a major distraction. A very timely article, thanks.

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