Real Estate Investing Basics

How to Start Thinking Like a Big-Time Real Estate Investor

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In the video below, investor Thach Nguyen reveals how he has successfully made a career of investing in real estate. He’s doing so well, in fact, we’re standing in front of a deal that he anticipates will positively cash flow around $240,000 a year—and that’s just one property he purchased from one single owner.

So, what’s the key to generating profits like Thach? Having the correct mindset.

The Mindset of a Big-Time Real Estate Investor

“If you were to simplify it—give me advice for any investor right now—tell me how do you look at deals differently?” I asked Thach. “How do you get focused on only one type of deal, and how do you broaden your mind to start looking at every possibility?”

Below he gives us a few pointers.

Related: 3 Ways to Develop a Winning Mindset

When I was starting, I started as a real estate agent. As a real estate agent, when you look down the road, the farthest you can think is listing this property. You can ever think beyond that.

If you’re a wholesaler, what would you think? The farthest you can think is you can wholesale or maybe you can flip it later. A flipper would think flipping it. A builder would think tearing [existing property]down.

So, my tip for you guys is you have to start with 10, 20 years out and ask yourself what your lifestyle looks like.

How much money do you have coming in every single month? How many doors do you need?

From there, if you’re thinking long-term, when you think passive income, you find deals that match passive income. If you think wholesale, you find deals to match wholesale. You think flip, you find a house that might flip. You can never find a flip that gives you these types of return, because your mindset is thinking flip. Your mindset is thinking wholesale.

So, the tip I will tell people is if you want to find a better margin deal or deal like this, you’ve got to think like a long-term passive income investor.

Now, when I think of this, I start my day thinking:

  • Can this property meet a BRRRR?
  • If it doesn’t meet a BRRRR, can I build on it?
  • If it isn’t something to build on, can it meet a flip?
  • If it doesn’t meet a flip, can I assign it?
  • If I can’t do that, can I just list it for the owner?

Back then, I started from the bottom up. And so what happened, is if you started up, you just stop wherever your mind can extend. So, the key for me now is that I stand from—every day I stand from—I’m an investor who wants to create passive income.

So, when I go out there and door knock and find property, the Law of Attraction will give me what I think about. That’s what I find all the time.

This is something I struggled with for many, many years. To sum up what Thach said, I only thought six months out all the time.

“I need to flip houses,” and that’s all I found. I found a ton of flips, and all I would do is flip. When I was a wholesaler, all I found was wholesale. So, it’s niching yourself.

Small house exterior. View of entrance porch with stairs and walkway

Related: 8 Ways to Use Rental Properties to Create Retirement Income

Now, I do believe that at some point you’ve got to niche yourself, but Thach chose to do so at the top and then work back down.

“That’s right,” he said. “That’s the key.”

I think it’s a great point. So, I hope you guys get that and think long-term. I thought six months out forever; only the last few years of my life I’m actually thinking 10 years out. And it’s really challenging for me—still. But being able to do that, you start seeing so many other exit strategies.

Thach added:

Here’s the thing though, just because you think long-term doesn’t mean you’re going to stop wholesaling. It doesn’t mean you’re going to stop flipping.

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So, when a deal comes to me, I can quickly analyze it and go, “BRRRR or new construction or flip.”

When working backward, I’m not telling people to stop flipping houses. I’m telling you when you stand  over here, you’re clear on that you’re flipping this house for a specific reason—getting max for the flip.

So, you don’t stop doing it. You just have an end game in why you’re doing it.

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Do you agree or disagree with this advice? If your strategy differs, do you think it’s superior to this one? Why?

Share your thoughts in the comment section below.

Tarl Yarber is the CEO and Founder of Fixated Real Estate LLC, a Pacific Northwest leading investment company with over $45MM in single family res...
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    Michael P. Lindekugel Real Estate Broker from Seattle, WA
    Replied 3 months ago
    great talking about mindset. all the mastermind this mastermind that all mention it. it is nothing more than fancy repackaging of entrepreneurship of running a company. the long term returns for a company profitability and investor returns. it isn't anything new. business school finance, accounting and management 101 repackaged. Excluding the banking part of the real estate industry with derivatives, derivatives of derivatives, credit default swaps, etc. for all the hype about real estate there is not one new real estate investment strategy in the last 50 years. Not one. none of this is new. Same hype in the 1990s. same hype in the 2000s. anecdotally, the long term hold investors fair better in a market correct or crash than flippers. Flippers tend to get over extended. thinking about how much monthly cash flow you need in 10 years, 20 years and working back to accumulate that many doors to provide the cash flow is repackaged business school retirement and estate planning. what i routinely dont hear mentioned is yield, interest or ROI. they are the same and calculated using IRR, NPV, and MIRR. this is important. For example, your portfolio contains ten assets each bring in $100k. the portfolio average yield or interest calculated on the ten assets is 15%. That means the cash flow generated provides a ROI of 15% interest on the original cash to acquire the assets. Now, you are evaluating acquiring an asset bringing in $240k cash flow a year. Sounds fantastic!! $$$ what if the $240k is 8% interest on the cash to acquire the asset? then your portfolio yield is being dragged down by acquiring the $240k asset when you should be seeking assets providing at least 15% interest. how much cash was invested to acquire the asset the $240k cash flow? how much cash was sunk into the asset after acquisition? is $240k a year an IRR of 5% or 35%? Only talking about cash flow without talking about yield does not provide for decision analysis for competing projects. he mentions margin which i assume is profit margin. profit margin is not the same as ROI or yield. profit margin is a measure of an entities pricing strategies and cost controls and has nothing to do with ROI or yield. It is mostly a company’s internal measurement. Generally, in the whole online real estate investment blogs, website, gurus etc there is serious lack of discussion surrounding ROI and calculating it properly. Cash flow means nothing if the ROI is so low that why bother. If we want to teach people to be real estate entrepreneurs, then we need to teach them to think as they CFO not just the CEO.
    Wenda Kennedy JD from Nikiski, Alaska
    Replied 3 months ago
    I agree. People get focused on one aspect and that's what they do -- no matter where the market is going and what trends are developing. I started in RE in 1976, so I have lived through several business cycles. I try to talk to other investors about what I see coming, but many are functionally deaf. They are myopically following their limited business models without making the necessary adjustments. Then the market rolls over them like a Mac truck. Survivors and those who thrive must be nibble in order to move into the different market segments, depending on the trends and opportunities.
    Terry Lowe
    Replied 3 months ago
    Wendy, Often I agree with your analysis. Our son lives in Anchorage, and it would be fun to meet and chat sometime when we are there.
    Anthony Harper Realtor from Birmingham, AL
    Replied 3 months ago
    Tarl you're an "Og" for making this one. Good stuff!
    Eduardo Nogoy
    Replied 3 months ago
    Hi Michael, I really like your analysis and feedback. I want to learn from you I’m a prospective RE investor thinking for the long term.
    Michael P. Lindekugel Real Estate Broker from Seattle, WA
    Replied 3 months ago
    Eduardo, i have participated in every investment strategy there is. i have taught matriculated finance, economics, and accounting. my preferred strategy is long term hold. least amount of work for the most amount of money passive investment. there is nothing special about real estate except the passive investment tax treatment. there are no new investment strategies. you want to flip a house? nothing new or special. investors have been taking over under performing and failing corporations and turning them around and selling them since commerce began. Warren Buffet is a long term hold investor that follows value investing. nothing new or special about acquiring the undervalued apartment building or commercial property. business school 101. every real estate seminar, class, blog, guru is repackaged business school 101 with real estate terms thrown in. i will say the vast majority that i have attended and observed get one or more things wrong. terms are mixed up such confusing profit with cash flow or profit margin with ROI. definitions and formulas are not correct. net income is incorrectly used in ROI calculations. the ROI calculus is incorrect.
    Linda Burrell
    Replied 3 months ago
    I love this strategy and I will be putting it to work. You will be hearing my testimony once I get my first deal. Thanks a lot
    Jason Sellers
    Replied 3 months ago
    Greatness CONGRATULATIONS 🙌🏿🙌🏿🙌🏿💪🏿