The jury is in, the studies are conclusive, we don’t need to guess anymore… multitasking is evil. It causes brain damage. And it limits productivity, restricts your income, adds to your stress level, can damage relationships, and could shorten your life.
So, why do real estate investors love to multitask?
You may think I’m picking on fellow real estate investors. You may wonder why I’m being so hard on investors, in particular. Here’s why.
I’m not talking about the typical multitasking that is so common in business and life these days. I’m talking about professional multitasking—two-timing, living a double life, moonlighting.
It’s so common in the real estate investing world that it’s accepted as normal. While some people succeed at this form of professional multitasking, I believe that most who try it will experience:
- an eroded quality of life,
- a much higher stress level,
- lower income, and
- a premature end to their real estate investing career.
BiggerPockets CEO Scott Trench recently agreed with this sentiment in this post.
What am I talking about, anyway?
Too Many Irons in the Fire
I’m talking about real estate investors who make a great income from their day job and attempt to actively manage a real estate business on the side long-term.
I realize this is offensive to many of you, and I really don’t intend to offend. (See my caveats later in this post.) But I would like to spare many of you from the stress, limited income, and likely failure at the end of this path for most people.
Why is this like multitasking?
Definition of Multitasking
Per the Cambridge Dictionary, the definition of multitasking is “the ability of a computer to operate several programs at one time.” The origin of the word dates only to the 1960s. In fact, Google shows it had zero use prior to recent years.
Though originally applied to computers, it has found a new application relating to humans in the past few decades. Multitasking in the human sense is trying to successfully accomplish more than one task at a time.
When I talk to real estate investors who earn their primary income from a great job or own a business, medical practice, IT business, etc.—those who have a long-term plan to build an alternate stream of income by actively managing a real estate portfolio—they are typically multitasking. I find it striking that my conversations with these wonderful folks are very different in the early stages of their journey versus later.
When I speak to those in the early stages, they are usually excited, hopeful, and confident that they can pull this off. Many of them have gone to a guru’s seminar and have been told that it is easier than it really is.
When I speak to many of these investors in later stages, we often have a different conversation. They are often exhausted. Their quality of life, families, friendships, and income have not gone as planned. And especially in times of an overheated market (like 2006 and now), they realize they are unable to compete with the big boys to locate the best off-market deals.
They often realize the truth of this ancient Chinese proverb:
“He who chases two rabbits will catch neither.”
I recently spoke to a dentist in the Pacific Northwest. He told me he was building and managing a portfolio of 20 rental homes that would eventually replace his income and provide for his retirement. At first, he sounded like he was enjoying it.
Then, he sighed and admitted he wasn’t enjoying it at all. He was taking calls with painters between dental procedures and screening tenants in the evening.
“I have to admit this is driving me crazy. And I’m only on house number three!” he confessed.
This is not as easy as it seems. If this is your plan, I would think hard about other options. I’ll get to that in a minute.
Who CAN Multitask Effectively
So, who am I not talking to? I’m not talking to four groups of people:
- If you are a full-time, active real estate investor building an active portfolio, actively flipping homes, or actively doing some type of larger commercial deals, I’m not talking to you.
- If you already own a portfolio of single- or multifamily properties and have effectively outsourced property management, accounting, and other critical functions, allowing you to focus on your full-time gig, I might not be talking to you.
- If you are actively managing real estate while doing your full-time gig on a temporary basis while you are in transition, this seems like a reasonable thing to do. Most entrepreneurs have had that tension while they launched. I sure did.
- If your role in an active real estate investment is of a passive nature, then I’m not talking to you. For example, if you are loaning money through a hard money lender, or you provide funding for a house-flipper, or invest with a syndicator or a fund, this is a great way to benefit from real estate investing while earning money from your day job or enjoying your retirement.
How to Stop Multitasking as a Real Estate Investor
What’s the cure for multitasking? Actually, I just outlined the cure above (the four types I am not talking to contains the solution).
I have friends doing all of the above. And they are prospering in these activities. I believe you could, too.
What’s my top choice, you ask?
At this point in my investing career, with almost three decades as an entrepreneur (two of these in real estate investing), I strongly prefer option No. 4: passively investing with a professional syndicator. Unlike the other options, this one can give you access to a team of professionals with a track record, property management, skin in the game, professional investor interface, and best practices on tax deferral.
I practice what I preach. Though I have done options No. 1 and 2 for years, I am fully invested in option No. 4 now. I invest my funds this way, and I recommend that accredited investors take this path. Connect with me and we can discuss how I came to these conclusions.
Are you a multitasker? Are you finding success on this path? Feel free to disagree with me… I have much to learn and realize generalizations don’t apply to everyone.
Let’s discuss in the comment section below.