Why Most RE “Investors” Never Create Their Desired Lifestyle

[Brian Ellwood]

There’s a lot of misinformation in the real estate education industry.

Not about how to invest in real estate, but about the purpose of investing in real estate...

The lifestyle you can expect to receive, depending upon the type of efforts you put in.

Allow me to explain…

The term financial freedom is tossed around by every single real estate educator.

Many of them post pictures of Lamborghinis and big houses with a caption like:

“Real estate investing is the best way to get FINANCIAL FREEDOM!”.

The problem is, “Financial Freedom” is a vague term, and hardly anyone ever takes the time to define what that means.

Does financial freedom mean a bank account with a lot of money in it?

Big checks coming in?

The ability to buy things “freely”?

Not having to worry about money?

The other question is:

What does someone have to DO in order to get that freedom?

What’s the trade-off?

Also, is there a stopping point, or a point at which you can step out?

In other words, do you have to do things you don’t like for a while, but then you don’t have to do them once you get “financial freedom”….

OR do you have to keep doing them to maintain “financial freedom”?

But, there’s another part of that statement that’s even more unclear:

“Real estate investing”

Real estate investing can mean a LOT of things:

• buy and hold
• fix and flip
• wholesaling
• buying notes
• buying tax liens
• and more.

There’s also a residential and a commercial path to several of those.

It's safe to say:

The waters are definitely murky when someone first gets into real estate investing.

So here we have two vague terms, which on the surface the industry defines as something like this:

Real Estate Investing - Doing one or more of many different forms of investing related to or involving real property.

Financial Freedom - Not having to worry about money, being rich.

So when someone says “Real Estate Investing will give you Financial Freedom” as their headline, do you see why there’s a problem with that?

Using our new definitions, it would look something like this:

“Doing one or more of many different forms of investing related to or involving real property will make you rich and you probably won’t have to worry about money.”

Can you see how vague and cryptic that is?

Do you see why so many people are confused when they first start learning about real estate (and often stay that way forever)?

Like me, a ton of people get into real estate because they read the book “Rich Dad, Poor Dad” by Robert Kiyosaki.

They learn about passive income and say “Hell yeah, I want some of that, who wouldn’t?

"I’m sick of working for a paycheck. I’d love some mailbox money to come to me every month."

Real estate seems to be the main way people are doing that.

"I’m going to check out a local investors meeting. I want to do this!”

So, when they first start out, their primary goal is to get passive income. They want it because they are tired of working for money, doing something they’d rather NOT do.

They want to spend more time with family, friends, travel, pursue passions, exercise, and more.

So, it’s fair to say that for most people, when you really dig in and ask them, their definition of “financial freedom” is having passive income coming in, WITHOUT WORKING, so that they can do all of the above things.

That’s good, we’ve narrowed down what most people, and probably you, really want.

So if your bills are 40K/year, you want 40K coming in every year, without working. You want those checks to just hit your mailbox.

See, now we’re getting much more specific, and that’s great. It helps trim away the fat in a big way.

We went from wanting “financial freedom” to wanting $40,000 per year, or even better, $3,333 per month. THAT is the target.

It might not seem important to know that right now, but the opposite is true.

It couldn’t be more important.

Knowing the exact outcome you aspire to get from your endeavors is critically important, because it informs all of your actions.

The outcome tells you what to do, each and every day.

So if passive income and freedom are the specific outcome you want from real estate investing, then it would make sense to focus on the activities that provide passive income, right?

It would. But, for whatever reason, this one juncture is where so many people go terribly wrong.

I started out wholesaling and flipping myself. I did it for many years.

I had a lot of "success" as most would define it within those niches, doing over 100 deals per year for about 4 years running

But, my lifestyle was NOT what I hoped for.

Being tied to a desk and managing a team was not my ideal outcome.

It wasn't until I switched to building truly passive income that I was actually able to get the freedom I was after.

The biggest reason people gravitate towards real estate strategies like wholesaling and flipping is because they seem easier, less committal, and like a good way to get their feet wet in the industry.

Another big reason is that they don’t have a lot of liquid cash to actually purchase the houses, and they falsely believe they need it to make a purchase.

Another BIG reason people don’t want to actually own something is because they’re scared they will buy a bad house.

They aren’t well versed on exactly how to tell a good deal from a bad one, so they gravitate towards strategies that don’t end with them owning the property.

I know this because I was that person, and I clung to those excuses, for many years.

Instead of digging in and doing the hard work to find answers to these vague objections people have, like

“I don’t have the money” or

“I don’t know how to analyze a deal”

People instead spend months and often years doing real estate strategies that only generate checks for themselves....

Not passive income....

And NOT their ideal lifestyle.

They engage in “active income” businesses, that are transactional. This means that for every time they make money a transaction has to take place.

I think this is really unfortunate because it’s derailing a lot of would-be investors from achieving their ideal outcome.

They get a taste of what they think real estate investing is, don't like it, and they quit.

You absolutely must start with lifestyle.

What would an ideal day look like for you if money was no object?

What does that ideal day cost to live (per month)?

How many properties do you need to buy (and hold) to hit that passive income goal?

That's it, folks.

Did you know that the average American can actually pay ALL of their bills with the income from about 12 rental properties?

I hope this post helps some of you to shorten your journey to financial freedom.

I did the wrong stuff for a good 6 or 7 years and I don't want you to have to do the same :)

To your freedom!

Brian

[Amy Kendall]

Awesome post @Brian Ellwood!  I absolutely agree!  I think some new investors get lost in thinking they have to add 100 units this year like they heard on a podcast, or else they aren't doing it right.  But if you know what numbers you are trying to hit and just shoot for that, then you probably can do that with a lot less doors than most people think.  My husband and I sat down about five years ago and developed a plan to replace his income and that was our plan.  Now, we have surpassed that, and of course our end goal changed, but he is now part time at his job and we have more time to spend together as a family and do the things we like.  We still don't have that lamborghini, but that was never what it was about for us in the first place.