Rich Mind Poor Mind for Investors

[Matthew Irish-Jones]

I started my career as an investor, turned into an agent that only worked with investors, started a property management company and a construction company, and have now come full circle to again focusing on investing.   Being an investor focused agent and property manager for over a decade has given me some very interesting insight into how real investors think, and how poor investors thing.

Poor Mind Investors

1. Cheap - They want the agent to work for less.  The property manager to lower fees.  The seller to discount $1000 on final walk through because there was a dirty tissue left in on the floor and seek out cheap service as a personal mission.   They love themselves some uninsured, front teeth missing, handyman, who is not reliable, but his hands don't shake all that much when he does show up.

2. Wholesalers - They are going to start their investing career as wholesalers because they don't have Capital.  I could write a very long, boring novel on this fallacy. 

3. Emotional - They are highly emotional investors.  They invest for the dream of high returns and quitting their job.  The amount of people I meet that are going to quit their job because they are going to be the greatest investor since Buffet is unreal.  Its one of the oddest phenomenon's I have ever encountered.  Real Estate is their escape to Utopia, and I am going to be allowed to follow them on their dream as they loyal servant.  All I need to do is look at hundreds of $50,000 houses accurately project renovations, and get them infinite returns in a war zone. 

4. Disorganized - Every vacancy is a five star alarm, every maintenance request is panic, every recurring item that is predictable is cause for curse words, a closed palm fist shake at the Gods, and a verbal thrashing of their uninsured vendors, unscreened tenants, or someone else that happens to be next to them. 

5. Lack of Business sense - Investing in Real Estate is different from the stock market.  Either you will self manage or pay a property manager.  Property managers are not cheap, if you want to save your 8-10% of rent collected, you need to build business systems.  Filing system, screening system, maintenance call system, renovations systems, notice to tenants to vacate, notice of rent increase, notice of late payment, keep up with local laws, organize keys, etc... Once the cheap investor turned wholesaler buys a property, becomes overly emotional and disorganized... it is the beginning of the end of the pipe dream of Corona's on the beach. 

Rich Mind Investors

1.  Value Time - they are using RE investing as a diversification strategy, so they understand they will not get infinite, 20% cash on cash returns or anything close to it.  They value their time, build in the cost of management and invest for tax benefits, equity gain, and diversification, NOT cash.

2. Never become Wholesalers 

3. Control Their Emotions - they understand investing comes with risk, hot water tanks start leaking unexpectedly, honest people make mistakes, and having solid long term relationships with good people in the industry, is worth more than getting a $19.32 discount off of a service.  They are invested for the long haul.  A monthly P+L on a property is much different than a monthly P+L on a business.  Not all properties cash flow every month, this is not a reason to panic. 

4. Are organized or... let their Property Manager do the organizing knowing full well they are giving up some of their cash flow.  They sleep good at night and allow the PM to handle all the above mentioned headaches. 

5. Patience - Trade Up- After 3-10 years they 1031 their equity into a larger property, are willing to take on something more risky, will work a BRRR or do something similar to what you would see in the game of Monopoly. None of them are trying to get rich, because they are already rich or on their way to being rich, and RE investing is wealth diversification.

Well... if you can't get rich as an entry level Real Estate investor what should you do?  Get rich by increasing your net income, keeping your day job, working on yourself, adding value to other people's lives, and if you ever do come up with enough money to invest, use it as a wealth diversification, long term building strategy, not as a tool to NOT work and live on the beach.