As people who use real estate investing to pursue their dreams, we often put our focus on short-term goals and results and neglect the more important long-term vision.
And don’t get me wrong, I don’t blame anyone! There is so much minutiae that comes with pursuing real estate that it really takes some concentration to work on the now and plan for the future simultaneously. However…
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One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Here are 5 things You Need to Do Right Now In Order to Secure the Future
So for todays post, I just wanted to help remind you guys and gals of some the important things you need to be working on for the long-haul, while you are making the small day-to-day things happen in your real estate business. I hope you find these helpful!
1. Define Your Lifestyle Cost
As an up-and-coming investor, you are aspiring to reach some type of defined “wealth” level.
To be “rich” is a VERY subjective concept and we all need to do some soul searching in order to figure out what it means for each of ourselves, individually.
Because we all live in different areas with different cost of living standards, to one, an annual income of $100,000 looks a lot different in terms of lifestyle than the other.
For example, I live in the San Francisco bay area, and with what I want to accomplish and the type of life I want to lead, I have found that my income goal is to build a passive income portfolio through real estate that nets me $30,0000 a month. That’s a take-home of $360,000 per year and it would provide me enough to travel at will, the ability to continue to build wealth, give back extravagantly and live very comfortably.
Now I know if I happen to live in a cheaper area, (I actually spent a large part of my life right outside Atlanta, GA) that number would look more like $150,000 per year.
It simply depends on your goals, the cost of living in the area you reside and so on.
So the take away: How much money do you want to make? What lifestyle do you want to lead?
If you don’t take the time out now to figure this out, you’re going to find yourself in 10 years being like, “What did I just do with my life?” (Not saying that in 10 years from now you’re life will be over, but a lot will be potentially wasted and you definitely won’t find yourself close to where you want to be).
You need to have a clear vision you’re working toward, otherwise your target goal will be nothing, and you’ll hit it every time!
2. Start Saving Money
It amazes me how many people (including myself at this point) live paycheck-to-paycheck, when they don’t even have to!
Saving money is a key to building wealth, and if you don’t start now, 10 years from now you’ll regret it big time!
Let me share a story about someone I know, we’ll call him Bob.
Bob worked the majority of his life making a good living at around $80,000 a year. He played hard on the weekends and worked hard during the week. He was known as a great guy! Loved good food, good laughs and being “hostest-of-the-mostest” if you caught my drift.
Well he recently retired, without a penny to his name. When he realized he was getting older, and his body ended up making it so he could no longer work, it was to late!
He was stuck.
Being in his late 50’s his end result was to live off of disability and social security for a take home amount of about $1200 a month.
Perspective: Lived his whole life on $80,000 per year (around $6,600 per month) and gets to retire and end his days on a lifestyle budget of $14,400 per year ($1,200 per month).
Super sad right?
This is because he didn’t plan and he didn’t save. Don’t be Bob! Get a plan for the future, right now, otherwise you will regret it!
3. Open a 401K and Roth IRA
A lot of us aspiring real estate investors are entrepreneurs of some sort and don’t make a typical paycheck with benefits, perks, stock options etc.
We have to pay for our own insurance out of pocket, figure out our own taxes and so on.
Well with that, I’ve noticed that it is typical that a lot of us end up neglecting opening and contributing to a retirement fund of some kind.
Now I’m not a CPA and you totally want to seek out a professional on this, but with the basics that I understand, I know it’s better to open one and contribute to it monthly, even if it’s only $50 a month!
I hear that because of the power of compound interest, that the earlier you start, the more money you will make in the long-run.
You don’t want to wait!
I’m reading a book right now called “I Will Teach You To Be Rich” by Ramit Sethi and in it, he gives an awesome example of the power of compound interest.
Smart Sally contributed only a $100 a month for 10 years from age 25 to age 35 and then stopped. Dumb Dan started when he was 35, contributing a $100 a month as well and continued to do so for 30 years.
At age 65, at an 8% interest rate, Sally ends up beating Dan almost by $50,000 dollars!!!
(Smart Sally ended with $200,061 and Dumb Dan ended up with $149,036).
As you can see, you really need to set one of these up and get to contributing!!!
4. Make Time For a Hobby
Here we come to the importance of enjoying life.
You see, if you always focus on working and making money, you’ll end up old and regretting a lot of things in life. Take time to smell the roses, my friend!
Whether you’re into hiking or surfing or fishing, whatever it is, make sure to take time to enjoy yourself.
Life is short, don’t waste it, or you may find yourself in 10 years, wishing you had done things differently.
5. Give Back
For our final piece, in life there are always people who are ahead of us, and there are always people who are behind us.
Stop for the ones behind you.
Let’s take real estate for example. There are the experts and then there are the newbies, and then there is everyone in between.
Right now, make time to pour into someone who doesn’t know as much as you. Give back the knowledge that you’ve acquired because you will find that in 10 years, those will be some of the most lucrative and valuable relationships of your life.
I believe that if you give you will receive, and that’s not just with money.
Is there anything else you’d add?
Be sure to leave your comments below!