I am going to guess that over 50 percent of the posts on BiggerPockets are all about the “how.” Everyone wants to know how to invest in real estate. Whether it is wholesaling, fix and flip, or buy and hold, most people come to BiggerPockets looking for an answer to the “how” question.
But the question most investors skip or gloss over is the “why?”
- Why are you in the business?
- Why are you doing what you are doing?
- Why did you set out on this path?
My partners and I were just revisiting this question recently. We’ve expanded our business into a different segment, and it requires us to re-ask this question. We need to be on the same page for the “why.” It is our guiding light in business. Everything stems from knowing that answer. I wanted to share some of our answers and hear some of your “whys.”
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
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Working for More Than Money
I want to start with the easy answer. Most people never get past this answer: I am in it to make money. Great, get a job. Oh, that’s not what you mean. You meant you wanted to make “passive income.” Why not buy a McDonalds? Too expensive? Don’t want to be in fast food? What about a laundromat? Don’t want to count quarters? What about a hair salon? I can go on and on with plenty of businesses that make money and have fairly low barriers to entry. The point is, if you dig deeper into your “why,” it will reduce the “hows.”
We are in business for 3 reasons other than making money.
- To provide high quality affordable housing in safe neighborhoods.
- To revitalize the incredible housing stock in Chicago, which in turn improves the communities they are in.
- To help others make money doing what we do.
Side note: There is no city in the US that has the housing stock that Chicago has. Chicago has an assortment of brick and stone single family and multifamily homes. No one is building homes like this anymore.
Our Investing Goals
Our first goal is to provide high quality affordable housing. Chicago, much like other major metropolitan areas, has high rents in the affluent neighborhoods. Even in the not-so-affluent neighborhoods, rents can be high. We strive to put a product out where people will be happy to call it their home and treat it as such. Most importantly, we seek to provide a place that people can afford. That is one reason why we accept Section 8 tenants.
Our second goal is to revitalize Chicago housing stock, which improves communities. My partner and I were just in a meeting this past week with an alderman trying to put together a plan to revitalize her ward. The first thing we talked about was housing. Without housing, there isn’t a community. There are still properties that sit vacant to this day and have not been touched. These properties are a drag on the community and need to be taken care of and put back into livable shape. We do that.
Our last goal is to help others make money doing what we do. This goal’s origins are different than where we are now. The goal started as, “We need money. Who will give it to us?” After we got past that initial phase, we now look at it as helping others make money. For our private lenders, we offer an alternative to investing in stocks and bonds. The other day, I received a call from an investor who told me that we are his best performing asset this year. For the investors that we sell property to, we offer an opportunity to own real estate without all the hassles of owning real estate and make money too.
We never started with these “whys” in place. We started just like the most others. We wanted to make money. Because we weren’t clear, we diluted our energies by running after a bunch of things that ended up distracting us. We got involved in partnerships that wanted something other than what we wanted because we saw it as an opportunity to make money.
We wasted energy on chasing after some commercial/industrial deals that were outside of our expertise. We spent thousands of dollars on mailing and infrastructure for wholesaling. In the end, answering this question set the direction of our business. When opportunity comes up, we check our “why” and see if it fits before making a decision. If it fits, it is full steam ahead. If not, there are plenty of others that are looking for that deal!
What is YOUR “why”?
Leave your answers below!