No way around it—real estate investing has fundamentally changed my life for the better. From the friends and colleagues I’ve made and the real estate deals I’ve completed to buying our dream house on 11 acres and my wife being able to stay home with our kids, as well as future plans for philanthropic causes, my life would be totally different if it wasn’t for real estate.
Download Your FREE guide to evicting a tenant!
We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.
How Real Estate Snowballs
My early mentor Rob used to talk about the “legs of the stool”—meaning, there are many different ways to create income streams that support the overall financial goal. Within real estate, that could mean wholesaling, rentals, fix and flipping, notes, brokerage or real estate agent work, or lending, to name a few.
Why does this matter? If you have a construction project taking longer than expected, you have potential income you can make from that flip, but it hasn’t yet closed and you’ve not actually made the money from it. But if you had a few rental properties cash flowing at the same time, you have steady income from the rentals and can take the big chunks from the fix and flips when they close.
The other nice thing about having the diversity in your business is that when you see an opportunity, you understand it, can decide if it’s a good opportunity for you or not, and take action.
As you do more deals, you also will start to get more opportunities from people who want to sell something to you, do a deal with you, or ask for your help in putting one together.
I personally have income that comes from rentals, fix and flips, real estate commissions, and some private lending to other investors. I’m always thinking about all the legs of my stool and how best to use the skills, opportunities, funds, and time.
Money Is Less Important Than Opportunity and Lifestyle
Money is easy to make, an it’s even easier when the target is clear. I often see young entrepreneurs get wrapped up in how much they are going to make and how fast they can possibly get to a certain income, house, opportunity, etc. It’s the wrong focus because ultimately, it’s really not about the money. It’s what you can do with it.
The fact is, nearly everyone who has been financially successful in real estate has started with far greater aspirations than just making money. They have a vision for their life. Maybe they want to have two homes, one in Hawaii and one in Colorado. Maybe they want time to spend with family doing something together every day. Maybe the target work load is three to four days a week and 20 hours a week.
But how can you achieve all of that?
Tim Ferris talks about lifestyle a lot in his The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich book. He includes a few different examples, such as owning an amazing car like a Ferarri. Maybe owning (or driving) one of these is a huge motivator for you. That’s cool! I love cars and have several good friends who own high-end vehicles. These friends are both financially successful, and they were able to buy them outright. But you might not actually need to have $200k-$300k for the dream car you want. You could lease one for $1,000-$1,500 a month for a few years. What I’m trying to get at is the things you want to achieve are probably much closer than you realize.
For me personally, I want to travel with our family as much as possible while our kids are still young. And to do that certainly costs money, but it also requires time. We set aside money for travel every month. We also set aside funds for taxes, savings, and our regular monthly expenses. As a family, we talk about spending, saving, and investing. We want our kids to understand where the money comes from and what good financial decisions look like.
Focusing on Time
One of the massive ways real estate helps with time is in its ability to create and make passive income. If you are trying to figure out why you can’t get out of your day job that makes $100k a year but leave you with no free time, you need to think back to the legs of the stool that make up your income. If you make a great income, but never have time to enjoy doing things you love with people you love, then why are you working so hard?
Related: Which Real Estate Investments Provide True Passive Income & Financial Freedom?
Instead, start thinking of ways to create passive income. As with anything, it does take some time and some skill to grow the passive income. Start with one deal or one rental. Learn about it, and leverage first your time to understand how deals work, and then begin to grow from there.
Making Your “Why” Crystal Clear
If you aren’t 100 percent clear on your “why,” take some time and whiteboard it out. Get online and cloud map it. Grab your journal and write it out. Whatever it takes, write it down. Become so clear on the goal that you wake up thinking about it, go to sleep dreaming about it, and obsess on how to bring it to fruition. And then start taking a step and an action every day towards that goal.
The more clear the “why,” the more easily you’ll be able to see the road you need to take to achieve it.
Then, keep reviewing your “why” and your financial plan for your household. Make sure your fun and vacation time is planned out, calendared, and held sacred. Then, watch the life you’ve dreamed of gradually come to fruition.
What’s driving you to create income through real estate?
Let’s discuss below!