How to Get Mindset Right For Real Estate Investing
Updated: Jul 20, 2021
I truly believe that mindset is the greatest opportunity when it comes to getting started with real estate.
You have to understand that you have to look at this as it's not a get rich quick scheme. It is a long-term play, and there are steps and there are progressions that you have to take. And so, if you take it when you start out as a new investor with that approach, you can save yourself a lot of heartache and pain because it does take a while and there are faults and there are missteps, but that's perfect because imperfect action leads to results.
There’re so many options in real estate., you have to decide what you want to focus on, pick a lane, which the wholesaling, Airbnb, multifamily, single-family. I don't know you, so whatever works for you or whatever you see works for you, start somewhere. Maybe wholesaling is where you start, maybe finding deals for somebody is where you start, but what you want to do is you want to get around people, you want to go to meetups, in most cases that’s happening virtually right now. Anybody that you know in the area that does real estate you want to provide value to them, that is truly the gift. If you can find a deal, maybe you take no money on the deal, maybe you don't take a wholesale fee, maybe you just do the deal and they teach you the deal from the inside out.
That is the key to learning because I truly believe that real estate is an active business and by doing things, by learning about it within the deal, that's where you get the most value. So, partner up, provide value with somebody like me or anybody in the field that's in your area to really teach you the ins and outs of the deal. And what really changed my life, if you haven't read Rich Dad Poor Dad, it is really the Holy Grail of real estate investing and how to shift your mind to assets versus liabilities, it's a must read. If you're going to work in real estate with me, you're not allowed to work with me unless you read this book. Everybody that you will talk to in real estate, that's how they got inspired most likely.
What you have to find out is, how much do you want to be involved in the business? The day today? Because the farther and farther I go down the rabbit hole of real estate, the farther and farther I realized that I want to be farther away from it. I'd rather invest with somebody that does the day to day operations on what they do if that's flipping or multifamily, and allow myself to focus on other avenues for me to make money. And I find that a lot of people think they want to be in control until they're really in control.
I just got off the phone with my cousin, he's got a great job, he's really busy and he wants to invest, but he doesn't have the opportunity to be day today, so he's happy to just lend money to an investor or me and just get a nice return, but learn the business gradually. And I think that's key if you truly identify if you've got a great job, and let's say you don't, maybe you don't 100% love it, but it's great and it's providing you money, just think of that job as a way to continue to make revenue to dump into investments until the investments grow bigger than the job. That's really the rule, you 80/20 it. So, 80% on their day job and then 20% on your passion, and then you have to grow the 20% higher than the 80% in order for you to leave your job.
It's really that simple and there are so many avenues you could do it and I harp on the same thing all the time. You could get this from five Airbnb’s, if you ran them all yourself, you could be financially free from three, right? So lose your expectations of what you think it is because it's harder than you think, it's going to take longer than you think, but through that, you can really, no pun intended, construct a life, where you can have the freedom with your kids or have the capacity to do other things. I'll just go over my top five things for real estate investors when you're starting off.
1.Read Rich Dad Poor Dad, that's number one on the list.
2.Go to meetups, it doesn't matter that you're new, it doesn't matter that you haven't done a deal yet, that's not what it's about. It's about being yourself, understanding it, and not putting expectations on why somebody would help you because you don't know if they got helped out in their career ahead of time as well.
3.Be in the proximity of people doing deals and realize how you can provide value to them.
4.Drive around. I cycle a lot, and I'm always looking at real estate. That really gives you the knowledge, like everybody is so all over the place with real estate. If you're really focused, let's say just two neighborhoods, maybe you find deals in just those two neighborhoods, but you know the price per square foot, you know exactly how to do the deal, that's a lot of value. How do you eat an elephant? One bite at a time. And so, I think everybody gets shiny object syndrome when they start real estate and they're flying all over the place, and they're getting nowhere. Because you know, you can be busy, but you cannot be going anywhere for sure.
5.Just be humble. Be humble, lose the ego at the door, if you truly want somebody to help you in order to do that, you have to lose the ego.
You have to ask yourself what you want out of it. It's really that simple because it's going to change. And you might start off buying a house, you might start off wholesaling two houses, and then you might move into multifamily, or you go with single-family. But everybody has their own opinion, so you can't fall on the fault line for everybody because it doesn't matter. It really matters what your life is, and whatever that looks like is fine and when I started out, I wanted 5,000 Airbnb’s, and I got up to like 30 and I was like, "No, I don't want that at all. This is kind of crazy." So, like, how do I get 10 producing Airbnb’s? Because that's the true key is producing assets on net profit, because really cash and the net are key. You can have 10 properties, but if you're not making any money, maybe you're building equity for sure, but you're not taking it to the next level. You might have a six unit that you can invest in, you own it by yourself, but you might only have like a quarter of a percent of 100 unit, right? What is bringing you more money? You really have to look at that.
So, is your ego telling you to be involved in the 100 deal because you can tell everybody that it's 100 units? My ego tells me that I'd rather care what the net profit is, so that's when you have to check yourself at the door and really be smart about where you put your money in and what makes sense, and it has nothing to do with the outside point of view. I've met plenty of people in my time that is 50 and 60 or even 40 and they have 50 houses and you'd never even know it, you have no idea, they don't talk about it at all and they've been buying houses since they were 18. So, they don't care, but they've been financially free for years and they're not bragging about it, and it doesn't matter. So, make sure that when you're buying real estate, when you're purchasing real estate, when you're doing deals, it's for yourself and it makes sense for your pocketbook, it makes sense for your finances and investing. So really, add value, meetups, networking.
I spent 20 years in the restaurant business, making contacts from people all over the world at the restaurants I worked at, the high-end restaurants, getting their name, meeting people. This guy does this, and so on, and so on, so, it's not like this just happens overnight. The number one thing, you have to be as kind to yourself and understand that this is a process, and you have to understand that in order to get where you need to go, it's going to take steps, there are gradual parts.
My mentor used to tell me, "Great, you've only made $50,000 a year, and you're telling me that your goal was 700,000." Like, how about you make a $100,000 first, right? And so, I keep harking back to the fact of it's really what you need, in order to get a goal on what you need to invest, you have to reverse engineer your life. You write out a three-year goal, and then you look at that and how do you get to that three-year goal? And then you break it down month by month, week by week, you know how granular you want to get, and then you go from there. And it really is about manifesting that because once you write it down, it's in the stars, it's out there and you have the opportunity to meditate on it.
You can look at it on your whiteboard every day, you know all these things that you can do, and you're just creating this abundance mentality in your mind like it's going to happen, it's going to happen. And something I would suggest, the thing that's not talked about enough in real estate is momentum, it took me seven years and seven bad deals to get my first property, I thought it was never going to happen and then when I bought one house, I bought two more in the same year. And so, momentum is not talked about enough, but I think winning small goals, let's say you lent out $10,000 and you made a $2,000 return, that's a win. You don't have to go out and hit for the fences every time. You can ask yourself like, "How do I get a small win? How do I feel good about it?"
And then you build on that over and over and over again until you're ready to take that riskier play. And understand that by not buying a property, a bad property, by not doing a bad deal, you can actually get ahead of other people, that's what people don't understand. By not doing a deal, I'm going to say that again, by not doing a deal, by not doing a bad deal, you're actually getting ahead. And so by getting ahead, waiting for the deal, the rule of thumb is, you make money when you buy, you don't make money when you sell and it's never been more true.