The Real Cost of Real Estate Investing
I want passive income, I want to be financially free, I want to have rentals to retire, to replace my income, to pay for my kids college education and a huge plethora of answers come out when I ask clients I coach, why do you want to invest in real estate?
For some these answers are the sub-conscious programming installed when they read books, see adverts ‘selling’ the great lifestyle investing in real estate is, and how easy it is to achieve these results but I wanted to ask myself and hopefully come up with some answers or at least another view point to help you decide if it is truly what you want. A book RevNyou and written by Julie Broad called ‘More than cashflow’ is probably the most honest book I have ever read about investing in real estate. I am also a great believer that there is no such thing as balance when you are trying to achieve something great, be that in sports, career or, in this case, real estate investing. There is always a cost somewhere in your life either financially or in time or in both when trying to excel at something. Financial costs can be measured pretty easily, how much did it cost, we have a way of doing a comparative analysis between one course or another, one book or another and the results we take from our actions from reading the books and doing the courses we can calculate the return on the investment. Invest in yourself, it’s the best investment, they say, and they are right by the way, but the real cost of investing in real estate has other benefits and pitfalls. Most education and courses are conducted outside of normal working hours, this means you have to give something up in order to go after these goals, these why’s, these dreams we believe real estate can provide. If you sit on the couch and watch hours of Netflix, for example, then you are not really sacrificing much, but what if you had a family, kids, a relationship that perhaps did not want to invest in real estate, out of fear or some other reason? What is the cost to that part of your life? How can you measure that, how can you quantify something which is not really quantifiable?
As I approach 2020 with a pretty clear direction of where my real estate is, where my portfolio sitting and what its net worth is I reflect on the last ten or eleven years where I have been paying the price of my real estate journey and I ask myself a few questions which I hope I can answer somewhat to help others move forward, or choose not too if that’s their path.
Is there a way I could have done it better?
Was there an easier way and could I have achieved it quicker?
Does everyone have to pay the same price?
What have I learned that I can pass on and share to help you?
In answer to question one the answer is a simple yes, I learned from my own mistakes early on, I did what I thought was right and paid for courses I probably didn’t need, I could have started with the end goal in mind. What I mean by that is when I ask people WHY they want to invest it is usually the answers I started this post with but the reality is there is usually something better, bigger, more fun that connects with the person on a soulful level that is the REAL reason they want to do this, this can be really, really deep. They say financial freedom, yet the reality is they want holidays because they grew up in a less fortunate home where holidays were things other people did so they want to have that and not feel the pain and suffering of not having ‘enough’. See how one is a group of words, but the second part of the sentence is a feeling. It’s the feelings that drive us, energize us, get us out of bed in the morning, we will do things to either avoid pain or to gain pleasure, that’s it. Figure out early on what your real why is and dig deep to find the answers, if you can do this then you have already done it better than I did when I started out. Is there a better way? Yes figure out your REAL why, the feelings behind it and that will help keep you energized as you go on the real estate journey.
Question two, was there an easier way and could I have achieved it quicker? The answer to this is have you ever said to yourself, “if I knew then what I know now”, of course you have, hindsight is 2020 right? Well there is an easier way, one thing I learned on my journey is there is very little that has not been done before, successfully, by someone else. I remember sitting in a work truck with my old boss back when I was an employee and he said, “you can’t just go and buy houses”. I remember thinking, why not? People do it all the time, I just have to find the people that have done it and ask them to show me how. A concept that when the people who are selling you the real estate investing dream always touch upon and we take it at face value so this actually cost me a LOT of money in real cash and it cost me a lot of time in what was right and what was going to work for me versus someone telling me ‘this is how you do it if you want to be successful’. I spent tens of thousands on courses and in time learning this and that, some of which has turned out to be really useful and some of which has turned out to be not correct or old information which created stress and tension when trying to implement and it wasn’t working, after all they promised it would work if I just did this one thing…… to be quicker and to do it easier we have to learn from those who have gone before us and blazed the trail ahead, sometimes taking arrows in the back so we can walk leisurely through the path at ease. The trouble is which path do you follow? When learning from others it is important to know they have actually walked the path you want to walk, and they know the way. How long have they been walking the path, are they associated with others who have also walked the path for a long time? We can often tell who someone is by who they associate with, just like checking a new friend request on Facebook, who are they friends with? A bunch of idiots we know or a great group of people we respect and admire? This is how you should choose who you are going to follow and learn from to speed up your time to success in real estate and reduce your cost in time AND money. Doesn’t mean they are the cheapest, or the most expensive for that matter, it does mean though they are worth what you spend to learn from them, be it money or time!
The third question, does everyone have to pay the same price? NO you do not, you can learn from others and reduce your cost in money and time if you do the same as in question two, be careful who you listen too, who you follow, and are you following hype or a true, tried over time, proven success formula. For some depending on where you are currently in life financially, emotionally, personally this journey can be a joint one and the price of playing the game together is a fun one, where you grow together, experience together and succeed together. For others it might mean doing it yourself and the price is time with your other half until they see the stars of success and then they start to support, so everyone does not have to pay the same price but you will pay something if you choose to pursue this as an avenue, what that price is and how successful you want to be in this field is entirely up to you.
The final question was one that I really wanted to think long and hard on and deliver value to you, what have I learned that I can pass on and share to help you? I could write for ten days straight here about a multitude of things so I am going to be really strict with myself and say, if I only had two minutes and ten tips to pass on the most precise info possible to help you succeed what would it be?
Figure out your ‘WHY’, if that takes half a year of soul searching and uncovering social and familial programming so we can truly understand what we want to do with life do that. Knowing this and knowing thyself is half the battle and it will stop you starting down the wrong path or doing the wrong strategy.
Figure out what strategy you want to do THEN find an area it works, real estate works in cycles so flipping houses, for example, in the wrong part of the real estate cycle will be hard at best. OR, figure out an area first then what strategy will work there in that particular cycle. Just because it worked for someone else does not mean it will work for you and vice versa.
Don’t give up, time in the real estate market will achieve more success than trying to time the real estate market and guess when its going up and down.
Don’t give up your day job, especially until you have established yourself and can afford to live off what you create.
Its not about overnight success, give yourself time to really see the benefits of your work, ten years will fly by before you know it.
Network with like minded individuals who are ahead of you on the journey so you can learn from them, and their mistakes!
Let people know it is what you are doing, (investing in real estate) you will be surprised with how many people have money stashed away they want to put into property but don’t have the time, knowledge or the opportunity to do so, you can be that person for them (joint venture and create win-win situations)
Be prepared to continually grow your knowledge and network, this WILL cost you money but it WILL make you more if you invest wisely.
BE honest, do things legally and correctly, put others first ahead of you and be prepared to go the extra 10%
Follow and copy successful people, even if that means paying, it’s worth it!
The real cost of real estate investing is more than just money, its emotional, its personal and it is much more than people realize. HOWEVER when done right over time it is worth it, there is yet to be a vehicle I have seen with such a proven track record that can provide life changing results and truly hep you achieve life goals using the money real estate can and does provide when done correctly.
By Gary Spencer-Smith, professional Real Estate Investor and Licensed Real Estate Investment Advisor.
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