Remember the Main Goal
I was talking with a friend and fellow investor from another state who was asking some pretty detailed questions regarding entity reorganization. As we worked through the questions and the situation, I had to remind this investor what the main goal of her entity was, which is also the main goal of real estate investing: acquiring assets that generate cash flow and/or grow in value. When you are assembling your playbook as a real estate investor, please remember that the main goal of being a real estate investor is acquiring assets.
You may have heard it said that when you are up to your hips in alligators, it’s hard to remember that the objective is to drain the swamp. Sometimes you just need to go back and remember what the main thing is that you’re doing and why you are doing it. If you’re a real estate investor, the reason you’re doing all the hard work and heavy lifting is to acquire assets, those things that put cash in your pocket. Ideally, that cash comes both now and in the future. There are so many variations on how to obtain cash flow from real estate that I would be going beyond the simplicity rule I try to follow when writing these emails if I tried to cover them.
Why do you need to be reminded of the main goal of being a real estate investor, you may ask? Because if there is one profession besides practicing law that results in constant interruptions and distractions, it’s that of being a real estate investor. Sometimes I think the entrepreneurial mindset is such that it looks for a new idea almost daily. This results in an investor losing track of the main goal, which is to acquire assets that generate cash flow and build wealth. All too often I encounter individuals at seminars and events who have transitioned their businesses 4 or 5 times in the previous 7 or 8 months, usually because they have encountered some new idea someone has sold them on for a quick, easy, sexy way to make money in real estate. Once the shiny veneer wears off, they realize the “new, easy” method takes hard work. They are then tempted to chase the next shiny object that comes along.
I recall working with one young investor who would go dark every now and then, not responding for two or three days, and then proudly return my phone calls saying he had locked himself away for two days to once again revise his marketing plan for his business. While I commended him on the fact he had a marketing plan, I chided him on the fact that this was the third time in two months that he had revised it, but I had yet to see him ever execute or implement his marketing plan.
Another activity I see a lot of investors engage in that makes them appear to be busy but actually accomplishes nothing is that of spending way too much time trying to network electronically with investors in other parts of the country in anticipation that someday they might have a deal to work on together. Effective networking is good, but an investor in a rust belt state looking for deals in and around where they live does not need to be trying to create a network of investors in Nevada, Arizona, California and Florida. They need to be creating a network of investors in their own market where they are going to be doing deals.
My admonition remains the same. Remember what the goal of real estate investing is. It’s acquiring assets that generate income and build wealth.