Once again, having the right mindset and the right processes should help you achieving your goals
An internal mindset to create
- Write down your goals and read them loud everyday
- Flip the switch in your head and have the right attitude “I will do this to achieve this goal”, “I will not give up because I am committed to my goals”
- You are who you associate with so hang out with successful people and talented investors and try to rise to their level of success
- Think creatively “how can I do this?” instead of “I can’t do it”
- Study the right sources and be curious about the mindset of people who took another path or strategy to succeed
- Pick the right plan that will help you achieve your goals
- Acquire the right assets that fit with your plan, your budget, and your ability to manage
- Manage the right metrics as rental properties must be continually maintained and managed. Periodically check how your properties are performing in terms of cash flows, expenses, rents etc…
Create the right plan
- Your plan is not your business plan, it is your deep-seated belief as to where you are headed
- Your plan can change as long as it keep leading to your goal
- Have your end game in mind (be specific) when you start your plan
- Know your WHY. Knowing your true motivation will help you reaching your goal and staying committed
- Have an idea of the type of assets you want to buy and the ones you do not want to buy, even if not clear at first
- Estimate how often you will have to buy to stay on track with your goals and the life you envision
- Know how you will finance your deals (banks, private money lending, creative financing or extra income from a job)
- You can now write your plan : at the end, place you your GOAL and at the beginning you can write TODAY as your journey begins now. Your plan is what will take place between today and the achievement of your goal.
Examples of Plans to Achieve Long-Term Wealth
- Growing your net worth exponentially by buying larger and larger residential buildings with the cash flows generated by your rental properties in the span of a decade. The focus is on the first property (eg. a 4-apartment residential property that needs some rehabs, purchased at a discount and that you will stabilize for maximal cash flow generation)
- Accumulating single-family houses faster and faster with the cash flows generated by the properties and your work income (after a first year of savings and learning, buy a first house at a discount in year two, two more the year after, then use the compounding effect to buy always more properties each and every year until you can replace your work income)
- Combine your investment property with your personal residence : live in one unit and rent the second (and third) one. This is known as “house hacking”. You can benefit from a conventional loan with minimum down payment, low expenses (no property management) and on the job training. Make sure to pick a first property at a discount (fin foreclosure and/or with rehabs), fix it and live in it for a year or two then move out. It can be a terrific investment for a first-time buyer.
- Buy, Rehab, Rent, Refinance and Repeat (the BRRR strategy) for maximal cash flow generation. This can be a powerful strategy because you can acquire numerous properties without running out of capital to invest. Make sure to buy the fixer-upper properties at a deep discount and to have the right process for budgeting the renovation work and have the property tenant-proof fast. A good relationship with a local bank is necessary too. Keep repeating the process and start selling a couple of properties per year after five years to enjoy the natural and forced appreciation of the properties.
Source and credits
All explanations and tips come from Brandon Turner’s Book on Rental Investing