Every day I get asked by people, “How do I get started in real estate investing?” They see the freedom I have to take off work whenever I want, go on any vacation I want and basically buy whatever I want. Let’s face it – I am a nerdy guy who somehow landed a smoking hot wife. It’s either my amazing sense of humor or she can sense the real estate “Tigers Blood!”
But my success didn’t happen by accident. My first few years investing, I wondered around aimlessly trying to find good deals (hard as hell) or find some money (even harder). I did all the things you would expect from a newbie investor…
- I joined the local REIA
- I started going to networking events
- I read Rich Dad Poor Dad and Donald Trump books
- I even got myself a fancy little business card
When people asked what I did, I would say proudly “I am a real estate investor!”
The problem was I had no idea what I was doing. In fact, I actually lost money on the first two real estate transactions that I ever attempted (buy me a beer and ask me about it sometime).
Then something awesome happened. I was invited to a Jack Miller seminar… and for the first time I was surrounded by hundreds of very successful investors. I could just sense that something was different about this group. They cared deeply about each other and seemed to follow a common profit formula.
The principles I learned from hanging out with some of the “old school” guys that I met there changed my life and allowed me to break through the daily grind and live a financially free lifestyle.
Principle #1: Live Debt Free
These guys didn’t drive fancy cars or wear three-piece suits with nice watches. In fact, they took the opposite approach…
They prided themselves on driving a car they horse-traded a crappy property for and have been driving for 10 years. They drank box wine and made fun of young guys like me who were out perpetrating and pretending to be successful.
They stressed being debt free and only spending money on investments that produced cash flow.
Principle #2: Cash Flow Is King
While some members of the “inner circle” were wholesalers, like myself, most of them invested for long-term wealth. They were patient investors who understood that the only way to break out of the rat race and build some real wealth was to own tenanted-rental properties that they eventually would own free and clear.
They structured deals to have amortizing loan structures and stuck to the fundamentals of investing. They never got emotional and instead focused on “the numbers” of a transaction.
If it didn’t positively cash flow, they didn’t do the deal.
Principle #3: Stay Laser Focused
Real estate investors by nature are entrepreneurial. And entrepreneurs are by nature opportunists.
While this is a great trait to have when first getting started in a new business, it can be difficult to not get “shiny object syndrome.” My personal mentor, Lyle Wall, (whom I met at this particular event and have been great friends with ever since) tells me to “keep articulating the ball down the field and eventually you will score a touchdown!”
Basically what he is saying is to stop worrying about every great idea or investing strategy that comes into your world and STAY FOCUSED on the principles of investing.
In the book Outliers, author Malcolm Gladwell talks about his 10,000 hours theory. He says that in order for you to become part of the top 5% of any given field, you have to put in at least 10,000 hours of practice.
This is also true for being a real estate investor – so if you want to become the best at what you do… then you must be patient, stay focused and put in the time needed to master your craft.
Principle #4: There Is No Free Lunch
If a deal sounds too good to be true… it probably is.
This holds true from gurus pitching you the latest and greatest investing education… to a real estate agent telling you “this deal is guaranteed to be a winner.”
Like Warren Buffett, run toward a market when everyone else is running away. Wake up every day with the mindset of a hunter and don’t get caught up in the latest investing trends.
Stick to the principles of investing (stay off government/attorneys radars, buy low, get cash flow and sell when you can make a solid profit) and you will retire wealthy and live financially free.
Principle #5 – Your Network Is Your Net Worth
The last thing I want to share with you today is the importance of a solid network.
I have been fortunate enough to build an amazing network of very successful investors, but more importantly just all around great people. My network brings me deals, lends me money and buys me pizza and beer. I can call them with any business/personal problems, and I know I will always get solid advice.
I am a member of an elite mastermind of the top 40 residential real estate investors in the country, and each year I still attend a couple of seminars to keep up my educations and hang out with my friends and fellow investor colleagues.
Jack Miller’s group showed me the importance of surrounding myself with successful, like-minded people who put friendships first over money. I can guarantee that not a single one of your real estate deals will go according to plan, but if you have the right power team and network in place – there is no hurdle you can’t handle.
I hope that you take my advice to heart…
These principles changed my life, and if you live by them, you will end up the same awesome place I am… minus my wife 🙂
To your continued success,
Do you have REI principles that you live by? Share with us below.
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