Why I Believe Many Investors Have the Wrong Goals

[Don Konipol]

It’s my opinion that many investors have the wrong mindset when it comes to real estate investing.  This is evident when they express their goal as “ I want to own enough real estate to provide me a $10,000 per month income to replace my salary”.  While financial independence is a worthy goal, defining it this way leads to investing that’s (1) too restrictive , (2) too heavily emphasized on cash flow and (3) too heavily reliant on only one way to achieve financial independence.

I always stated my goal as “ I want to have an investable net worth of $x in 5 years while utilizing a maximum of 50% leverage.  This allows for a wide variety of ways to achieve the goal thru all aspects of real estate; investing in assets that have great capital gains potential but may not cash flow (options, land, redevelopment, gentrification, etc. ) utilizing “fee income” to build my estate (syndication, brokerage, partials, participations), and “creating” high yielding notes, and “creating” wealth through creative real estate buying, selling and exchanging. 

I’m a firm believer in that before one masters any creative or wealth building strategy in real estate investing, they need to master three things; (1) real estate PRINCIPLES, (2) real estate LAW, (3) real estate FINANCE.  Once the investor understands these three FOUNDATIONAL aspects of real estate investing, they can comprehend the creative and wealth building techniques and strategies and successfully apply them to individual deals.  It is precisely because of mentoring programs that teach strategies and techniques to people who do not have any grasp of the three afore mentioned fundamentals that we have such a mess with “wholesaling” and “subject to” that governmental authorities are figuring ways to heavily regulate or outright ban these activities in the residential real estate field. 

Let us know what you think.  What are or were your goals in real estate? Have you achieved them? Or are you on the path to achieving those goals?