If you had to start all over again, what would you do?

[Jeff NA]

I was just curious, if the experienced investors here had to start all over again, right now, and were able to know everything they've learned along the way, how would you go about beginning?

[Timothy W.]

I did have to start all over. It's a great experience!

Here's what you do:
1. Dematerialize your life. Lose your "love" for all the "things" you think make you happy. Once you stop spending money on stupid crap like that, you can start mastering money.

2. Try living someplace "uncool"...but cheap. I moved from hip, urban Chicago to living near the Amish. My house costs less than my Chicago property taxes used to cost and I suddenly realized I didn't necessarily need to go out and pay $20 for parking, $75 for dinner, $25 cover charge and have 3 martinis at $18 each to enjoy myself on a Saturday evening. I can still do that if I want and the irony is while it's a longer distance in driving, I can still get into Chicago faster from Indiana than I could from the "suburban" west side of Chicago. But now I have more options with what I want to do with my free time and since I'm not paying a king's ransom to have a house, I have more money for fun stuff. Besides, the Amish make better food than anything I've had at Morton's, Capital Grille, McCormick and Schmick's or even my beloved Cheesecake Factory.

3. You're small again which isn't bad. It means your lean, mean, mobile and can get maximum ROI by finding small niches that the big guys are just too big or busy to exploit. You're not taking care of a portfolio, so spend the time finding the maximum ROI in a market that you can. I know I talk about the 2% rule (rent must be 2% of the purchase price) as a standard and it is a good standard - but I don't follow it. That's because when I got small, I found niches where I can get 10-14%. The 2% rule is a good rule to follow, but I prefer the 14% rule.

4. Go with your gut. It's like the song says, "When you ain't got nuthin' you got nuthin' to lose." Now's a perfect time to try that mountainside ski resort daycare you always had a nagging feeling would be a cash cow but you just couldn't afford to risk "all you had" on. You don't have anything to risk now. Don't rely on education because education is based on "what worked before". If we relied on education, there'd never be any innovation. Trust your instincts. There's something you know that you can't prove in any educational material but you just have a gut instinct is out there. Get it. It really is out there. Case in point - show me one real estate book that has the 14% rule. I can't show you any bit of educational material that has the 14% rule. All I have is a house that does it (well, a couple anyway).

5. Trust yourself. Chances are you lost something because of something you did or failed to do. Own that mistake and realize it was just a mistake and move on. I lost a house to foreclosure. Big deal. I have several now. I'm not blaming a bank or a mortgage broker because I couldn't keep up with the payments. If I had been smarter in a decision 6 years earlier, I would not have been in the position I was. The thing is I know what I'm good at now and I'm confident in my abilities at it. That's all I need. I don't need to be good at rearranging the past.