Maintenance mindset - how to get to the next level in investing?

[Joe Kim]

Anyone feel like they are in this state of "middle ground" or "in between"?

I'm sure there are not so small amount of investors who are in this stage where you are not a newbie but also you don't feel like you have quite "made it" yet.   

I've been investing since 2013 which is not a long time but have done a good number of buy/hold rentals, private lending, and now STR/Airbnb for the last 2 years. I had a rapid growth in my STR portfolio - I did my first two homes (rental arbitrage) in the first two months! Then added 3 homes that I owned into STR/Airbnb 4 months later. I did 5 properties for airbnb in 6 months time. That first year I did one more arbitrage to make it to 6 total. Now this 2nd year is coming to a close and I did only 1 property more to total 7.

Why did I not do another 6 properties in year 2?   I'm in the middle stage.




Challenges:

1)  Time.  (or lack of time)

I work full time so real estate is a side gig and not my primary work.    Unlike some, I do not intend to quit my day job anytime soon.  Also, the stage in life I am right now with a young family, my time is precious and a battle between -dayjob, family time, investing time.

One thing I have come to terms is that there are more things important than investing.   In fact, those three things I mention - dayjob, family time, investing - out of the 3  investing is my last priority (or it should be).   Remember I have no plans to quit my dayjob.(too many reasons- I love my dayjob, etc...)

2) People  (or lack of people)

Like in any business, you need good people to help you grow your business.   I find it that this is one of the biggest challenges.  Finding good people to work for you is especially difficult in this low unemployment stage in the economy.   There are fewer people who are willing to work part-time in a type of work I have for them.  For example, my cohosts or assistants who manage my Airbnb homes work  variable times and make variable commission pay based on bookings.  

The biggest challenge is the not finding "more" people, but finding the "right" person for the job.  

3)  Money/Capital

Surprisingly, this is the least difficult problem for me.   In real estate there are rate-limiting steps that prevent investors from growth and capital may be what's lacking to get them to the next level.   So far I'm needing more time and people than money.  

4)  Maintenance

The other challenge in my time is maintenance.   Now that I'm at 7 properties in Airbnb.  I'm also selling off traditional buy/hold properties that don't fit my current goals.  I've already sold or selling 3 properties in 2019 and plan to sell at 1 or 2 more in 2020.  I'm trying to hone my focus on what works for me and eliminate distractions.

The challenge is continuing maintenance - bookkeeping, tax prep, keeping all things running and paid (paying all bills).    I've hired a bookkeeper, have a real estate CPA, pay almost all bills on autopay.      I still see this as a challenge because this is my least favorite activity.

Again, I would love to hand all these non-desirable tasks (for me) to someone else.  

Solutions:

1)  B student mentality.

I've learned that trying TOO hard to be perfect is a barrier to success.    Has anyone heard that Valedictorians are rarely the most successful person in their class?   or that CEOs tend to be the B or C students?      

I now understand what that means.    A+ students are not allowed to fail.   They can be cautious and not take risks.   In the world of business and investing, that can be recipe for failure or just never getting started.   

Also, pushing forward even though things are not perfect is key to growth.   If you waited to make everything perfect, growth will be slow or never realized.

Accept some level of mediocrity= B student.   You cannot be the best at everything.    I see that in my Airbnb business, I cannot recruit the absolute best people to work for me.   I'm not Tesla, Apple, or Google and I should have no pretense that I can recruit the worlds best minds or hardest working people.   I'm not saying, I don't push people who work for me to be better or help improve.   But you cannot expect to always get the most polished or experienced people to work for you.   And...even more true for contractors who may working to repair or create an addition to your homes.

2)  Systems

Create better systems.   Honestly, we all know this to be true.  Not going to go into bloody details.  Everyone needs better systems.

3)  Delegate or learn to love it.(doing tasks that are important but you hate doing)

Delegate the tasks you hate to do or learn to prioritize the things you hate to do first.     I'm trying both things but still struggling to do both well.   Once you delegate you need to accept a level of mediocrity or at least lower than your personal standard.   I know people will say no to this but the reality is that it is very difficult to both train and maintain good people.   I have to walk the fine balance of working with the people I have to improve their quality but not push them OUT of the business with harshness and high standards that are not reachable.  

Keeping to my B student mentality - I don't have time to proof read this post.   Please forgive grammatical or spelling errors.   

I love to hear what challenges you are facing and what solutions you have found.