Demystifying goal setting

How many times have we heard it before? "Have you written down your goals?" The question is asked in the podcasts, in books, at seminars... But if you're like me, you nod your head and make it a mental priority but then the phone rings, your kids ask for help with homework, and the dog needs to go for a walk. 

I'm a big believer of written goals. No really, I am! But if you asked me to show you my written goals, I might be able to find an old napkin somewhere. Perhaps some scrawl in the margins of a notebook. But nowhere do I have a definitive list of defined, tangible goals for myself, my family, and my business. 

To make a goal, you have to know what you want. Stating a desire is not a goal but you can derive your goals by first outlining your desired outcomes. So that is where I'll start.

• I want to quit my job.
• I want to spend more time with my kids.
• I want to travel more.
• I want to realize my family's dream to live on a few remote acres outside of town.
• I want to retire in 10 years.

From these desires, I can start laying out broad goals to get me there. For example, if I want to quit my job, I know that I'll need a specific amount of money coming in every month to replace my income. This number is more complicated than just replacing my salary. I will also have to purchase health insurance for my family. I'll have to consider that my taxes will probably go up when I'm no longer a W-2 employee. I'll no longer have someone else contributing to my retirement. I'll need more savings to cover unexpected loss of income due to market forces. I can also combine some of my wants. If I quit my job and am working for myself, that will allow me to spend more time with my kids. So, after looking at my current situation, financial needs, and comfort with risk (and my wife's lack of comfort), I have big goal #1:

I need $58k year income from real estate.

Now that I know what I need to quit my job, I can ask "How do I get there?" In this business, there are three ways we make money; cash flow, short term capital gains, and long term capital gains. So it's here I can begin to ask the tougher questions. What do I want to do? What kind of investing does my market support? What kind of capital can I bring to bear? Personally, I'd more comfortable walking away from my job if the majority of my income were from cash flow. Sure there are variables and risks, but while I love flips, I don't want to put my family in a situation where if I'm not constantly flipping, my family doesn't eat. So I can now define my first sub-goal, again based on my situation and risk tolerance:

I need $40k a year in cash flow.

Looking at my market, were much closer to the 1% rule than the 2% rule. Sure, there are great deals to be found here, but if I want to get to that cash flow goal sooner than later, I might want to look at different strategies and markets. Here in Tucson, we have a lot of properties with little to no equity. So, I could look at subject-to transactions as discussed in Bigger Pockets Podcast, Show 70. We also have a lot of mobile homes, so John Fedro's strategies from Podcast 75 might be a good fit. Looking at these strategies, we can now narrow the goal even further:

I need to find motivated subject-to and mobile home sellers.

Now we start getting into the details. How do I find these sellers? Well, the key is marketing. I knew a lot about real estate before I found BP, but it was here that the importance of marketing really got driven home. There are a lot of options when it comes to marketing. From direct mailing to bandit signs, there are hundreds of ways to reach out and find sellers. Since I'm just getting started in my marketing, I'm not sure what will work best so I have to rely on the advice of others while keeping in mind what my budget can accommodate. I'm extremely tech savvy. My day job is in aerospace and I've spend some time in information technology. To that end, I've decided to start by building a web page and driving traffic there. (Podcast 27 with Jason & Katherine Grote) That brings us to my next goal:

Build a website

This is where I am today. I bought a domain name and because I didn't want to worry about the technical stuff, hired a freelancer to build it. I found a great freelancer who understands my needs, vision, and my limited budget. I expect to spend about $150 for a simple landing page and hope to launch in the next couple weeks. While I wait for the site to be completed, I'm learning about the various online marketing methods and putting together a budget. 

Of course while all of this is happening, I'm networking, watching the MLS, and following up with leads from other sources. Don't let any one goal distract you from the rest of your business! 

Now, what are you waiting for? Make some goals and go out and tear it up!