Future Investor: What’s the first step in becoming a real estate investor?
Me: Why.
Future Investor: Because I want to start investing. So what’s the first step?
Me: Why.
Future Investor: I just told you. Because I want to start investing.
Me: Why first.
Future Investor: That question doesn’t even make sense. I just want to know how I start investing.
Me: I just told you: why.
Future Investor: You didn’t tell me anything!
Okay, so my conversations with first time investors aren’t really so “who’s on first,” (if you’re too young to know what that is – google Abbot & Costello), but it does take people by surprise when I tell them that defining your why is the most important first step you can take to becoming a successful investor. Not understanding your WHY in real estate can be as bad as placing a Taco Bell order after a night of drinking - excited about it at the time, but questioning your life decisions later.
Knowing your why allows you to narrow down your goals and market area, but most importantly it keeps you focused when you realize that real estate is not even as remotely fun or easy as it appears on HGTV. Like that time my husband and I purchased a property with an unpermitted garage conversion that required us to tear down the newly repaired and painted drywall to the studs, costing us thousands and weeks of work. Or a multi-family conversion during which our contractor quit on us after 4 weeks of zero work, and we were then delayed 4-more weeks due to an imaginary development plan requirement by the city. Let me tell you what a “fun” 8 weeks of interest-only mortgage payments and zero progress that was. Not.
So what is a “why” and how do you find yours? As I alluded to previously, a “why” is what drives your desire to be an investor and keeps you going when times get tough. Examples of things that are NOT why’s:
“I am relocating and can’t sell my house so I might as well rent it out and make a few bucks.”
“I’ve always wanted to try flipping.”
“Investors make a lot of money.”
These are potential reasons why investing might interest you, but they are not Whys. A why is much deeper and all-encompassing. Examples of a well-thought-out Whys:
“Real estate investing will pay for my kids’ college and allow them to graduate debt free.”
“With Real estate investing I am no longer earning someone else money. It gives me the freedom to be my own boss and determine my own salary.”
And my personal Why:
“Real estate investing empowers me to be my own boss while earning passive income that does not require me to trade time for money. It allows me to choose how I want to spend my time.” I’ve never understood the societal norm of working in the same job or industry for 40 years, retiring at 65 only to live off a merger pension and social security. I hope to be a healthy and hip 65 year old, but why would I take that risk of delaying the enjoyment of life until I may possibly be too old to enjoy all it has to offer? That thought process is what drives my why even when I’m going through a less than stellar renovation.
So your very first step in deciding if real estate investing is for you is determining your why. If you don’t have a strong why, then frankly, you’re probably not ready. Once you have your Why defined, you can move onto the fun part of defining How you will achieve your why, and BiggerPockets has TONS of advice for that.
Let's hear your why in the comments.
