Real Estate Investing for Long Term Success; Start with the End in Mind
“Failing to plan is planning to fail…”
…remember that quote? I think I found it incredibly annoying growing up as my Dad repeated it to me more times than I can count.
And, whether I liked it or not, he was totally right! This is true in pretty much every aspect of life, but in real estate investing, not having a plan can ruin your business, waste time, money, energy, and leave you feeling like real estate just isn’t what everyone says it is.
I’ve come to believe that many people who “try” real estate and then get quit with a horror story of how a deal went wrong or someone screwed them over never took the time to plan out their business, or chart a path to long term success.
There are a million and one ways to make money investing in real estate. This is awesome and should allow you to find years of enjoyment, growth, and profitability inside one industry.
The negative is it’s easy to get distracted and pulled away from your core competency.
I see investors all the time hopping from wholesaling, to flipping, to commercial, back to residential… you get the point.
They never give themselves enough time to get truly exemplary at one facet before they try something new.
To avoid this common problem you must sit down and decide what you are going to focus on and then stick with it.
Put on a pair of blinders and don’t look up until you’ve mastered that aspect of investing.
For me, I started with flipping homes. It’s taken me several years to only begin really feeling like I’m making some strides toward having this mastered. My flipping goal is to purchase and rehab between 1.5 – 2 homes each month (around 18 – 24 per year).
At my goal profit of $50,000 a door my flipping business should generate around $900,000 – $1,200,000 per year.
Not a bad place to start!
The next step for me (because I do very comprehensive flips and my construction team has gotten very strong) is to add in new construction to my business. It offers a more scalable business model, very predictable construction times and costs, and I can create density by subdividing lots (which means more doors per project).
I can find one lot and build 4 – 8 homes on it, instead of having to find that many homes to flip.
My goal with new construction is to build 6 – 10 small neighborhoods of 4 – 15 homes each. (for talks sake lets just say 50 doors per year in 8 separate projects).
That side of my business should bring in around $2,500,000.
Step three for my business is to use some of the revenue generated from the flipping and new construction to finance commercial or multifamily value add buy & hold deals.
What I want you to get from this quick overview of my business growth plan is I know where I want to go. I’ve mapped out a plan of how I’m going to get there and I’m going to STICK TO THIS PLAN!
Your plan doesn’t have to be anything like mine, but figure out where you want to go and then design your business with the end goal in mind.
It’s not always fun, sexy, or particularly innovative, but consistent work and effort will glean you the greatest results.
Another aspect of this that I remind myself on the REALLY hard days is “if I switch now, a lot of the work and knowledge I’ve gained won’t be particularly useful in a different aspect of the business.”
I really don’t want all that pain and suffering and long night to go to waste! Your next breakthrough is just around the corner.
Stay strong, form a plan, and stick with it!