If you are one of the many people who invest in real estate as a side hustle, you may be wondering what it would take to make enough to quit your day job.
This may seem daunting but with some organization and imaginative thinking, you can make your investment business flourish. There are nine essential steps you can take on to bring you into a place of success with your investing.
Before we get into the steps you need to take, it’s important to establish the baseline goal. Most people get into this line of work because they want to create more wealth for themselves.
This obviously includes financial wealth, but there is much more to it. Real estate investing can bring emotional wealth and stability for yourself, your family, and your community. Keep this objective at the forefront and allow everything to stem from there.
Our philosophy on real estate investing at every level is based on the 3 pillars and 9 action steps in the REI Clarity Framework.
Clarity
This pillar is about mindset and knowledge. You can achieve much of what’s needed while sitting on your couch. Listen to podcasts, reading books, analyzing deals. The more clarity you have to higher your rate of success.
1. Know Your Strategy
First, understand what your strategy is. In anything you do, it’s important to have a plan. Without one, your objective has failed before you have even started. This is especially true in something as multifaceted as real estate investing.
There are some important things to consider when you are laying out your strategy. Think about your goals for the property. Is this a long-term buy-and-hold purchase, or are you going to flip the space? Perhaps you want to have tenants and rent it out. Consider whether these will be long or short term. This all influences the properties you end up investing in.
It’s okay for your strategy to change and develop over time. This is completely normal. But you need to establish the facts first, and then tweak later.
2. Find the $$$
Next, you need to find the money. This line of business relies on being able to use money in order to make money. Figure out where your investment money will be coming from.
Maybe it’s coming from yourself or a close friend or loved one. These are not the only options, though. You may need to go for a hard money loan, work your connections, or ask for a bank loan. Whichever avenue you choose, finding a source of money is a hard requirement.
3. Forecast Your Future
All the strategy in the world is nothing without visualization. People might be tempted to skip this step or brush it aside as unimportant. Don’t do this. Embarking on a new venture is more than just a series of checkmarks to success. It is equally a mental game.
Stop and visualize what you want the fruit of your labor to be ten years from now. This will inform the strategy you develop and the money you pursue. Break it down into smaller waypoints.
Where do you want to be a year from now? How about five years? The vision you have now should give you a clearer concept of what you should be doing in between point A and point B.
Visualizing the future will also motivate you. As with any business where the outcome is uncertain, stress and doubt are natural symptoms. When you have a vision of where you are going and understand what it will take, you can find a fresh, objective perspective of the moment. Hopefully, you will have a clear head moving forward. This is the last step in your journey to clarity.
Connections
Our next category is connections. This is a valuable part of the process, and it can take a lot of time to develop those connections. But it’s a common theme among every successful real estate investor. The reason why is that this is not something you can succeed at without other people. So what does that entail?
1. Build A Team
If you want real long-term success, you need to build a team. This may sound surprising since this is a solo venture and essentially a start-up. But building a team does not necessarily mean that you have to hire a bunch of people to take care of aspects of your business. The team you are creating is more like a support crew – people you can rely on to give you good advice on certain areas that you may not have expertise in.
Some beneficial members of your team could include a lawyer to help protect you legally, an accountant to talk business strategy, and a property manager who can analyze what repairs will look like. Talking to another realtor and insurance agent is also beneficial knowledge.
These are people you can turn to when inevitable issues or questions crop up. But don’t make the mistake of seeking them out only when you have a problem. Reach out now and start to build those relationships. When things get stressful, you will know exactly who you can trust to help right the ship.
2. Establish Your Mentors
Another important group of connections you will need is mentors. This could be anyone. You don’t have to go out and hire someone to fill this need. It should be someone whose vision and guidance you trust to lead you through this process.
If they have been through the process themselves, even better – but that is not mandatory. What you are really looking for is someone who understands the steps you are trying to take and will hold you to them. Someone who will encourage you and hold your feet to the fire at the same time.
Perhaps you will need multiple mentors. Person A gives great advice on real estate investing. Person B knows you well and will push you when you need to be pushed and encourage when you’re down. The point is that you can’t do this alone and need to surround yourself with guiding figures.
3. Grow Your Community
Another important way to establish yourself is to expand your community outreach. This is something that you have been doing already throughout your life. It could be people at church or the parents in the PTA. Whatever situation you are in, you have some kind of community.
This step involves going further in your social outreach and doing it with intention. Start introducing what you do to the people you know or the people you want to know. This plants a seed for the future and makes you a possible resource down the road.
Face-to-face interactions are important, but we are living in a digital world now. You need to expand your social platform online as well. Reach out to people and start engaging as a brand. Think about the social media platforms your community will be on and invest your energy there.
And find forums and groups online that can educate you and offer support while you network with the other members. Finding a community is another step that does not happen overnight but can be a surprising source of strength in the future.
Implementation
You have established your mental base and you have a foundation of support with your connections. Now it is time to take those resources and get into the implementation phase. This is where all of that inner work can be channeled outward.
1. Take The Risk
The first step to implementation is taking a risk. It can be easy to be stopped in your tracks by too much planning. You want your first investment to be a success. But if you overthink it, you can end up stalling out and never taking that leap.
Nothing that you do is ever going to be perfect, especially when you are just starting your enterprise. In fact, if you ask any successful real estate investor, they probably have one or two stories of personal failure when they were beginners in their field.
Their current success shows that this is not a permanent state. As with most things in life, you can learn from these experiences and use them to improve. Unfortunately for all of us, failure is usually the only way to find lasting success.
Be aware that this isn’t a green light to find the riskiest property you can and take the plunge. There still needs to be thought behind your actions and some care, because a huge risk can end up completely debilitating you. Find a nice medium between jumping into the deep end and never getting into the water at all.
2. Exit Gracefully
You have a property you want to buy. Now you need to think about not just how you are going to purchase it, but how to exit gracefully from the deal. This is for a couple of reasons.
You want to have clarity so that nothing is confusing or awkward if the time comes to exit the deal. You also want to make sure you are not losing something by the way you exit, so figure this out beforehand. It pays to think ahead.
3. Rise By Lifting Others
The final step brings everything together: lifting each other up. You may be inclined to think that having a self-focused tunnel vision is the key. We have already gone over how important connections are, from your broader community to the people you trust the most for advice.
The people who are supporting you are lifting you up and you have to offer the same level of support to others. This is the focal point of investing. Nothing is done alone, so you are not just investing in property, but also in other people.
This means offering advice and support to the people who need you. Maybe it’s a tenant or a fellow investor. Maybe it’s the people on your team or in your community. Show up for them. It also means using your power to take actions in investing that not only support you but also the people around you.
This is important for a lot of reasons, but a surprise benefit is that these social investments will come back to help you down the road. Trust the process of investing.
BE INSPIRED!
Now you have all the keys to success for building your business. But there are still classic mistakes that every investor should try to avoid if they can. The biggest one has to do with focus. When you first start out, you may be acquiring advice from a lot of different places: online forums, trusted friends, or investing personalities.
As we mentioned above, getting advice and support is a good thing. But at a certain level, it can turn into white noise and just be a distraction. People will have a lot of suggestions and it would be impossible to follow all of them.
Don’t allow these things to distract you. When you started on this journey, you laid out a strategy for how you would proceed and a vision for the future. Don’t allow the advice of other people to completely wipe out your focus. This another instance where overthinking can stop your forward motion.
And don’t make the mistake of rigidly following only these steps. You need to consider who you are and what your needs are in order to succeed. Maybe you are someone who has never done real estate investing like this. Educate yourself on the key concepts. Learn everything you can about how to research your market and create a business plan.
If this is something you are familiar with, you need to think about how you can take these steps and make them work on a more granular individual level. What makes the most sense for your particular situation?
You read through all the steps and now you have an idea of what you need to do to get started. This is an exciting time and the possibilities are nearly endless. All it requires from you is the effort and energy to visualize your future and move forward with your convictions.