How often have you heard the expression, “If I knew then what I know now?”
It reminds me, growing up, listening to Dad talk about real estate investing, he was always saying, “If I knew then what I know now, I would have done things much differently.”
So this got me thinking that if I could turn back time, knowing what I know now about all the different aspects of real estate investing, and all the dos and don’ts, what would I do differently? How much easier would it be, and how much more productive and profitable would I be now?
So, here are the five things I would tell “young” Larry.
1. Align your work with your interest.
I do not recall ever hearing this as a child. Perhaps I did and simply tuned it out, but I would love to tell young Larry to find your strengths and weaknesses. Perhaps complete an interest assessment test and create an understanding of yourself.
As a child who was always helping my dad fix up his properties, I was fascinated by houses.
When I was a teenager, I would sit in open houses for the local real estate broker (simpler rules and times then, as I basically was babysitting the house).
I loved the architecture and seeing all the different floor plans. I just loved viewing property and wanted to be a realtor someday.
Yet it took me 18 years of being in the workforce before aligning myself in a career that was congruent with my passion. I invested in real estate but did not work in the real estate industry. I now know that if you love what you, do you will never have to work another day in your life. At least it will not feel like work.
2. Begin with the end in mind; think long-term.
How do you see yourself living as you age? What are things you want for your family, and how do you want to spend your later years? Then lean back, close your eyes and dream big. Establishing a road map to obtain that lifestyle will be easy if you know where you’re heading. What career you choose and how you invest in your future will have purpose and meaning.
For me as a young adult, it was more about paying my bills and being able to have new cars and the latest gadgets. Living for the moment was exciting, but that excitement fades as years go by and future lifestyles start to take center stage.
3. Start planning early.
“Work smart, not hard, to get ahead.” Wow, I wish I had heard that advice as a child. “Spend the next five years doing what most people will not do, so you can spend the rest of your life doing what most people cannot do.” Growing up in the Midwest, the old-fashioned Midwestern work ethic had me toiling 12-, 14- or even 18-hour days. I was making a living but not making a life. Eventually, I was introduced to the concept of working smart instead of working hard. This is when life started changing for me.
Smart work is leveraging your intellect instead of simply swapping hours for dollars. Working smart is creating a plan (yes, a written plan) of what you want from life, planning your lifestyle and the money it will take to live that lifestyle, then developing a strategy to get it. For me it meant going from simple goals like buying a property with a $200 monthly cash flow to strategizing the big picture of creating a residual positive cash flow of at least $30,000 per month.
These end goals will be the driving force to propel your investments to the next level with purposeful activity.
4. Pursue your passions.
“Do what excites you and trust that the rewards will follow. Your creative juices will flow more freely when you are coming from a spirit of passion.” I grew up and got a job working hard and doing what society wanted from me. It was not until I started my own business doing home renovations — something I was passionate about — that opportunities opened up for me.
I bought my first boat (which was another passion) as an outdoorsman who loves the water. Boating allowed me to enjoy the great outdoors. Within minutes of starting up the boat, my stress vanished. Living a life of passion and purpose is when my investments starting growing exponentially. It is said that the average person has more than 130 opportunities pass by him or her each and every day and most go unrecognized. So live with passion, and the world will open up for you. Always keep an open mind and never shut out possibilities.
5. Focus on simplification and net worth.
Simplification is the most overlooked opportunity for creating wealth. But simplification is a term I never really heard, or at least took time to embrace, until I got older. I would want to instill in my younger self the concept of simplification. Reducing your monthly obligations gives you more investment capital, which can be used to generate more income. Spend at least five years focusing on wealth creation instead of wasting money on the latest gadgets and things. Focus on your net worth, not your working income. I truly wish I had gotten this advice early on. This took me better than 40 years to realize. This is part of thinking big and for the long term. This point was driven home to me by an Australian client, who shared with me that Americans are taught from birth to spend and go in to debt, while Australians are taught from birth to save and invest. That is a conversation I will remember forever, as it makes such great sense.
Today’s income is simply consumable. When you focus on your net worth, you will think twice about whether the money you are about to put out is buying you an asset or a liability. Savings is paramount to create money for investing. This investing money will now create more passive income. You can spend the earnings of the investments, but the initial investment should always be reinvested to keep earning more passive income.
My biggest “ah- ha” moment
I trust you too have found yourself thinking that if you knew then what you know now, you would have done things differently. Interestingly enough (for me, anyhow), the lessons are much deeper than how to invest or what to invest in. It comes from preparing the mindset. I find it is the proper mindset that opens the doors to the opportunities.
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