Driving down the road yesterday, I was heavy in thought about the investment properties I had just been looking at when the song, “If I Could Turn Back Time,” by Cher, came on the radio.
While the song is more about relationships, the title and lyrics “If I Could Turn Back Time” continue to resonate with me.
It reminds me, growing up, listening to my dad talk about real estate investing and saying, “If I knew then what I know now, I would have done things much differently.”
So this got me thinking: If I could turn back time knowing what I know now, what would I do differently?
5 things I would tell my younger self about real estate investing
1. Young Larry, align your work with your interest
Larry’s first rental where he lived downstairs.
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 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.
2. Young Larry, 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 you do 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. Young Larry, start planning early
Work smart, not hard, to get ahead. “Spend the next five years doing what most people will not, so you can spend the rest of your life doing what most people cannot.” 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. In the rural Midwest, there is so much emphasis on hard work. As I moved into bigger cities 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. Young Larry, 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.
5. Young Larry, focus on simplification and net worth
Simplification is the most overlooked opportunity for creating wealth. 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.
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 lay 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 re-invested to keep earning more passive income.
My biggest “ah- ha” moment
I trust you too have found yourself thinking, “If I knew then what I 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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