What would you do differently if you had to do it all over again?

One of my favorite questions I hear interviewers ask wildly successful people is this…

“What would you do differently if you had to do it all over again?”

I think we as humans love this question because it requires someone to be somewhat critical of themselves and reflect on what they could have done differently.

Let me preface this by saying that I don’t consider myself wildly successful and I doubt at this point in time, I would be asked that question by any interviewer.

But here is what I would do differently if I had the knowledge I have now.

I would have skipped all of the formal education I have. Which is an associate’s degree in electronics, a bachelors degree and a masters degree in business. Additionally, I am certified trainer in three curriculums for Dale Carnegie Training. A real estate license, a certified coach for Marshall Goldsmith Stakeholder Centered Coaching.

Instead I would have picked one specific niche and went all in on that. One of the best quotes i heard many years ago was this “There are riches in the niches”.

The guy who told me this ran an aeronautical college.

I think at the time I heard this I was thinking more specifically about higher education and really specialized programs and how profitable they can be by being focused on one or two programs versus a big university with 100’s of programs.

But now over a decade later since hearing that quote I have a different idea about how valuable this little statement actually was.

When you are focused on one or maybe two things that are compatible with each other, you have the advantage to really focus on getting really good at whatever that is. You don’t have any distractions.

You also become the expert on whatever that is, which the marketplace highly values.

You dont clutter your mind with things that dont have to do with whatever you’re focused on. So the effort you put forth which is limited gets your best attention. When you focus on too many things one of those things will always not get the best you. Because our energy is not infinite. Our clarity and intelligence can’t be totally committed to the one thing. And it must be to get great at it.

In real estate most brokers don’t do commercial and residential. They do one or the other. Because it is too much to learn to try and do both. Engineers usually don’t do mechanical and electrical. They may understand both, but they are experts in one or the other. The top actors in the world only act. The tops athletes don’t do multiple sports, usually by the age of 10 they are focused on one sport.

A guy I really like a lot who is wildly successful and retired before he was 40. Was asked the question. I loved his response.

He said that he would become an expert on trucks. The larger trucks like F250’s and bigger. He said that in a short amount of time that he gave his attention to it. He was able to make about $2000 dollars per trade buying and selling trucks. All of this is possible because of the internet.

But he says you have to understand the marketplace on those trucks. How much they can sell for. How much the comparables are in certain areas around the country. But he said while he did it, with some help from his brother who was an expert on it he could easily hit the $2000 a day mark 4 times a week on average.

I don’t regret my path by the way. None of us would be where we are today without our uniques paths. I wouldn’t have the insight I have today without my path. However, I share this with the hopes I reach people on their unique paths and help them find the right path and a bonus would be reaching someone who is at a point in time in their life trying to figure out what their path could be.

Regardless of what you choose. The point is going all in on one particular thing. Being a jack of all trades doesn’t pay well. But if you are an expert in one particular thing you can charge a premium.

The good things is if you are smart enough to read this, you still have the opportunity to commit to one thing and you have the time to become the expert in it. And so do I. Let’s do it!

Go all in on something.

To your success and your future.

4 things you must STOP to create wealth with Income Producing Real Estate

This morning I was thinking about all the reasons and excuses I thought about before I became a real estate investor. I was like most people when I started too. I had very little money to invest, but I knew it was the right thing to do and would pay off in the long run. I just had to have the courage and go all in.

The first four points are really things you have to stop overthinking. And the last one is a really bonus idea and concept. It is not something you must stop. It really is something you must actually start thinking about.

Don’t listen to people who don’t own real estate.
I put this number one for a reason. I think it is most important. The remaining three are also important, but to me not nearly as important as this one.

The reality is most of us listen and spend time with people that don’t have an understanding of what we are trying accomplish. And to be blunt, if you are reading this, you already are different than most people out there and are likely at the top of your friend and family group.

I don’t mean to be mean here. But this is true. At the top I mean, you are most likely more financially competent, working to change your life, seeking growth constantly, etc. I know this because I have been there as well.

When you start to tell your friend/family group about what you want to do. They most likely will all tell you that it is too risky. Don’t listen. Get around people who have done it. These people know you can do it and will help you do it.

Waiting for the perfect time.
There is no such thing as the perfect time. I think all of us are thinking that there will be a perfect time to do this or that at some point in time in the future. That is the wrong attitude to have. The only time we have is the time right now. Markets are changing all of the time. You just have to do your analysis and go all in. The best time to start would have been ten years ago but since you didn’t the bets time is today. Right now.

Thinking the worse case scenario.
I think it is built in our human nature to always think about the worse thing that could happen. Believe me, I am guilty of this all of the time. I won’t bore you with all of my issues. But the one thing I had to learn about real estate is in close to twenty years investing and buying properties, the worst case scenario hasn’t happened.

When I bought my first property in 2006. I was considering a four-plex and a duplex. I talked myself out of the four-plex, because I said to myself, what would happen if all four air conditioners went out at the same time. What would happen if all four refrigerators went out at the same time. And what would happen if all four units were vacant at the same time. I didn’t think I had the money to overcome those kinds of issues all at once.

So I settled on the duplex. If I would have bought the four-plex. I can honestly say that my net worth would be at least $250K more than it is today. And guess what, now that I have over 50 doors that I rent this worst case scenario has never happened.

Thinking your full-time job will be enough.
I can remember when I went from making 43K a year to making 50K a year. Keep in mind this is more money that either one of my parents had ever made up until that time. And then when I went from 50K, to in the 60’s and then into the mid 80’s, and ultimately multiple six figures since my early 30’s.

All of these jumps in salary were huge to me. I never knew anyone who made that kind of money, at least not in my family. In my small world this was a lot of money. And I am very grateful for ever opportunity I have had and the people who helped me along the way get there.

But even as a single person for most of those significant pay increases it was never enough for me. Obviously I was investing but I never really lived a very outlandish lifestyle. Look I get it, did I have a lot than most people. Yes. But it still wasn’t that significant.

I say all of this, because even with a high salary in my job, it was still difficult to get to a point in my life (I’m still not there) for total freedom and security. And thinking a job will do it is just crazy. And I had significant pay increases during that time. For most of us our full time job will never allow us to become wealthy. You have to invest.

Time.

I mention time twice in five points. You are thinking I am crazy and why doesn’t this point fall under the other one.

This one is different. I am talking about the big clock here. The one that we all have. Yes its morbid, but it is reality.

Our time is limited here, we all know this whether we want to admit it or not. I am 43. If I can hit my goals by 45. I am still technically close to middle aged and really on the back half of my lifespan if you consider all of the statistics.

I am using this as fire under my ass. My dad died at 60. I can still remember the day he died talking about his own retirement. Which in his world was maybe 3-5 years away. But he had worked his entire life to retire one day. I made a decision that day I took him to the hospital and watch him die that I would not do that.

Since then I have tried to work and invest like my life depends on it. Because it does.

I have a great life right now. Really no complaints, but I am working towards one goal. Financial Independence. I chose income producing real estate as my vehicle of choice and I am all in on it. Whether you choose real estate or not. You have to go all in.

To your success and your future.

Why you must learn this lesson now to get what you want

One of the most important lessons I have learned in my life is this:

If you seek you will find.

Not very profound at all. But most people never seek.

I have talked about the magic of the seek before. The seek is the most important part of this statement. Because if you are actively seeking you will start to be exposed to what you ultimately are looking to find.

And sometimes during this process, you may actually identify that what you thought you were originally looking for is not the thing you should have been looking for. You may actually find something more significant.

My personal example is this.

When I was a young leader I made it a point and my mission to study and learn all I could about leadership. I became a seeker of knowledge around leadership and exposure to some of the best leaders on the planet. My goal was to become the best leader, n my mind and my teams mind, ever.

While seeking knowledge and experience around leadership. I actually found something more important that was not actually part of the original goal. What I actually found was my thirst and hunger for personal development.

Some may think leadership development and self development are the same thing. And my retort would be that leadership development is a component of self development. Self development is much bigger and includes a lot more than leadership development.

Seeking is a full-time job. It isn’t something you do casually. It is something that you are doing intentionally and deliberately on a daily basis. Seeking is not a casual event.

As a real estate investor looking to grow my wealth and financial independence I look at real estate on a daily basis. Sometimes multiple times a day. I am seeking opportunities that can help get me to my ultimate goal.

One of the questions I have had and have been seeking is how to buy bigger properties and get access to bigger deals. Bigger deals means more doors and requires a lot more money to buy those deals.

When I started seeking how to do this. I mean really seeking. Which means finding people and resources that can help me do this. I not only found out how to buy bigger deals, but I am actually learning that buying the bigger properties is not really the end goal. More importantly I am learning how to create a business that provides my partners and myself more money and financial independence.

I am still on the path of learning this, but I am intentionally seeking new and better information everyday.

Lastly, the seek requires action and most likely money. Until you are willing to put money into what you are seeking, you will never actually get to the goal.

Become a full-time seeker. What is a goal that you want to accomplish? What is something you have always wanted or wanted to do? Whatever that is become an intentional seeker of knowledge and resources that can help you achieve what you are seeking.

To your success and your future.

The Comfort Crisis, Embrace Discomfort to Reclaim your Wild, Happy, Healthy Self,

I read a lot of books each year. On average around 40 or so for the last decade. To some people that isn’t a lot, but to 99% of the rest of the world, it is a massive amount. Out of those 40 books each year, I would guess about two-three will actually be compiling enough for me to write about here on my website. This happens to be one of the books that makes the cut.

Since around 2014 or so, I started taking my highlights from a book and putting them in my journal, and then ultimately the really good books will make it here on my blog. I am not sure how many book summaries I have done over the years, but if you have an interest let me know and I can share all of them with you.

The Comfort Crisis, Embrace Discomfort to Reclaim your Wild, Happy, Healthy Self was a great book for me to read right now. I am looking for ways to challenge myself to increase my productivity and results in a lot of different areas in my life.

As I mentioned before, if I am reading 40 books a year, many times, I will read several books in a row around a certain theme or topic. It could be business, marketing, sales, or personal development, emotional intelligence, political at times, etc.

Right now, the theme is self discipline and self control. Not that I don’t have these two things. But I am trying to determine ways to have even more.

Comfort Crisis, gave be a lot of things to think about.

Michael Easter, the author of the book brilliantly lays out why the human species and definitely Americans are more comfortable than ever before, and how discomfort has always made us better in every aspect of life. In the modern comfortable world we live in today, we no longer have very many discomforts.

A few takeaways:

Problem Creep: The author lays out some compelling data around this topic. Problem creep is the fact that as we experience fewer problems in our life, we don’t get more satisfied. We instead just lower our threshold for what we consider a problem and thus we think we have more problems. We end up with the same amount of (so called) problems, except now they are more shallow.

Turn on the news and you will see this on a daily basis. Or go to twitter if you wish, but everybody is either offended, wants to be offended, or was offended by something.

Do hard things: They have two rules around this topic.
1. It must be really fucking hard.
2. You can’t die.

Really fucking hard means, there must be at least a 50% chance you could fail.

This one really got me thinking about when is the last time I did something really hard? Where I could actually fail? And quite frankly I am not sure. Most of the stuff I do that is hard, I have done before. Maybe, I am looking for a better time during a certain workout or run, but do I have a chance of failing? Probably not.

It also hit on the fact that when it comes to working out nowadays many of us don’t actually do anything really hard. Sure working out is hard, but we now do it in a controlled air conditioned environment, with weights that are perfectly balanced, we have the softest shoes you could possibly run in on the most cushioned treadmills. How hard is it?

So it has me thinking about how can I make things harder and do things that will make me uncomfortable.

Smart Phones: The author says that boredom was removed from the human species forever in 2007 with invention of the smart phone. We no longer have the benefits of being bored. We have this phone with us all of the time. The author cites research that shows Americans are picking up their phones 2,617 time a day on average. With the average person spending 2 hours and 30 minutes a day staring at a small screen.

He said if you live an additional 60 years, you would spend 7 hours staring at your phone.

This was mind blowing to me when you put it in this context.

I am like most people and I see my screen time that my phone sends me on a weekly basis. It is something that I have been conscious about, and have done some things to minimize my time on my phone. But I am going to make it a point to do even more to prevent myself from being on my phone so much.

Also, the fact that we are never really bored, we are less creative because we are always stimulated, most likely by something that really isn’t of any value to us. Do you really need to know the news of the day all day long.

Eating: We all know this, but our ancestors didn’t have readily available food like we do now. They actually had to hunt for their food. And when they killed it, or found it, they would then have to carry all of that food back to wherever they were living.

Nowadays we have so many comforts around food, and I can’t say the last time I actually forced myself to be really hungry.

One of the big takeaways for me from this book is to force myself to eat less a few times a week and actually feel discomfort around not eating. The health benefits around this are well documented. I know many people talk about fasting for 12-16 hours. I do it pretty frequently as well. But I want to force myself in to even longer fasts and cleanses.

Luck: One of the last takes I really liked in this book that the author briefly talks about is the fact that I am alive and how lucky I really am.

The stat in the book says this: The odds of being alive is 1 in 10 to the 2,685,000 power. I am not a mathematician, but that is a lot. Secondly, he talks about the average lifspean of a human in 1900 was 31 years of age. Today, across the world it is 72.

And lastly, the fact that I was born in America is another blessing.

I think, I already knew how lucky I was to be born at this time, in this country. But it was a great reminder for me.

As I mentioned these are just a few of my notes of things that jumped out to me in the book. I highly encourage you to read it.

To your success and your future.

8 Calculations you must learn to do when you invest in real estate

This morning I was thinking about some of the terms and calculations as a real estate investor I needed to learn. You may not use all of these calculations when analyzing a deal, but understanding each of these and when to use them is very important.

They are really not in any particular order, except for the first one.

Net Operating Income (NOI) is the most important calculation to use when it comes to analyzing a multi family apartment building or purchasing a portfolio of single family homes.

Also, Debt Coverage Ration (DCR) is a calculation that banks look at very hard when they are analyzing a multifamily property.

Learn how to make these calculations forwards and backwards.

A. Net Operating Income (NOI)
NOI is a property’s income after being reduced by vacancy and credit loss and all operating expenses. NOI is one of the most important calculations to any real estate investment because it represents the income stream that subsequently determines the property’s market value that is, the price a real estate investor is willing to pay for that income stream.

Gross Operating Income – Operating Expenses = Net Operating Income

B. Gross Scheduled Income (GSI)
GSI is the annual rental income a property would generate if 100% of all space were rented and all rents collected. If vacant units do exist at the time of your real estate analysis then include them at their reasonable market rent.

Rental Income (actual) + Vacant Units (at market rent) = Gross Scheduled Income

C. Gross Operating Income (GOI)
GOI is gross scheduled income less vacancy and credit loss plus income derived from other sources such as coin-operated laundry facilities. Consider GOI as the amount of rental income the real estate investor actually collects to service the rental property.

Gross Scheduled Income – Vacancy and Credit Loss + Other Income = Gross Operating Income

D. Loan to Value (LTV)
LTV measures what percentage of a property’s appraised value or selling price (whichever is less) is attributable to financing. A higher LTV benefits real estate investors with greater leverage, whereas lenders regard a higher LTV as a greater financial risk.

Loan Amount ÷ Lesser of Appraised Value or Selling Price = Loan to Value

E. Debt Coverage Ratio (DCR)
DCR is a ratio that expresses the number of times annual net operating income exceeds debt service (i.e., total loan payment, including both principal and interest).

Net Operating Income ÷ Debt Service = Debt Coverage Ratio

DCR results:

  • Less than 1.0 – not enough NOI to cover the debt
  • Exactly 1.0 – just enough NOI to cover the debt
  • Greater than 1.0 – more than enough NOI to cover the debt

F. Cash on Cash Return (CoC)
CoC is the ratio between a property’s cash flow in a given year and the amount of initial capital investment required to make the acquisition (e.g., mortgage down payment and closing costs). Most investors usually look at cash-on-cash as it relates to cash flow before taxes during the first year of ownership.

Cash Flow Before Taxes ÷ Initial Capital Investment = Cash on Cash Return

G. Cap Rate
This popular return expresses the ratio between a rental property’s value and its net operating income. The cap rate formula commonly serves two useful real estate investing purposes: To calculate a property’s cap rate, or by transposing the formula, to calculate a property’s reasonable estimate of value.

Net Operating Income ÷ Market Value = Cap Rate

Net Operating Income ÷ Cap rate = Market Value

H. Time Value of Money

Time value of money is very important to consider when you invest. What is your money worth today and what will it be worth in the future if you decide to hang on to it. This the calculation you must make when you are thinking about how to spend and invest your money wisely.

Time value of money is the underlying assumption that money, over time, will change value. It’s an important element in real estate investing because it could suggest that the timing of receipts from the investment might be more important than the amount received.

To your success and your future.

Contact me if you are looking to start investing in real estate.