The Secret of Starting At The End

So you want to be a real estate investor?! One of the most common questions I get from those who are just starting is, “Where do I start?” or, “How do I know where to begin?” I want to share a secret with anyone who has ever struggled with how or where to start in the world of real estate investing; start at the end.

When I say start at the end, I mean that you have to figure out where you want to end up or it is awfully hard to develop a plan for how to get there. It would be like the family that says they want to go on vacation but they never take the time to figure out where they want to go! If they never take the time sit down and decide where to go, then they forfeit the right to complain about never arriving anywhere.

Your real estate investment choice should begin with drilling down to what amounts to 2 very basic baskets of choices;

1. Would I prefer a bigger chuck of cash now?
2. Would I prefer the passive income each and every month?

Either answer is fine. Let’s face it: in real life we will want both, but we also know that we need to have a primary and a secondary when it comes to these two categories. If you already have a good chunk of cash, then you would most likely lean towards the passive income category. If you lack the cash and need to build up some money, to solve some other issues or areas of your financial life, you would most likely lean towards getting a bigger chunk sooner.

Consequently, when we come across deals, we tend to try and push them towards the primary objective that WE need; either cash flow or cash now. I have seen beginners get frustrated when they just can’t seem to get their first deal under their belts. One of the reasons they might be struggling is because they have tried to fit a square peg into a round hole. Maybe the deal they have found would be great for cash flow but not so great for cash now. Or maybe they found a decent wholesale deal that would have some cash if they flipped it; but it spits off no income if they were to keep it.

Instead of trying to force our own will and what we need into every deal, we need to learn to stand back and start at the end and see what the deal allows us to do. When I look at any prospective deal, I ask myself 3 questions regarding any potential profit;

1. Can I make money living in it?
2. Can I make money renting it out?
3. Can I make money selling it?

First of all, if the answer is no to all three of these questions, then it probably is not a deal I am going to do. What if there was money renting it out, but I don’t want to have rentals or I need the quick cash? Or what if I could buy it right, but the rents just won’t cover the debt service? Should I throw the deal away? Definitely not!

This is why it becomes so important to build our team. Just like Robert Allen and Mark Victor Hansen talk about in the OMM book, you need to develop your Mastermind Team. Part of this is to surround yourself with other investors who might be looking for things you are not. For instance, if you are looking for cash flow, and you find a deal where there is profit on a flip but not from a passive income perspective, you could flip the deal over to one of your team members who is looking for a rehab. If you are looking for fixers to rehab and sell, but you find a 4-plex in good shape that has some cash flow, you could still turn the deal over to one of your team members who seeks that.

Simply said, rather than getting frustrated when we find deals that don’t give us what WE want, see if there is profit in another category and make a bit of money by flipping the deal to another investor who may be seeking something different.

Another way to say it is, "start at the end". See what the deal allows you to do and go with it instead of fighting it!