Failure is not an option! You need a plan…

Jon Hull

North Peak Contributor

As some of you know…

I work for the Fire Dept. here in CA. When we fight fire failure is not an option. I see real estate investing the same way. I am a little over one-third of the way through a thirty-year career and have been to a few major emergency incidents. I am no “salty dog” (good-old-boy veteran fireman), but I have seen some fire scenes run very smoothly and some run slow and inefficient. The effectiveness of a fire engine company can often be directly attributed to the amount of planning they do and how much they train on that plan. I.e. planning and execution. I believe this mindset directly relates to investing.

I am far closer to the beginning than the end of my journey, but it doesn’t matter how far down the road you have gotten because it is impossible to know where you are going without a map.

Since you are now reading this it means you have acknowledged the fact that having a plan is crucial. At this point, you have made the effort to reach out to an individual investment firm, get on this email list, and start collecting information. Good job so far. (I think you have made some wise choices!) Or, maybe, you have successfully been investing for years. Either way, being intentional about the future is of utmost importance.

 

Regardless, let’s talk about planning a bit more…

I am far closer to the beginning than the end of my journey, but it doesn’t matter how far down the road you have gotten because it is impossible to know where you are going without a map.”
-Jon Hull

Have you actually taken the time to write out your plan? Have you posted it somewhere you will see often? What does your plan incorporate? For the next few minutes we will go over what I believe are some of the most important elements of a real estate investment plan. During this process I will share my plan with you.

I recommend starting on a poster board. If you are married or have a significant other that you plan on sharing your future with, I would also suggest you include them in this process. Go grab three sheets of poster board (paper, white board, chalk board, etc). Title one ‘Dreams’, one ‘Goals’, and one ‘Plan’. Then proceed to dream, set goals and start creating your plan in whatever form you like all over your chosen writing platform. Mine looked like this:

My “Why” is simple.

1 – I want to spend as much of my life as possible with those that I love instead of instead of punching a time card.

2 – My wife and I are passionate about giving and we don’t ever want to say ‘no’ to a worthy cause.

Why?

I believe the most important question you can ask is Why? In some way or another we are all here because we want passive income. Maybe that income is for retirement, maybe it’s for funding your traveling addiction, maybe you want to be your own boss. What we need to keep in mind is that this will likely be a long, slow, patient process that includes wins and losses. There will be good times and bad. The “Why” can help carry you through the losses and keep you grounded in the wins. I post my ‘Why’ at the top of my ‘Plan’.

My “Why” is simple.

1 – I want to spend as much of my life as possible with those that I love instead of instead of punching a time card.

2 – My wife and I are passionate about giving and we don’t ever want to say ‘no’ to a worthy cause.

Who?

You aren’t going to do this alone. Time to chose who you will be doing this with. Are you the hands-on type? Do you want to be involved at every turn and make every decision? If so, there will be realtors, contractors, wholesalers, management companies, title companies, etc. Or, do you want to follow a less arduous path and start collecting finished, turn key rental properties. If so I encourage you to make sure you vet your turn key company thoroughly and pick the right team to work with. (I think I can recommend some good guys)

My “Who?”

My team is primarily made up of the staff here at North Peak. I trust this group to manage my investments above the myriad of other teams and individuals I have spoken with.

MY WHEN?

While the market remains hot I plan on mostly doing private lending and short term flips. When the market cools down and there is a better chance of gaining appreciation I plan on moving more towards long term, buy and hold rentals.

When?

Now? Maybe. Maybe not. I am constantly keeping a close watch on the general economy as well as various housing markets. My plan changes based on what these markets do. Right now, I am a big fan of helping fund other people’s projects and pursuing my own short-term flips. I am not a fan of tying up all my money, long-term, in a peaking economy. I may not be right, but I like to err on the side of caution.

My “When?”

While the market remains hot I plan on mostly doing private lending and short-term flips. When the market cools down and there is a better chance of gaining appreciation I plan on moving more towards long-term, buy and hold rentals.

Where?

Now is not the best time to buy single family rentals in my area. My cash on cash return would likely be negative ten percent or worse. With my ability to invest right now, California does not fit into my plan. However, now may be a great time to be funding projects in the Midwest markets. Detroit for example is going though all kinds of gentrification and might be one of the hottest markets in the country in a few years.

My “Where?”

All this said, I am a long distance real estate investor. I am currently investing in Indianapolis and plan on expanding from there where I see fit as markets change.

How?

“How” is a big question. Google defines investment as ”the action or process of investing money for profit or material result”. This would suggest that any investment involves two things; capital and what that capital buys that makes you money. “How,” asks: What money? Which Investment?

Nobody has figured out the perfect way to invest and there is no formula to make you rich. What I have found is this; there is no substitute for discipline and personal financial responsibility. Save money. Over the last few years, I have saved enough to get a great start in real estate investing. I also eat out less than once a week and I drive a ten-year-old hybrid.

I’ll say it again “There is no substitute for discipline and personal financial responsibility.”

As you become successful, your responsible habits will only compound your wealth.

How?

“How” is a big question. Google defines investment as ”the action or process of investing money for profit or material result”. This would suggest that any investment involves two things; capital and what that capital buys that makes you money. “How,” asks: What money? Which Investment?

Nobody has figured out the perfect way to invest and there is no formula to make you rich. What I have found is this; there is no substitute for discipline and personal financial responsibility. Save money. Over the last few years, I have saved enough to get a great start in real estate investing. I also eat out less than once a week and I drive a ten-year-old hybrid.

I’ll say it again “There is no substitute for discipline and personal financial responsibility.”

As you become successful, your responsible habits will only compound your wealth.

“I’ll say it again “There is no substitute for discipline and personal financial responsibility.””
-Jon Hull

As for what type of investment you choose to buy, well, that is much more subjective. There are many books out there that can help you figure this out. Here are a few favorites:

 

The Book on Rental Property Investing – by Brandon Turner
Long Distance Real Estate Investing – David Greene
Finding and Funding Great Deals – Anson Young

My long-term plan is to use the BRRRR strategy as often as possible to build a rental portfolio that eventually makes at least 3x my current average annual income.

Lastly, a plan is nothing without execution. I recommend setting some early goals that are easily attainable. This will help you take the first few steps on your journey. Once you have knocked out a couple easy ones, start reaching further, then further, and keep reaching until your “why” becomes a reality.

Lastly, a plan is nothing without execution. I recommend setting some early goals that are easily attainable. This will help you take the first few steps on your journey. Once you have knocked out a couple easy ones, start reaching further, then further, and keep reaching until your “why” becomes a reality.

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