I get asked questions from new and aspiring investors all the time. All too often, they go something like this: What’s the best thing to invest in? I have $xx,xxx, how should I start?
Hey, I’m flattered. I’m flattered that you have seen what I’ve done and want to replicate it. I want you to be a successful investor and want to help where I can. But those questions aren’t going to get you there.
WHAT’S THE BEST PLAY IN FOOTBALL?
Think about it like this; would you ask Bill Belichick (five-time Super Bowl champ coach) “I want to be good at football. What’s the best play to run?”
(by the way, I’m not saying I’m the real estate investing equivalent to Bill Belichick!)
That is an absurd question! There is no single best play in football. Are you on offense or defense? What down is it? How many yards to go? Where are you at on the field? How much time is left in the game? How many time outs do you have? Are you ahead or behind? What are your team’s strengths? What are your weaknesses? Who are the strongest players on the field? Who are you playing? What are their strengths and weaknesses? How do you match up with them?
Every situation is different. What is right in one instant, for one team, in one set of conditions could be a completely wrong play for another team with a completely different matchup.
But when it comes to real estate investing, wannabe investors often ask the equivalent of “What’s the best play?” They want someone to tell them exactly what to do and when to do it. It just doesn’t work like that. What is right for one investor, in one set of conditions, could completely wrong for another investor.
THE “OBVIOUS” PLAYS
There are times in football that the right play is super obvious… but even the obvious plays are not as straightforward as they may seem.
For example; it’s 4th & 15, you have the ball 70 yards from the end zone in the first quarter. What’s the best play? Well, clearly you punt. Super straightforward. Easy-peasy right? Well, not really…
How deep can your punter kick? How good is their returner? Their blockers? Your coverage? Sometimes the right decision is to angle the punt to the sideline and not give them a chance of a return. Under different circumstances, the best play is to kick it as deep as possible to pin the other team back. Even something as obvious as “you punt the ball” is more nuanced than it seems on the surface.
Compound that with the fact that even when you put all the variables together, nearly every situation has multiple plays that are reasonable calls to make. Say it’s the very beginning of the game, you received the opening kickoff and it’s 1st & 10 at the 25. What’s the right play to run?
It’s the same thing in real estate. There is a lot of nuance to every specific situation. Even something that seems to be an obvious investment “play” isn’t as straightforward as it seems. And there are often multiple investment plays that could all be “right”. The right answer depends on such a multitude of variables and circumstances that unique to each individual at that point in time…
What are your specific goals? How much do you have saved to invest? How much can you save monthly? What’s your credit score? Where do you live? What does that market offer? How strong is the market at that time? How demanding is your day job? Do you like your day job or do you want to leave it as soon as possible? What are your strengths? What are your weaknesses? Are you going to self-manage? Are you a handy person? What’s your risk tolerance?
SUCCESSFUL COACHES AND INVESTORS
High level, winning coaches don’t achieve success by just learning a few great plays – no matter how thick their playbook. Great coaches understand how all the variables work together and, in an instant, analyze them all to make the right call. They learn the theory and mechanics of the game. They dig in to understand all the variables at play and why they should run a particular play at a particular time. Winning coaches know when a certain play is the right play and when it’s the wrong play based on all the variables of their unique current conditions.
If you want to achieve a high level of success as an investor you must spend the time to learn the concepts and theories. You need to understand WHY a certain strategy or investment may or may not be the right thing for you given your current situation. Trying to run every play in the exact same way, and in the exact same order another successful investor did them in is not how you will become a successful real estate investor.
I wasn’t this successful in real estate by running someone else’s playbook. My success came because I spent time to learn the WHY behind everything. I knew why the decisions and investments I made were right for me at the current time given all the variables at play at that time. But your individual circumstances are going to completely different than mine.
THE TRAINED MIND
Instead of asking me “Should I flip properties or buy rentals?” Study the pros and cons of flips versus rentals. Determine the pros and cons. See how it fits in to your life, your goals, your circumstances, your market, the current economics, etc. Study what makes a “good” flip and a “good” rental return. Assess properties in your chosen market to see if either has potential. Maybe the right decision is flips, maybe it’s rentals, or maybe it’s both.
Instead of asking me “Should I partner with someone? Where should I start looking? What percentage should I use for this expense? When exactly did you do <fill in random milestone here> in your career? When should I do…? What should I…?” ask yourself WHY for everything. Study and understand the concepts and theories. Understand the pros and cons. Seek an understanding of the concepts and theories. Dig in to understand all the variables at play and why you should run a particular play at a particular time.
A trained mind is better than any script.