This week I talked about How To Scale Your Portfolio so you can get bigger, better, and more productive deals over time without toppling the risk that can come with those types of riskier but more profitable properties. Risk and reward are tied together so it’s important to understand where certain types of properties lie on that spectrum and build a portfolio that balances risk but continues to build in higher reward properties. Check out the full video here where I go in depth with how to scale your real estate portfolio!
Last week, I shared my first step when analyzing a potential deal by starting with a broad location, like an entire state and my second step of narrowing down a specific city. Today, I’m sharing my third step which is choosing an asset class.
One question I start with is, “What is the highest ROI (return on investment) I can get AND how much work am I willing to do to get there?” For example, short term rentals generally bring in more income BUT require more work. You’ll have to decide where this fits into your overall goals and lifestyle.
I’ll make sure that the chosen asset class works in that particular market before moving forward. For example, if I am targeting long term rentals with multifamily properties I need to make sure that the city has inventory with multifamily properties. Not every market will work with every asset class so this step is important before continuing to move on with my analysis.
Next week, I’ll share my next step once I’ve found my broad area, particular city, and asset class to invest in.
I wanted to share one of my favorite analogies. You may have heard me talk about how we can position ourselves like a barrel of monkeys to help accelerate our own growth while continuing to help others at the same time.
With a barrel of monkeys you have monkeys that are above you and monkeys that are below you. Part of being successful is recognizing your own flaws. When you’re looking up to the monkeys above you, or when you’re around people who are better than you, it’s ok to be humble and recognize that without feeling bad about yourself.
With the monkeys below you, or when you’re around people who are less ambitious or successful than you ONLY, then that can drain you. But, if you surround yourself with the monkeys above AND below you then you can become mentor to those below you which can be truly fulfilling and help sharpen your own skills through teaching others.
I learned that it’s best to set my life up like a barrel of monkeys. At any given time I have people above me who are mentors and teach me a better way to live and I need people below me so that the information I learn can flow to them. I have the people above me who push me to be better and the people below me help me be successful by contributing to them and sharing my expertise.
We’ve all heard horror stories with real estate investing but today I wanted to share one of my own! My very first investment property had a lot of pros which made me confident in buying it. When it came time to find a tenant though I naively thought that if I was a good landlord, everything would work out with my tenant and I didn’t bother screening him. BIG mistake!
After a few months, the rent checks started coming in late and then not at all. The tenant ended up owing close to $10,000 in rent and took off. Luckily, the house was still in good shape so I put my focus on getting a new tenant in.
I realized around this time that I should have received a refund for property taxes since I was paying taxes based on a much higher price than what I bought the home for. I found out that the check was sent to the house where my tenant cashed the check AND used that money to pay rent for 3 months! Needless to say, the sheriff had to get involved.
This was a huge lesson with knowing when to leverage professionals, like a property manager, who knew way more than me. I learned that although there would be costs with using a professional, it would have actually saved me money AND tons of time in the long run.
I also learned a few other lessons along the way if you want to hear me tell the whole story, check it out here.
The David Greene Team had the pleasure of working with our wonderful clients Josh and Shelbie in the greater Sacramento, CA area! Having seen over 80 homes with another team, reaching burn out, and taking a 2 year break led Josh and Shelbie to a major mindset shift. So how did they change their mind in order to lead to major house hacking success? Click here to find out!
