Aside from solely finding wealth, investors can benefit from learning how to improve their overall lifestyle which is what we aim to help with for our Accredited Lifestyle Investor audience. In this section, you will find content related to lifestyle improvement tips for passive investors. Ranging from physical and mental health, good habits, and personal growth tips, we’re excited to provide lifestyle content for the wealthy passive investor.

Create Multiple Streams of Income

Warren Buffett is known as one of the best investors to ever exist. Each year, he earns just $100,000 from Berkshire Hathaway. For the last 25 years, his salary has remained the same. During the same time period, he has managed to become the fourth richest person in the world.

 

Buffett did not increase income and his net worth through his day job. Like many investors, he became rich through the power of his business income and investments. To increase and maintain your net worth, you need to do more than rely on your W-2 income.

 

The Advantage of Having Multiple Streams of Income

 

When you depend on a single job, you place your finances at risk. If you are laid off, you have to depend on your savings or unemployment checks until you find a new position. By using passive investing and other strategies for wealth building, you can develop multiple income streams. Even if one income stream fails, you still have other income streams available that you can rely on.

 

When you have multiple income sources, it helps in the following ways.

 

  • You reduce your risk level. With multiple income streams, you are less likely to end up without any income sources.
  • Having multiple income streams is often easier than creating one large income source. Diversifying your income also helps to protect you from risk.
  • You can create income streams that focus on your talents or interests.
  • Having multiple income streams helps you reduce boredom because you constantly get to do new things.
  • You can increase your overall savings and net worth.
  • Eventually, you could quit your day job.

 

There are potential drawbacks you should be aware of as well. While passive income can help you build wealth, it also takes work in the beginning. Whether you invest in a rental property or an online site, you will have to spend time building your income stream. In addition, you will need to do your research to make sure that your income stream is a viable one before you invest your time and money.

 

How to Generate Multiple Income Streams

 

In the beginning, you should start by creating a mind map. The center of the map is for your main product or service. Then, you should draw four spokes that lead to products, advertising, services and other sections. These are the main categories you can use for investing and creating passive income sources.

 

From these spokes, you can draw more lines and ideas. For example, you can create products like online courses, physical products or ebooks. Under the advertising section, you could list a website or blog. While the services section may include options like driving for Uber, the other section may include ideas like renting out an investment property.

 

Ideally, you should focus on passive income streams. This kind of income involves doing the work once, but you get to reap your rewards over and over again. For example, a book is a good source of passive income. Once you have written and published the book, you continue to earn royalties as long as people keep buying it. Affiliate marketing and franchising are also popular methods for generating passive income. You may also want to focus on ideas that help you grow your main business or career.

 

Developing multiple income streams takes time and effort. Start with just one income stream. Once you have finished planning and initiating one stream, you can begin working on the next one. If an income stream fails, you should be willing to drop it and move on.

 

1. Invest in a Property

 

Real estate is one of the oldest and best ways to develop passive income. Once you buy a property, you can rent it out to businesses or residents. If you want an easier option, you can hire a professional property manager to take care of the property. Normally, property managers charge about 10 percent of the monthly rent. While this may reduce your cash flow, it will also allow you to spend more of your time building other income sources.

 

When you invest in a property, you have to do your research. If the property is not in the right area, it will not attract tenants. In addition, a decrepit building may require a huge investment in renovations before it can be rented out.

 

If you make a wise investment, your tenants will pay your monthly loan cost for you. Over time, they will pay off the mortgage until you owe nothing. At this point, your investment turns into your retirement plan.

 

2. Buy Index Funds

 

Index funds are one of the best investment options available. Normally, you have to pay commission fees and other costs when you invest in mutual funds and stocks. An index fund charges less because it does not use brokers or stock pickers. Instead, these funds automatically invest in the overall market.

 

Over the last 100 years, the stock market has always increased in value. Because index funds save you so much money on commissions and fees, you end up earning more in the long run. Plus, you do not have to choose which stocks you want to purchase. Once you contribute money to an index fund in your portfolio, you can sit back and enjoy your new income stream.

 

3. Write a Book

 

If you are an expert on a specific topic, writing a book can be a viable source of income. In addition, it can help you advance your current career or business. When people see that you have published an authoritative book on the subject, they are more likely to see you as an expert.

 

Today, you can easily publish ebooks on your own. Once you have written your manuscript, you can hire someone to edit, format and market the finished book. You can sell the ebook on your site or through retailers like Amazon. In addition, you can give the ebook to your clients during promotions.

 

While writing a book involves a lot of work at first, it becomes a passive income stream once the book is published. This is especially true if you work with a publisher. Once the book has been published, the publisher will send you a percentage of the sales on a quarterly or annual basis.

 

4. Create YouTube Videos

 

By 2021, researchers estimate that people will spend 100 minutes a day watching video content. Because of this, many marketers are using online videos to advertise their products. You can capitalize on this trend by creating YouTube videos.

 

If you want to build your net worth, this is an easy field to get started in. You can create videos like tutorials or movie reviews. Then, you just have to put them on YouTube. If you link Google AdSense to the videos, then they will automatically include advertisements. When viewers click on these ads, you end up making money. The best thing about this plan is that you need very little capital to get started with it. Once you have your videos on YouTube, you can kick back and enjoy a new source of income.

 

5. Start or Buy a Blog

 

You can bring in advertising and affiliate revenue using a blog. If you have a limited budget, you can always create the blog yourself and wait until it has more views. To buy a blog, you will generally have to pay about 24 times the blog’s monthly income. If the blog earns $200 a month, you can expect to pay about $4,800 for it.

 

Investing your time and money in a blog can pay off. Top blogs earn millions of dollars a year. In addition, your blog can support your other income streams. For example, you can sell your ebook on your blog or advertise your company’s products.

 

6. Create and Sell a Product

 

If you want to focus on wealth building, creating your own product is a good place to start. You can sell your product on your website or in an online marketplace. Once your product is doing well, you can always sell your company. Depending on the kind of product or service you sell, you may be able to turn your business into a franchise as well.

 

7. Use Real Estate Investment Trusts (REITs)

 

REITs are another idea for passive investing. If you want to earn money from rental properties without having to do any work, REITs can help. Basically, you are buying a share in a portfolio of different real estate projects. Then, this portfolio is managed by a professional team. At the end of each financial quarter, the funds’ earnings are distributed to each share.

 

8. Try Airbnb

 

Do you have a vacation house that sits empty for most of the year? If you have extra space, you can convert your unused rooms into a revenue stream. Once you place your rooms on Airbnb, travelers can rent the space. Depending on how luxurious the rooms are, you can end up earning a significant amount of revenue from them.

 

You do not have to be limited to just the ideas on this list. If you want to increase income and build wealth, you can also try some of the following options as well.

 

  • Freelance in your free time.
  • Become an angel investor.
  • Make an online course.
  • Become a silent partner in a business.
  • Create an app.
  • Try peer-to-peer lending.

 

By building your wealth, you can create a legacy that you can leave to your children one day. Many of these additional income streams involve passive investing, so they require very little work once you have them up and running. Before long, these strategies for wealth building can help you multiply your net worth and create a lasting legacy.

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How to Navigate 2020 – 5 Tips for Real Estate Investors

What a crazy year this has been! It has certainly been a rollercoaster to say the least, but the good news is that there are ways you can not only survive, but thrive in 2020 as a real estate investor. 

Here Are 5 Tips That Can Help:

#1 Educate, educate, educate. Working from home? Can’t travel? Attend some online events, webinars, read a few books, listen to podcasts, watch “how-to” videos, get on BiggerPockets and read blogs. 

“An investment in knowledge pays the best interest” – Benjamin Franklin 

#2 Re-define your goals and investing criteria. What are your long-term goals? What do you REALLY want to gain from investing in real estate? It’s not all dollars and cents and it’s not all about cashflow vs equity. Take a couple hours this summer to write down what it is you really want to achieve in life. Money can only be exchanged for experiences or “things” – what are you after? 

“You should set goals beyond your reach so you always have something to live for” – Ted Turner

#3 Volunteer your time – seek mentors. Learn from other’s successes and failures. Mentorship can come in many forms, but the most effective is usually in the form of having a personal coach or mentor. This has made the biggest impact in my life over the past decade. Have money to spare? Consider hiring a coach or mentor. Don’t have money to spare? Consider volunteering your time to add value to others in exchange for mentorship.  

“The richest people in the world look for and build networks. Everyone else looks for a job” – Robert Kiyosaki 

#4 Get your personal finances in order. What can you do to reduce overhead or save additional cash? Could you start a side business for some additional income? Stay focused and disciplined on your long-term objectives. Any time you spend money on things you don’t need, you move further from your goals.

“Personal finance is only 20% head knowledge and 80% behavior” – Dave Ramsey 

#5 Learn from mistakes. You will make mistakes and you will likely lose money based on inexperience; I know I have. Reading biographies, seeking mentors, asking people about their “lessons learned” can help you cut the learning curve. 

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes” – Warren Buffet 

I hope you find these helpful. Even if you only implement ONE of these, you will be 90% ahead of most. This year, more than ever, is a time to grow, expand and thrive. 

To Your Success

Travis Watts 

 

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Mindful Spending – How to Save For Happiness

The idea of “Mindful Spending” came to me today. I have never heard this term before, but it made perfect sense. I want to share with you what it means to me and how you can benefit: 

 

Here’s the simple truth – You need to figure out what you really want, eliminate expenses that don’t bring you joy, set realistic goals and create an achievable plan to get you there.

 

The money that you generate is for you, your family, your future and hopefully for sharing with others. We live in a society that is SO consumer-driven; it can be easy to fall into the trap of spending too much at expensive restaurants, buying a new car, luxury clothing items, a $6 coffee out the door and the list goes on. But here’s the secret…unless this “stuff” TRULY brings long-term happiness to you, don’t spend your money on them! 

 

Understanding what you value is…invaluable

 

At the end of the day, the question to ask yourself is…Do my ongoing expenses bring me the thrill they once did? This concept is not about depriving yourself of spending; it’s about adjusting your spending habits to mirror your values by spending on experiences, products, and services that TRULY matter to you.

How To Find Out What Matters –  Here is an Easy Exercise:

#1 Write down all your ongoing expenditures and frequently purchased items

#2 Total up these expenditures (a monthly total). How much do these cost you every month?

#3 On a scale from 1 to 10, add up how much value and/or happiness these bring to you. (1 = almost none and 10 = tremendous satisfaction)

#4 Now consider your Financial Freedom. What would you do with your TIME if you had complete Financial Freedom? If you already have Financial Freedom, what could you do for others? What else could you give? 

#5 Now decide what you would rather have. The joy from the expenditures on your list or the feeling of knowing you have absolute Financial Freedom? Life is a balance; you don’t want to remove ALL the items on your list, you want to eliminate the expenses that are not serving you and your future goals. 

#6 Write down at least 2 or 3 items that you could eliminate from your expenses. Add up what that savings would be annually. Now multiply the annual savings x 10 years. Last, multiply that number by 8%. This percentage represents a (potential) investment return (from stocks, real estate, etc) that you could have if you removed the non-essential expenses from your life.  

Example: 

Subscription TV Service = $75 month x 12 months = $900 a year

Car Payment (Fancy Pants Car) = $400 month x 12 months = $4,800 a year

($900 + $4,800 = $5,700) x 10 years = $57,000

$57,000 x 8% = $4,560 a year investment income (potential)

 

Mindful Spending Benefit = By eliminating a few items that do not bring long-lasting fulfillment and joy to your life (for a 10-year period) you could instead build up investment income toward your Financial Freedom goals. Which is more important? Your future, time, family, happiness and contribution, or having an excess of “stuff” in your life? 

To Your Success

Travis Watts 

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Is a college degree necessary for wealth?

It’s long been believed that having earned a college degree was a necessary prerequisite for wealth building. And, to be honest, the statistics have, for the most part, backed that up. Reports have shown that those with a bachelor’s degree earn 66% more money than those whose highest educational achievement was earning a high school diploma.

 

However, it’s important to look beyond the numbers. First, statistics don’t necessarily apply to you and your situation. Just because the average person may earn more after earning a college degree doesn’t mean that you will. Second, keep in mind that these types of statistics by their nature are always indicative of past events. Times are changing, and it appears that the value of an education in the form of a college degree is decreasing and will continue to over the coming years and decades.

 

Third and perhaps most importantly, the amount of loans that students have been accruing has been increasing exponentially over the years. Just from 1992-2012, the average amount that a student had borrowed in earning that education doubled to $27,000. Today, the situation, which has reached $1.6 trillion in total loans, is being described as a “crisis.” Student loan debt is the most powerful indicator that the value of a degree is decreasing while the money that you’d save by not taking out loans is money that can often be better used to invest in yourself.

 

Importance of Investing in Yourself

 

Yes, investing is important in building any sort of wealth. This is true for investing in things such as real estate or the opening of a business as well as with passive investing. It’s also true for yourself. However, you can invest in yourself in different ways than going to college, in ways that focus on taking in information that’s often more directly relevant to your goals. The most important thing to keep in mind is that you still need an education. That is an absolute must. But this can be outside of a classroom. Teach yourself what you need to learn. All of the information is out there. You can learn quite a lot about wealth building and other aspects of the world on your own.

 

Many discount the achievements of actors, musicians, and athletes who have achieved success without earning a degree, oftentimes simply saying that they were lucky. But they’re neglecting to take into consideration all of the training, practicing and studying that these individuals engaged in to achieve that success. It may not have been in a college classroom, but the amount of self-education that they engaged in was significant. This is also true of some who have achieved success in the business world after entering but not graduating from college. Two examples of this are Bill Gates and Mark Zuckerberg.

 

College Doesn’t Prepare for the Real World

 

Another important thing to keep in mind is that the college system doesn’t prepare you for many aspects of the real world.

 

One way that this is done is by schools showing a preponderance for memorizing. Yes, this is an important skill, but it’s not as important as schools make it out to be. Also, how you succeed in college, how you achieve a 4.0 GPA, will not translate as well into real-life settings as many had hoped for or, worse, expected. People in power, the ones already with wealth, behave differently than college professors do, and there is no simple, easy-to-follow path to excelling in that system like there is at college.

 

Schools are also set up to teach students how to be disciplined and obedient, not how to be go-getters who engage in much more active wealth-building activities. In many cases, those who don’t draw within the lines are the ones who achieve the most success in life despite colleges giving the impression that the opposite is true, leading to surprise as graduates attempt to take what they learned into the real world.

 

Simply put, earning an A in school entails a different skill set than earning an A in real life. In fact, earning an A in real life can often be an elusive goal as it’s just not simple to determine exactly what success is like in the real world. It’d probably be best to get away from that type of thinking altogether.

 

Being a Self-Starter

 

An increase in self-starters in the world over the past several years has also indicated that earning a degree is not necessary to achieve success. For example, if you want to enter the real estate market or engage in passive investing, the only thing that’s important is how much knowledge you have.

 

Of course, there will be situations where getting a license or even earning a college degree will ultimately be necessary. A real estate license can provide enough benefits for you that you’ll want to make the sacrifices to get one. Conversely, if your life goal is to be a doctor, there’s not really a viable path to that specific goal without entering and succeeding in the college system. With that said, several other ways of earning money are accessible to you without you ever having needed to step foot in a college classroom.

 

It’s also important to look at the world as it relates to COVID-19. This has and will continue to change the world around us. We must adapt to these changing circumstances, both as it relates to COVID-19 and as it relates to events that haven’t happened yet and that cannot be predicted. You must have a mindset of rolling with changing times, and this is another skill set that is not normally taught in college settings.

 

The bottom line is that maybe attending and graduating from college is ultimately the most effective way for you to reach your goals. However, in many cases, it is not. It’s important to take the entire picture in mind as you make this decision while remembering that a college degree is absolutely not necessary for wealth.

 

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Being Patient for a Deal Vs Jumping the Gun

It’s not easy to be patient. This is why there’s a common saying referring to it as a virtue. When you’re patient in life, you’ll enjoy many benefits. For instance, patience helps you focus on your long-term financial goals and inspires you to make better decisions. Patience can also help you form a helpful skillset and improve your mental and physical health. Jumping the gun and making hurried decisions often results in problems and frustrations.

 

How Patience Helps You Focus on Your Long-Term Financial Goals

 

To achieve long-term goals, you need a strategy, one that may include several steps. Take the time to break down what you want to achieve. If you experience a setback, then be open to trying something else, or consider where you want to go from a different angle. To achieve a long-term goal, you may need to start over multiple times, and this requires patience.

 

For many people, building wealth is the goal. If you direct your attention on immediate results, it may prevent you from reaching it. When you jump the gun in the investment world, you could wind up limiting your portfolio’s possibilities. In time, investment choices generally become less important than your capacity to withstand market fluctuations. This is where investment strategies like passive investing come in.

 

Passive investing is an effective strategy used to increase wealth. It helps people do so gradually. When you participate in passive investing, you’ll be purchasing a security and holding onto it for a long time. Real estate investing falls into this category. Property frequently increases in value, so consider looking into land or building investments that you can sell for a profit later.

 

Schroders Investment Management performed a study of global investors. It found that many of them are impatient. They are attracted to short-term investment opportunities and often hold onto securities for an average of three years. According to the study, fewer than a fifth of investors kept investments for five years or more. A younger investor is even more likely to be impatient.

 

The Schroders study found that investors in the 18 to 35-year-old age range aspire to earn around 10% from their investments while keeping them for less than two years. This age group is also less likely to invest using a strategy. Research shows that these investors tend to lose more while gaining fewer profits. Patient investors are successful ones.

 

How Patience Helps Your Quality of Life

 

People who are patient have better mental health. If you think of someone who is impatient, it might bring to mind a person with shaking hands and a red face. A person who is quivering with emotion is likely experiencing stress in their body. People who are patient are less depressed. They also experience fewer negative emotions, which is probably because they handle upsetting or tense situations better. Those who are patient are often more mindful and grateful. They also connect more fully to other humans and report that their lives have greater abundance.

 

Jumping the gun may result in your missing out on something better. For instance, if you were to purchase the first home that you tour, you might miss out on one that has the exact features that you want and a lower price. It pays to be patient and wait for the perfect home to become available. Real estate investing is also a great way to build personal wealth.

 

Parenting is another time when it pays to be patient. If you’re in a hurry for your kids to walk, you may not enjoy watching them develop small motor skills like learning how to move an object from one hand to the other or slowly gaining the strength to press up to their hands and knees. When you’re patient with their steps, you may find yourself appreciating more of what they are doing.

 

Why Patient People are Successful

 

Today’s culture focuses a lot on instant gratification. This means that people tend to search for quick fixes and shortcuts. They also fall for get-rich-quick schemes. While few people receive instant gratification from these things, many individuals continue to pursue them because they sound so good.

 

Patient people know that setbacks are temporary and that they’ll reach their goals in time. You can’t rush or hurry most goals. Often, they require thought and a bit of trial and error to come to fruition. Successful people make long-term commitments and dedicate themselves to achieving their goals despite any obstacles or challenges.

 

How to Become More Patient

 

How patient you are is based on your background, personality and the situation that you are in. Your personality likely dictates how well you deal with the setbacks and interruptions that happen during your life. You may handle these situations calmly or with frustration and anger.

 

To become more patient, you will need to practice. First, determine when you’re being impatient and narrow in on the emotion that you’re experiencing. For instance, are you mad because traffic is preventing you from getting home when you expected? Or, are you frustrated because a deal didn’t go your way? Maybe, you’re sad because your grown child made a bad decision. Once you start identifying when you’re impatient, you can start practicing being patient.

 

If it’s another person that’s causing you to feel impatient, then try to put yourself into their shoes. Keep in mind that the things that are causing you to feel impatient are not usually about you. For example, the store cashier didn’t run out of register tape to annoy you nor did the train become packed with people so that you would have to stand during your morning commute. Reframe how you look at the situation.

 

Also, don’t lose sight of your purpose. It’s natural to feel annoyed or rejected when you don’t receive the promotion that you wanted, but you can continue searching for employment opportunities that will help you reach your career goals. Remind yourself that tolerating frustrating situations will help you succeed.

 

Embrace Patience and Benefit

 

Impatience is often the instigator of mistakes and the founder of annoyance. Building wealth can be time consuming, and if your natural tendency is toward impatience, then you may have to practice being patient. When you embrace patience, you’ll be a more successful investor and enjoy benefits like achieving your goals and becoming a person that other people want to know and emulate. 

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How to Go From Solopreneur to a Business That Can Run Without You

Want to go from working 20, 30, 40 or more hour per week while doing one deal a month to working an hour per day while doing over 100 deals per year?

Mike Simmons, a wholesaler and fix-and-flip investor who Theo interviewed on the podcast, was able to go from a solopreneur to operating a business that runs without him by following one simple trick.

For nearly five years, Mike worked 7:30am to 4:30pm in a W2 job. After work, on weekends, and sometimes even during his lunch breaks, he would work in his fix-and-flip business. Since it was just him, he did it all. He found the deals. He negotiated the contracts. He attended closings. He managed the contractors. Overall, he spent 20 to 30 hours on his business each week, resulting in one deal per month. 

Flashing forward to present day, Mike almost never sees the houses that he buys. He doesn’t attend closings. He doesn’t find deals or buyers. Yet, he completes over 100 deals per year.

His secret? Every step in the flipping and wholesaling process is automated, and he has hired an employee who is responsible for overseeing each of these processes.

When to Hire?

The first step in going from solopreneur to a business that can run without you is knowing when to start delegating. In other words, when do you hire your first employee?

The answer depends on how quickly you scale your business. 

Here are three examples of when you should hire your first employee.

You identify a bottleneck. Mike’s first bottleneck was the process of ensuring a wholesale transaction is completed once a deal is under contract and an end buyer is identified. He spent more time on this part of the process and less time finding deals and finding buyers (among other things). So, his first hire was a transaction coordinator to oversee this step in the process.

Your business is generating enough income to pay the salary of an employee. Mike paid his first employee $12 per hour. So, he was generating at least that much income in his business

There is something you really dislike doing or are really bad at. Another reason why Mike’s first hire was a transaction coordinator was because he had poor attention to detail skills. He needed an employee who was detailed oriented.

Who to Hire and In What Order?

As I mentioned above, you hire your first employee when you’ve identified a bottleneck in your real estate process and/or when there is something you don’t like doing or are not good at. Also, when your busines generates enough income to pay an employee’s salary.

After you’ve first hire, who do you hire next?

The decision on who to hire next is similar to deciding who to hire first. Either there is something else you don’t like to do or are bad at, or a new bottleneck is created by the previously hired employee.

Mike’s second hire was a salesperson. Mike thought of himself as a decent salesperson. However, he didn’t like it. After hiring a salesperson, not only was he able to focus on aspects of the business that he enjoyed more but he was also able to complete more transactions due to the higher level skills of this new hire. 

Mike made his third hire based on a newly created bottleneck. The salesperson was responsible for answering the phone calls for income leads. This took time away from the salesperson getting in front of potential sellers and negotiating contracts. To remove this bottleneck, Mike hired a person to answer the phones. That way, the salesperson could spend more time negotiating contracts and less time on the phone qualifying leads.

Now that Mike had a dedicated person to answer the phones, he had the capability to handle more leads. Therefore, he hired a marketing person to generate more leads to keep the person who answers the phones busy.

Overall, the order in which you hire new employees usually starts with tasks you don’t like doing and eventually evolves into alleviating bottlenecks created by a previously hired employee.

Doer vs. Leader

When you are a solopreneur, you are wearing all the hats in your business. You are working in your business.

Once you start to hire employees, you slowly work less “in” your business and more “on” your business.

When you work in your business, you are a doer. When you work on your business, you are more of a leader.

The skills required to be a real estate doer are different than those needed to be a real estate leader.

One tip Mike provided about how to be a better leader to your employees is to document a process prior to hiring someone to oversee that process. A bad leader hires an employee for a role and says, “just get it done.” A good leader hires an employee for a role and says, “here is what you need to do in order to be successful.” But rather than telling them what they need to do, you can provide them with documentation with the step-by-step process for how to successful in their role.

 

To go from a solopreneur to operating a business that runs without you requires hiring employees. To ensure that the business runs successfully without you, make sure you are hiring employees for the right reasons and in the right order. And as you hire more and more employees, make sure you are improving your leadership skills.

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Lessons from Tools of Titans

Tim Ferris is an entrepreneur turned author whose pearls of wisdom are highly sought-after. Both self-made and resilient, this 42-year-old businessman has developed a proven recipe for success. His book, “Tools of Titans,” touches on the habits, tactics, and routines of moguls, icons, and renowned performers alike. Whether you’re a passive investor or have an interest in multifamily commercial real estate, here are some takeaways from Tim’s book that’ll motivate you to attain your goals.

 

Ditch Conventional Marketing

According to Ferris, gone are the days of traditional advertising. If you want your marketing efforts to breed substantial results, think outside the box. In professions like real estate, agents often go with the hard sell. Ferris urges professionals from all trades to abandon this aggressive approach. Instead, he recommends coming from a less is more perspective. There’s an elegance that comes with subtlety, and Ferris swears by it.

 

Don’t Fear Fear

In all that we do, Ferris recommends embracing unpleasant, foreign feelings. For those involved in passive investing, this is particularly relevant. A passive investor is one who’s apprehensive about the risks that come with investing. While it’s sensible to be cautious, Ferris finds that yielding to fear only amplifies our misgivings. With that said, if your behaviors are often dictated by fear, be more mindful about the emotions that you’re giving your energy to.

 

Qualifications Don’t Matter

With ambition and tenacity, Ferris believes that even the wildest of dreams can be brought to fruition. If you want to purchase a multifamily property but don’t know much about the market, go for it anyways. The idea that we need to boast tremendous knowledge on a topic doesn’t sit well with Ferris. So long as you have an unwavering passion for the pursuit you’re considering, Ferris states that failure is out of the question.

 

Become Comfortable With Public Speaking

The mere thought of speaking in front of an audience fills many people with dread. However, Ferris claims that there’s a strong correlation between success and being a competent speaker. Perhaps you’ve mastered the art of wealth building. Your experience and prosperity could inspire the masses if you choose to share your wisdom. As you become more comfortable with this skill, you’ll evolve into an invaluable figure. Those who wish to embark on a path that’s similar to yours will find you especially encouraging. In essence, sharing your story bodes well for increased morale.

 

Ask The Stupid Questions

Within the “Tools of Titans,” Ferris underscores the importance of delving deeper into our understandings by any means necessary. In most cases, this typically involves making foolish inquiries. Ferris maintains that getting a little egg on your face is worth asking the stupid questions. No matter the answer, it’ll promote growth. Passive investing is an intricate trade that requires in-depth thinking, which is why this piece of advice has proven advantageous to financial experts.

 

Don’t Sell Yourself Short

When it comes to wealth building, it’s easy to think that you’ve missed the mark one too many times. Unfortunately, this generally leads some to throw in the towel. In the hopes of maintaining momentum, Ferris asks aspiring businesspeople to give themself grace. As a result, you’ll become more forgiving when those inevitable disappointments occur. Much like Rome, building wealth doesn’t happen in a day. If you want to see your aspirations through, give self-doubt the boot.

 

Find An Uplifting Community

Though entrepreneurship involves solo endeavors, no businessperson has walked their journey alone. Fellowship and partnership are what Ferris considers to be the stepping stones to entrepreneurial success. If you’re a passive investor, this is undoubtedly true. Much of your work consists of making informed buying and selling decisions. Without a core group of people that you can rely on, you’re liable to let significant opportunities slip through the cracks. To ensure enduring prosperity, expand your reach, and find a trustworthy community.

 

Show Up

It doesn’t matter if you’re a visual or hands-on learner. Ferris asserts that showing up is the only surefire way to grow, prepare, and inform others. While in the process of building wealth, it’s critical to uphold this work ethic. Otherwise, a setback is bound to occur, which will halt your progress. With a healthy dose of drive and determination, Ferris believes that nothing is out of reach. When you do show up, make the moments matter. After all, an unenthusiastic attitude is as unproductive as negligence.

 

In essence, Tim Ferris offers a treasure trove of helpful insights and personal development tips in his book. Ideal for passive investors, budding entrepreneurs, and everyone in between, “Tools of Titans” eloquently unveils the practices and techniques that help mold a powerhouse.

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A Life Changing Technique – How to Read 52 Books A Year

A key ingredient to success is having the ability to consistently expand your knowledge and skills through reading. While it is true that many successful millionaires and billionaires dropped out of school early in life, most have continued the pursuit of knowledge and education in order to improve themselves.

Tony Robbins, a world-famous success coach coined the term “CANI”, which stands for Constant-And-Never-Ending-Improvement. Robbins emphasizes the importance of reading and improving ourselves if we want to be successful in our lives. From his book “Money: Master The Game” Robbins says…

“As a young man, I decided I was going to read a book a day. I didn’t quite read a book a day, but over seven years, I did read more than 700 books…”

 

A Few Additional Case Studies

Warren Buffet

The Chairman and CEO of Berkshire Hathaway and one of the richest men in the world spends 5 to 6 hours a day reading.

Bill Gates

The former CEO of Microsoft and one of the richest men in the world said that he reads about 50 books a year. 

Mark Cuban

Mark Cuban, a billionaire and the owner of Dallas Mavericks spends about 3 hours reading every day and he attributed his early career success in life to reading. 

Oprah Winfrey

Oprah is widely known for being an advocate for reading and she strongly recommends her talk-show viewers to adopt the habit of reading. Oprah often refers to reading as her “path to freedom” due to the tough start in her career. 

Mark Zuckerberg

Mark Zuckerberg, the founder of Facebook and a billionaire with a net worth of more than $70 billion is a strong believer in reading. Mark believes that if you want to improve the quality of your life, you must commit to personal growth and development. 

Elon Musk

Like many other successful billionaires, Elon Musk devoted a huge chunk of his time to reading when he was young. When he was in grade school, he read about ten hours a day. 

How Can YOU Benefit?

 

After realizing how many successful “reading advocates” there are, I decided to take a stab at an aggressive reading strategy in 2015, in the midst of transitioning from an active real estate investor to a passive real estate investor. 

 

I made a New Year’s Resolution in 2015 to read 52 books in one year (one book a week). But I knew I would fail if I tried to read books in the traditional fashion… one page at a time, front cover to back cover. So I decided to take a couple speed reading courses and I learned a powerful reading technique from a mentor of mine. Below is a technique that allowed me to read 52 books in one year. I continue to use this strategy today when I read non-fiction “How-To” or “Self-Improvement” books. 

 

A Reading Technique That Can Change Your Life 

 

Step 1 – Set aside (3) 15 minute or 20 minute intervals for reading each day (ie morning, afternoon, evening) and set a timer if needed.

Step 2 – Decide ahead of time what your goal is for reading the book. What are you seeking to learn from the book and how will that help you in your life or career? 

Step 3 Use a bookmark or sticky notes to save important pages or sections, use a pen to circle or underline key tips or ideas.

Step 4 – Read the front cover first, then the inside jacket, and then the foreword/introduction and first chapter. 

Step 5 – Then read the last chapter in the book. Next, circle back to the table of contents and select the most relevant chapters for your goals and only read those. 

 

The goal of using this technique is to extract a few key ideas, concepts, or takeaways that you can implement in your life. Statistically, most people only retain about 10% of what they read. This reading technique allows you to retain information quicker, more efficiently and offers you the ability to go back later and skip directly to the most relevant information by using bookmarks, notes and annotations. I hope this technique helps you expand your knowledge and skill sets and I’m sorry you were never taught this in school.  

 

To Your Success

Travis Watts 

 

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Turn a Decade Into a Year – How to “Knowledge Hack”

I love helping other people cut the learning curve. There have been several instances in my life where I condensed years and even decades of time by using a simple “Knowledge Hack” strategy. 

 

I Have a Question For You…

Have you considered having a mentor? Is it worth your time to read books, listen to podcasts, watch how-to videos, and network with others? 

 

Today I was researching some of the most successful people in America from the Forbes 400 List and realized that almost all of them had mentors at some point, and many still have mentors today. 

 

A Few Examples Include:

 

  • Bill Gates had Ed Roberts as a mentor
  • Oprah Winfrey had Mary Duncan as a mentor
  • Mark Zuckerberg had Steve Jobs as a mentor
  • Warren Buffet had Benjamin Graham as a mentor
  • Sam Walton (And family) had L.S. Robson as a mentor
  • Michael Dell had Lee Walker as a mentor 

 

Rather than thinking about having a “mentor” think of the word “coach” instead. It’s essentially the same thing, but using the word “coach” helped me put all of this into perspective years ago.   

 

A Quick Story

From 2009 to 2015 I did everything on my own as an active real estate investor in the single-family home space. It wasn’t because I thought I knew it all, it was because I did not see the need for a mentor or coach at the time. 

 

What I finally realized in 2015 (after 7 years of trial and error), was there were other people in the active real estate investing space who were operating much more efficiently than I was. They had more connections and were finding better deals and had a broader range of skill sets and ultimately… they were more profitable than I was. I had to do some soul searching, self-reflection, and take a long, hard, look in the mirror. Was active investing really the best use of my time and skills? 

 

What Happened Next?

I made a decision to start partnering with investment firms who had better skill sets, track record, connections, and efficiencies than I did. I essentially “piggybacked” off their success by becoming a limited partner investor in other people’s private placement offerings (mostly in multifamily apartments). This provided a hands-off approach to investing where I had the best of both worlds. I could participate in real estate, which I love and enjoy, while not having to be “in the business” of real estate in an active way, which I did not enjoy. 

 

After dedicating some time to networking, reading, listening to podcasts, watching how-to videos and seeking mentors, I inevitably became a full-time passive investor in real estate. I left the active single-family strategy behind because I was tired and burned out from trying to do it all myself, trying to make the right calls and know all the ends and outs. In addition, the hands-on approach was taking too much time away from the things I loved doing. I had far less spare time because my real estate projects were consuming more and more of my availability. 2015 was the beginning of an entirely new education process that has been life-changing to say the least.  

 

Takeaway

Mentors can come in many forms. The best advice I ever received was to seek out a mentor or “coach” who is doing what you want to do and is successful at doing it…because success leaves clues. 

“If I have seen further than others, it is by standing upon the shoulders of giants” – Sir Isaac Newton

 

To Your Success

 

Travis Watts

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Habits to avoid when building wealth

3 Habits to AVOID When Building Wealth

The wealthiest people in the world don’t build their empire by luck – they do it by working consistently and efficiently. 

However, when building wealth, it takes more than just working on sources of income. Just as important when building wealth is knowing which habits to practice and which to avoid. Fortunately, if you’re in the process of building wealth, chances are you know which habits to continue pursuing.

Instead, many people struggle when it comes to understanding which habits to avoid on their path to building wealth. Small bad habits add up to larger issues, which inevitably hurts your chance of building and keeping wealth.

Knowing which bad habits to cut out and avoid is utterly important when building wealth.

These are the top 3 habits to avoid when building wealth.

Reading Only for Fun

It’s important for everyone to have hobbies and reading tends to be a popular one. However, the issue comes when people stop reading to learn and only read for fun.

When building wealth, knowledge is critical. Many wealthy people indulge in books that help them further learn their craft from those who did it before them.

Sure, you can still read for fun – but don’t let that be the only kind of reading you do. Tom Corley researched the habits of highly successful millionaires and found that 92% of people with few assets did not read to learn.

This is also known as reading with intention. The intention is to grow your skillset and mindset in the areas you are focusing on to build wealth.

If one of these areas you’re trying to build wealth is in real estate such as apartment deals, a great book is Best Ever Apartment Syndication Book. It’s packed with real estate tips to help serious real estate investors that want to take their investing to the next level.

If you’re looking to build wealth in other areas, make the investment into a few books. They will help you in the long-run with whatever your wealth-building goals are.

Tip: Another great source of self-education is through podcasts. Find one like the Best Ever Show by Joe Fairless that focuses on tips and education in your desired learning area.

The Wrong Relationships

Relationships come in multiple forms – some are friendships, some are intimate, and others are professional.

When it comes to building wealth, each type of relationship matters. In fact, the law of averages tells us that we are the average of the five people we spend most of our time with. These five or so people are undoubtedly important in every facet of life – including building wealth.

Ensuring that relationships with the people closest to you is supportive is critical to ensuring success.

Avoiding the wrong ones is even more important.

Generally, those who don’t have the mindset to move forward in life will hold you back. Whether this means a significant other, a friend, or perhaps even a colleague, each relationship should support your goals and have like-minded efforts.

If the friends you are close with are not as forward minded as yourself, it is more than likely you will join them in your thinking and work ethic. Easier said than done, cutting ties with those who you know in some capacity are holding you back will help your growth financially.

If you’re not ready to cut ties, be prepared to spend a lot less time with those who you feel hold you back from your goals in some way. Avoiding the wrong relationships will help you tremendously in your wealth-building efforts.

Getting Financially Comfortable

Becoming financially comfortable is one of the most dangerous habits when it comes to expanding wealth. Often times, people find themselves content at a certain income level – usually one’s that are above their current level of income.

This habit will almost immediately bring your wealth-building efforts to a halt. Instead of actively pursuing new deals and new streams of revenue, a single “good” stream of revenue feels reliable enough.

Most millionaires have multiple streams of income to contribute to their wealth. While the common saying is that the average millionaire has seven streams of income, Tom Corley conducted a study that found that figure is closer to three-to-five streams of income.

Nonetheless, the fact still stands that being content with one reliable stream of income isn’t enough to generate wealth. Corley found that 65 percent of all self-made millionaires had at least three streams of income.

If you ever get to the point where you begin to feel comfortable, this is the perfect time to expand. Whether that means expanding upon a current stream of income or building a completely new one, it’s another area to grow.

By avoiding financial comfort, you’ll have a much better chance at building your wealth.

 

Remember – study what other successful people do. 

Avoiding these three habits are ones that will drastically help you build wealth, but it doesn’t paint the whole picture. Be sure to find out what the successful people are doing as well. 

This will ultimately give you a blueprint for habits you should be practicing yourself.

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How Physical Health Impacts Your Wealth

Becoming wealthy takes more than finding a successful way to make money. It takes an entire shift in mindset from the average person. These types of mindset shift include daily habits, routines, etc.

More importantly, is that these types of lifestyle changes tend to correlate with your ability to make money in some way.

Out of the many lifestyle choices that help lead to wealth, physical health is one of the most important.

Be it through the same habits needed to become physically healthy, or the literal impact of health on wealth, being physically healthy undoubtedly impacts your wealth.

Understanding how your physical health impacts your wealth is critical to your success. 

Becoming healthy as an individual will greatly help your financial health – here’s how:

More Time Means More Money

While there are a number of factors that quantify a “healthy” individual, one factor is certain – healthy people live longer than unhealthy people. 

No, this isn’t a myth and there is data to back this.

In fact, a medical study found that nonsmoking, normal weight, and physically fit men live an average of 12 years longer than those men who do smoke, are overweight, and out of shape. While this study highlights both extremes, the point is that healthy individuals live longer.

With an extra 12 years by simply being in shape, you’re able to make 12 additional years’ worth of money. So, if you’re making $80,000 per year, you’ve been able to make an additional million-or-so dollars. 

Ideally, you’re investing in passive income that will grow during that time to further help expand your wealth. 

If you’re looking for ways to make more money passively, consider passive real estate investing. It will help you to diversify your streams of income and take advantage of the extra years you get from being healthy.

As obvious as it sounds, being healthy gives you more time to make more money, undoubtedly affecting your overall wealth.

You Develop Useful Habits

Habits are critical when it comes to building wealth. However, habits are just as important when it comes to bettering your physical health.

Simple habits such as creating a routine are extremely important to the success of your physical health journey. Aspects such as tracking what you eat, going to the gym routinely, doing cardio, etc., all encourage routines.

Building wealth requires strict routines as well. Working hard and efficiently at building multiple streams of income doesn’t happen overnight.

In this regard, physical health and building wealth are very similar. The average person struggles to do either effectively. Take, for example, that 80% of overweight dieters fail in losing 10% or more of their body weight and keeping it off for more than a year.

More importantly, is that of the few who keep that weight off, 91% of people claimed they made previous unsuccessful attempts at losing weight prior to that. In other words, most successful overweight people who got in shape had failed prior to their success.

Sound familiar?

It should, because the majority of the world’s wealthiest people, like Jeff Bezos and Walt Disney, failed numerous times before finding success. Finding success in whatever you do ultimately comes down to mindset, including physical health. Strengthening your mindset in one area of life ultimately strengthens your mindset in other areas.

Put simply, building your physical health requires many of the same habits, routines, and the mindset that it takes to build wealth. Succeeding in physical health will help in your wealth-building success.

Health Reduces Stress

It’s no secret that finances and money are some of the biggest stressors you’ll face in life. In fact, roughly 75 percent of Americans say their biggest stressor is money.

Perhaps that’s what encouraged you to begin building wealth in the first place. Whether you’re there now or you’re working to get there, achieving financial freedom should take a load of stress of your shoulders.

Not everyone sees that in the same light, though. Depending on your industry or income streams, more money may bring on more stress. Fortunately, there are other ways to reduce stress during the process – like exercising and eating well.

Focusing first on proper diets, science tells us that stress negatively affects bodily functions like blood pressure and blood flow. By stressing over money or building your wealth, you essentially increase your blood pressure and tamper with your blood flow.

Eating healthy foods helps to reduce these effects from stress, ultimately leading to lower stress levels. Foods with omega-3s, vitamin E, etc., all help in lowering blood pressure and improving blood flow. Not only will your body thank you, but your mind will too.

However, eating healthy isn’t the only way to reduce stress. Studies have shown us time and time again that exercise lowers stress.

This is true for a mix of reasons, mainly along the lines of releasing chemicals like dopamine and norepinephrine which are vital to your mood and stress levels. 

Moreover, exercising allows you to take your mind off of stressors during that allocated exercise time. 

Ideally, you’re both eating healthy and regularly exercising to help combat stress levels. In doing so, you’ll have a much easier time building wealth.

Whether you’re looking for more ways to increase your income streams or are looking to begin building wealth, check out the Best Ever Show by Joe Fairless. You’ll learn how to build passive income through real estate, giving you plenty of time to build your physical health in the process.

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60 Second Wealth Tip - Advice From Three Financial Gurus

60 Second Wealth Tip: Advice From Three Financial Gurus

No matter what you read, watch, or who you listen to in regard to wealth building, one thing is certain…it takes discipline to obtain results.

Dave Ramsey (The get-out-of-debt financial coach) says “If you invest $100 a month from age 25-65 at 12%, you will have $1,176,000, thus making everyone a potential millionaire.” Sounds easy doesn’t it? But it takes discipline to save $100 a month for 40 years straight.

Robert Kiyosaki (author of Rich Dad Poor Dad) says “Every time a dollar hits our hand, we have the option to be poor, middle-class or rich”. If we spend it on expenses, we are choosing to be poor. If we buy something we think is an asset, but it’s really a liability (cars, boats, watches and luxuries) we are choosing to be middle-class. If we invest this money into an asset that throws off cash flow, we choose to be rich.” But it requires discipline to invest for an unknown future instead of spending cash today.

George Clason (author of The Richest Man in Babylon) suggests living off of 70% of your income, saving 10%, investing 10%, and giving the remaining 10% to charity. But it takes discipline to track finances, create a budget and stay consistent with this plan.

All the wisdom and advice above is great to have, but it only works if you are willing to stick it out long-term and follow the process. Most people seek the “How-To” or the “Quick Solution” or the “One Thing”. Perhaps a more important element is the ability to hold yourself accountable and stay consistent. This week’s 60-second wealth tip is to master…discipline. The sooner you can embrace this skill, the faster you can build long-term wealth and achieve your financial goals.

To Your Success,
Travis Watts

Listen to Joe’s interview with Robert Kiyosaki here.

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Building Lifelong Wealth

Today’s culture is undoubtedly attracted to the get-rich-quick schemes across the internet. Instead of learning how to build life-long wealth, most people are more concerned with getting rich quick.

The issue in this fallacy is two-fold. First, more often than not getting rich quick never works out. Whether that be due to a lack of motivation to keep hustling for money, or the fact that it simply takes too long. The second issue is that those who do get rich quick often struggle to keep the money.

Building long-term wealth is key to financial success. Better yet, is that money grows exponentially, so what seems slow to start ends up growing drastically when done correctly.

If you’re interested in building lifelong wealth, you’re in the right spot. Here are some of the most important keys to lifelong wealth:

Develop Multiple Income Streams

To the average American, a single stream of income satisfies their needs — it’s all they need to get by on a day-to-day basis. In fact, nearly 80% of all Americans live on a paycheck-to-paycheck basis, meaning they have a single stream of income.

Building wealth on a single stream of income, especially when working for someone else, is near impossible. There are no guarantees in the world — especially financially. While there’s no issue with having a regular job, relying on that single job as your only stream of income is dangerous.

Whether it be the company going out of business, being fired, or a handful of other reasons, there is always potential to lose that single stream of income.

Fortunately, there is an infinite number of ways to build more streams of income. Be it through a side job, starting a business, or investing current capital, the possibilities are endless. While your next stream of income doesn’t need to a million-dollar idea, it should be one that is scalable. Remember — there’s no need to get rich quick but going into any new financial venture should require a plan. Generally, the more scalable the better.

Whatever your next stream — and eventually streams — of revenue are, this is a vital step in building lifelong wealth. This is the same reason that almost half of all millionaires have almost four streams of income

Multiple streams of income allows you to build wealth exponentially, so make sure you’re working towards more income streams if you’re not already doing so.

Live Below Your Means

Living below your means is perhaps one of the most well-known, but least followed, keys to building lasting wealth. The reason for this is because it’s not as easy as it sounds.

Failure of living below means is the same reason how some of the richest athletes in the world, like Mike Tyson, went broke after they stopped producing money. In fact, this is a perfect example of why it’s so important to have multiple streams of income. Even for those who have a singular high stream of income, if they don’t live below their means, they can and will go broke.

Living below your means requires creating a financial plan. Truthfully, this is more important in the beginning of the wealth beginning process. Ideally, your multiple streams of income will eventually produce enough monthly income to far surpass your needs financially. 

However, in the beginning and until your streams of income fully cover your expenses, budgeting is essential. Know the exact amount of money you need to live, at the bare minimum, every month. From there, create a plan as to how you will grow your income and potential large spending you can cut out until you have more money.

Don’t go out of your way to try and save $5 per month if you’re making $10,000 per month, but make sure you’re not vastly overspending anywhere either.

Budgeting plans vary per person and are very situational, so do what works for you. At the very least, know that it is essential to building wealth until your monthly income (from multiple streams) drastically surpasses your expenses.

Invest Passively

To build real wealth, investing is necessary. Better yet, this can turn into an extremely legitimate income stream if done correctly. The best way to invest for lifelong wealth, though, is passively.

While there’s nothing wrong with actively investing, be sure to note that it will take time away from building other income streams. 

Passively investing in areas like real estate provide great returns and are extremely scalable. Best yet, though, is that once they are operational, they require little work by the investor (you). 

Some of the best real estate deals for a passive investor include apartment rentals. The data doesn’t lie, and there are clear increases in renting versus home ownership, as well as increasing rent prices. This allows investors to eventually have less vacancies and charge their tenants more — all the while property appreciates in value.

Apartment rentals are a great passive investing option for building lifelong wealth because once the work is done, the landlord has the ability to hire a property management company to do day-to-day work while they collect rent. 

Want to learn more about passively investing in real estate and how it can affect your lifelong wealth? Be sure to listen to the Best Ever Show by Joe Fairless and read the Best Ever Apartment Syndication Book.

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Net Worth By Age – How To Hack Your Psychology

My wife and I were taking a look at some high-end luxury homes the other day. Not to purchase for ourselves, just out of curiosity. We find it fascinating that there are so many elaborate homes coast to coast, especially when you read headlines like this one…

 

Nearly 40% of Americans can’t cover a surprise $400 expense – CBS News

 

When we arrived home, I started to research the average net worth for Americans. According to the Federal Reserve’s Triennial Consumer Finance Survey, the average net worth for the following ages are:

Under 35: $76,200

35-44: $288,700

45-54: $727,500

55-64: $1,167,400

65-74: $1,066,000

75+: $1,067,000

Statistics like these have always fascinated me. These net worth numbers also remind me of the importance of goal setting and the power of mindset. I speak with investors across the nation mostly every day, or at the very least, every week. It’s interesting how so many people get fixated on the magic “1 million” net worth goal or “$10,000 a month” passive income goal. Both of these are admirable goals to set out for, but these two numbers seem to always pop up. Why do so many people strive for these numbers?

Have you heard the saying “80% of success is mental and 20% is physical”?

Generally, I believe this saying holds a lot of truth. Psychology plays a major role in goal setting and personal achievement. In other words, there is a lot to be said for setting a goal of attaining $1,000,000, achieving it, but not achieving much more than that goal. Consider the saying, what you believe you can achieve. What if Americans set out to achieve a $10,000,000 net worth instead? Do you think the average US statistics would change? 

Beliefs are very powerful and they can be a great tool for achieving success, but they can also limit your success. Below is a powerful exercise. I encourage you to try it:

How To Hack Your Psychology

Rather than focusing on an exact “money goal” like a $1 million net worth or $10,000 a month in passive income, write down what you actually want to experience in your life. What are your REAL goals? “Money” after all, is just paper and digital blips on a computer screen. Be as specific as possible and REALLY DO THIS EXERCISE! 

Once you have written down your life goals and can clearly visualize them in your mind, you might be surprised at how many of them have nothing to do with money at all. What brings long-term happiness and joy to people most often are the non-materialistic things like spending time with family and friends, helping others, creating memorable moments, traveling, reducing stress, exercising, and having meaningful and fulfilling “work” to focus on. 

Simply put, the key to “hacking your psychology” is to focus on goals that bring you happiness and inspire you. Instead of focusing on money, try to visualize how you would convert your money into the things you love most (This is the 80% mental part). Yes, money is still a contributor in all of this, so you must stay disciplined with your saving and investing routine as well (This is the 20% physical part). If you’re truly committed to your goals, you’ll be amazed at how far your net worth grows over time and how quickly you reach your goals. 

 

Most people overestimate what they can accomplish in a year and underestimate what they can achieve in a decade” – Tony Robbins 

 

To Your Success

Travis Watts 

 

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Tax Benefits

Tax Benefits of Passive Investing

Passive investing is a great form of investing for those looking to create consistent cash flow on a monthly basis. Just as appealing as the monthly cash flow provided by passive investing, though, are the tax benefits. Especially true with passive investments such as real estate, the government provides fantastic tax incentives for passive investors. 

When investing in areas such as the stock market, investors are hit with capital gains taxes of 15% at the minimum. For those investors who bought and sold the stock within the same year, the tax rate could be as high as 37% – over one-third of the profit.

While technically landlords are subject to these same tax rates, real estate investing provides further tax incentives to help reduce these types of taxes. These same tax incentives are part of what make passive real estate investing a great option for any investor.

Here are some of the best tax benefits of passive investing:

Depreciation

Chances are, you’ve heard of depreciation as it relates to taxes. What you may not know is that depreciation is one of the great tax benefits when it comes to passive investing in real estate.

When investing in the stock market, the investor does not physically own any stock. There is no tangible item that can depreciate in value, meaning it cannot be written off. However, in real estate, the exact opposite is true.

The IRS allows you to deduct any business items with a shelf-life from your taxable income. When it comes to real estate, landlords generally have a great deal of “business items” that depreciate in value – including the property itself.

Understandably, the building itself along with other parts of the property will deteriorate over time if not maintained. The IRS knows this and allows this to be used as a tax benefit for real estate investors.

The lifespan of a property varies depending on the property type. For commercial real estate, the lifespan as determined by the IRS is 39 years. For residential property, the lifespan is classified as 27.5 years.

This is a great incentive for passive investors – especially those in residential real estate. Suppose your residential property is valued at $1,000,000. Because the IRS classified the lifespan of residential property at 27.5 years, this is the number you will divide the property by to determine depreciation.

In the above example, $1,000,000 divided by 27.5 years equals roughly $36,363. This is the amount you would be able to deduct from the income of the property each year.

Essentially, this allows the investor to show lesser profits from the property each year, thereby reducing the amount owed in taxes.

Section 1031

Section 1031 is one of the great incentives to real estate investing for those who plan to be invested for long-term gains. In simple terms, a 1031 exchange is the swapping of one property for another property.

The difference with a normal swap of property is that the investor sells their property and uses that money to buy another one, where they are then taxed for capital gains. The same is not true for a Section 1031 exchange, where the investor essentially swaps their property tax-free by the IRS.

There are many specifics to this rule, but many passive investors have taken advantage of it to drastically lower the amount of capital gains taxes paid. Instead of being taxed for the sale of every property, even if it is to purchase another one, the IRS only taxes the investor at the cash sale of the “final” property. 

When the investor decides to get rid of a property and not swap it for another one is truly the only time they are taxed if they took advantage of Section 1031.

A Section 1031 exchange may be difficult to come by, though, because it is technically a swap from one landlord to another. However, you can use a middleman – known as a Qualified Intermediary – who holds the cash and then purchases another property with it. 

Then, the investor never physically received the cash from the sale, meaning it falls in line with the rules of Section 1031.

Rental Income

Cash flow from passive real estate comes from rental income, which is taxed. However, unlike many other forms of revenue for investors, rental income has its own tax benefits.

One of the great tax benefits of rental income is that it is not subject to self-employment or FICA taxes.

The IRS taxes self-employed people at a base rate of 15.3% since they are not paying FICA taxes through an employer. This means that self-employed people owe 15.3% of their income at the end of the year to the IRS.

Luckily, the IRS does not classify rental income as income subject to social security or Medicare taxes, which is a great tax benefit. This is yet another area where it pays to be a passive investor, as you’ll inevitably owe far less in taxes in comparison to more active investing.

These Are Among Only a Few Benefits…

Passive investing provides a number of other tax benefits – but these are some of the most useful. 

Depreciation of value, the ability to swap properties to avoid capital gains taxes and avoiding self-employment taxes on rental income are some of the greatest tax benefits when it comes to passive real estate investing. 

Further reading on real-estate tax benefits and general knowledge can be found here.

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Top Regrets of the dying

The Top Two Regrets of The Dying – How To Buy More Time

It’s funny when you stop to think about it. Who doesn’t want a nice car, brand new clothes, a beautiful house in a high-end neighborhood and a vacation home for weekend getaways? All these things can be categorized as having “stuff”.

While stuff can certainly be nice to have, don’t get me wrong; we need a certain amount of it, but what if you could have FREEDOM instead of more stuff? Which would you choose?

“You can have anything you want… But not everything you want.” – Susan Fussell

Would you choose a new car or a big house over your own life? Of course not. Then why is it that so many people are on the pursuit for stuff rather than the freedom of time?

A Powerful True Story

A woman named Bronnie Ware was a nurse in 2009. She worked in a terminally ill care unit with people living out their final days in life. Bronnie decided to ask her patients about their top regrets in life. She first published the results initially as a blog post, then later wrote a book on the topic, but I’ll get right to the point. The top two regrets were:

· I never pursued my dreams and aspirations

· I worked too much and never made time for my family

Moral of The Story

Passive income is not about money or obtaining more stuff. It’s about having FREEDOM and the ability to spend your TIME on the things you LOVE and focus LESS of your time on the things you dislike doing.

How Passive Investing Works

The first step in the journey to financial freedom is having more income than expenses. But what if you had more PASSIVE income than expenses? Meaning money that comes in each month without having to exchange your time and effort for it. This is the true definition of financial freedom.

Wealth is measured in time, not dollars – Robert Kiyosaki

I believe the reason that more people pursue stuff rather than freedom is simple. There is hardly any education on the topic of “Time Freedom”. Which is achieved through building passive income streams.

How To Buy More Time

Passive Investing is often misunderstood. Here are two simple examples of passive investing. *This example is for educational purposes only. Actual returns and yields may vary depending on investments you choose*

#1 You invest passively a high-dividend paying stock or REIT that distributes a 10% annualized return.

#2 You invest passively in real estate syndications (80% of my portfolio – FYI) which distribute rents and other revenue from the property. For simple numbers, we’ll say 10% annualized as well.

Investing $100,000 in each of these asset types would look like this:

Stocks/REITs: $100,000 x 10% = ($10,000 passive income)

Syndications: $100,000 x 10% = ($10,000 passive income)

Neither of the asset types above require your time or labor in exchange for the income they provide. Instead, they allow you to be a passive investor so you can spend less time working for money and more time on the things you enjoy the most.

While $20,000 is certainly helpful, most people living in The United States and the Western World could not retire on this amount of income. The real benefit comes when you have MORE passive income than you have living expenses. See example below:

Stocks/REITs: $500,000 x 10% = ($50,000 passive income)

Syndications: $500,000 x 10% = ($50,000 passive income)

Having $100,000 per year in passive income could certainly afford, at the very least, an option to work part-time and free up 50% of your time. For some, this amount of money could mean full retirement, depending on lifestyle expenses.

The Journey to Financial Freedom Begins with Your Mindset

How much of your time and money are dedicated toward acquiring “stuff” and how much time and money are being dedicated toward passive investments? Passive investing can yield returns that are much more powerful than money itself. TIME is our greatest asset in life.

You may delay, but time will not. – Benjamin Franklin

To Your Success

Travis Watts

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Wealth Education For Your Children

Wealth Education For Your Children

If you’re a parent with a high net worth who cares about your children’s future, teaching youngsters about wealth management is imperative. Without the proper guidance, it’s easy for privileged progeny to quickly squander their money. Even worse, kids who don’t know how to handle money responsibly are far less likely to develop good character. Here are a few tips to ensure that your offspring can manage money intelligently.

Demystify Compound Interest Early

Without a doubt, understanding the nature of compound interest and learning how to leverage it wisely is the key to long-term financial success. Adolescents need to learn early on that compounding interest is often the albatross that sinks even the sturdiest of ships. Setting up a savings account that compounds monthly for a child will show them the power of compound interest in an extremely visceral way.

Help Them Start a Small Business

Few things in life teach an adolescent more about wealth creation and preservation than running an enterprise of their own. Whether it’s a lemonade stand or a leaf-raking service, operating a part-time business will teach kids the value of hard work and perseverance. Furthermore, starting a small business will allow children to familiarize themselves with the legal and bureaucratic hurdles that entrepreneurs have to negotiate.

Get Them Started Trading Stocks

Sooner or later, children need to understand the importance of investing in publicly traded companies when it comes to building wealth. Encourage them to play around with a trading simulator like MarketWatch Virtual Stock Exchange or Wall Street Survivor to get their feet wet. Stress the importance of structuring a portfolio that boasts a sensible mix of blue-chip stocks that pay dividends and more speculative start-up plays.

Put Them to Work on the Ground Floor

Those who’ve never held down a high school job that pays minimum wage have missed an amazing opportunity to grow as people. Quite a few notable wealthy parents push their kids into working entry-level jobs for a variety of reasons. Flipping burgers and washing dishes at a young age makes you a more empathetic and fiscally prudent adult later on in life.

Involve Them in a Rental Investment

If you want to show a young adult the surest path to financial success, introducing them to property rentals is a solid idea. You don’t even need to own an apartment complex or a mere duplex to get started. Buying a small parking lot or even a single space in a congested area works just as well. Showing them how to invest in REITs is another solid alternative.

Teach Them to Manage a Budget

Sticking to a budget is often the difference between long-term financial success and utter ruin. You can teach kids the importance of prudent financial management during their most impressionable years with an allowance. Give them a specific amount of money per month to spend and hold the line when it runs out early. Doing so will ensure that they develop discipline and a dedication to saving.

Stress the Importance of Charity

When you examine the lives of ultra-successful people, you often find that the most charitable characters make the most money. They also seem to enjoy their lives far more than those that don’t give back to society. Get your kids to contribute what money they can to charitable organizations early and often. Better yet, help them to organize a charity of their own for a worthy cause.

The Key to Effective Wealth Education for Kids

Bombarding youngsters with a lot of information all at once is a bad way to teach any lesson. Starting early and doling out little nuggets of wisdom gradually is the best way to develop a healthy understanding of wealth management and growth. No matter how smart a kid might be, he or she can’t possibly learn everything there is to know about managing money in a day.

 

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Will Apartments Be Stronger in the Post-Coronavirus World?

JP Morgan Chase, the largest lender by assets and fourth largest lender overall in the US, recently announced that they are raising borrowing standards for most new home loans to reduce their exposure during the coronavirus pandemic.

JPMorgan Chase’s chief marketing officer for the home lending business said “due to the economic uncertainty, we are making temporary changes that will allow us to more closely focus on serving our existing customers.”

What are these temporary changes? To qualify for a residential mortgage at Chase, a borrower must have a credit score of at least 700 and will be required to make a 20% down payment.

Additionally, Chase also announced that they are temporarily halting HELOC loan offerings.

JPMorgan is the first large lending institution to announce major changes to their lending criteria. I think a fair assumption is that other large lending institutions will follow suit in the coming weeks and months.

What does this mean for real estate investing and, more particular, apartments?

First, if less people qualify for residential financing, less people will be able to purchase their own homes. As a result, more people will be forced to rent. According to Experian, approximately 59% of Americans have a FICO Score of at least 700. And according to MBA, the average down payment across the housing market is around 10%. Therefore, the majority – and possibly the vast majority – of the population cannot qualify for Chase’s residential financing. Even if someone has a 700-credit score or higher, they may not be able to afford the 20% down payment due to the surge in home prices during the post-2009 economic expansion.

One benefit from buying a home during the post-2008 economic expansion was the increase in the value of the property from natural appreciation. According to Zillow, the average home value increased from $175,000 in March 2010 to $248,000 in March 2020. That is an overall increase of 47%, or 4.7% per year. This means that on average, the value of a home grew by nearly 5% each year. However, the Federal Reserve March consumer survey said home prices were expected to grow by only 1.32% this year, the lowest reading since the survey began in 2013. Therefore, one of the main financial benefits from owning a home has been eliminated, which may make renting more attractive.

16 million people are out of work due to the coronavirus. As a result, the number of borrowers who requested to delay mortgage payments rose by 1,900% in the second half of March. Currently, there has been a federal halt on foreclosures. So the question is, will foreclosures resume before or after these borrowers secure new employment? If it resumes before, many people will lose their homes and be forced to rent.

Overall, tighter lending criteria, the lowest projected home value increase since 2013, and the massive increase in the mortgage delay requests indicates that more people will be renting as opposed to buying in the near future. In fact, we are already seeing this happen. In March, the National Association of Realtors announced that they expect home sales to fall by around 10% compared to historical sales for this time of the year.

What do you think? Do you think more people will be renting or buying post-coronavirus?

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real estate investing during recessions

Preparing for Economic Downturns: How to Succeed with Real Estate Investing During a Recession

Facing a looming recession can no doubt be scary for any business owner, including a real estate investor. After all, you may have worked for years to acquire your current properties, and the thought of losing it all is almost too much to handle.

The good news? It is possible for you to prepare for an economic downturn and potentially come out of it relatively unscathed.

Here’s a rundown on how to succeed with real estate investing during a recession.

Stay the Course with Your Criteria

When it comes to buying property during a recession, make sure you have well-defined criteria, rather than making an attempt to time the market. If you buy according to certain proven criteria, you can better avoid getting into financial trouble no matter how the market happens to be performing.

For instance, pay attention to market cycle stages for your target area. In a market suffering from a recession, you can expect your vacancy rate to increase. Meanwhile, the opposite is true for an expanding market.

Also, try to diversify your assets. In other words, rather than pouring all of your eggs into one basket—for instance, single-family rental properties—make sure that you also pour some money into apartment communities as well.

Invest in Existing Properties

Let’s say you’re seeking real estate investing opportunities during a recession but can’t seem to locate any deals. In this situation, consider investing some of your cash into your existing rental investment properties instead.

This may decrease your costs or increase your rent prices. Ideally, the investment you make in the property should make it stand out even more to potential tenants so that you can keep your property as in-demand as possible during an economic downturn.

Make Sure That You Can Access Money

Another way to prepare for a recession is to avoid spending and focus more on saving. Cash reserves can come in handy for taking advantage of any new deals that come your way.

In addition, consider getting a credit line on one of the investment properties you own. A credit line can be helpful because you only have to worry about paying interest if you use this money. This can give you access to capital right away if you need it for a major unexpected repair, for example, during your recession.

Recession-Proof Your Real Estate Investing Business

Although recession fears remain strong, your confidence in your business—and the business itself—can remain just as strong. I’m here to help you to navigate an economic downturn by showing you how to approach real estate investing during a recession, including buying new property during a recession.

I offer a wide variety of tips and advice in my Best Real Estate Investing Advice Ever book, blog, and podcast. Recession-proof your business now, and enjoy success for months to come.

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Joe Fairless presenting at the Best Ever Real Estate Conference

Why Accredited Investors Should Attend Real Estate Investment Conferences

You’re an accredited investor who is looking to increase his or her net worth in the new year. The question is, how? Should you focus on securities, like stocks, or should you channel your energy into the potentially lucrative real estate industry?

The truth is, real estate remains one of the best investments available today. So, it only makes sense to fill your portfolio with successful properties this year. Still, you won’t be able to take advantage of the swiftly changing real estate market if you don’t have the foundational knowledge and experience needed to make this happen.

That’s where an investment conference comes in.

Real estate conferences can easily teach you how to generate passive income from rental property, for example. You can also learn how to navigate even the most complex deals.

Here’s a rundown on why real estate properties make excellent investments for accredited investors and why you need to attend real estate investing seminars in the coming months.

Enhance Your Education

One of the biggest reasons why you should attend an investment conference this year is that it will educate you on how to excel in this competitive industry.

Yes, life can get busy, so it’s easy to put your own industry education on the back burner. Deep down inside, you realize how important education is for you to master the real estate investing field. At the same time, you may feel that so many other things in life are vying for your attention—for example, home life, your business, and your children’s extracurricular activities—that you simply don’t have time to attend a conference.

The truth is, you can’t afford NOT to go to an investment conference. Here’s why.

A real estate investing conference will provide you with a large number of resources, education, and information that will transform your thinking and, thus, your approach to business. Many conferences feature keynote presentations, along with breakout sessions and panels that the foremost industry experts lead. Through these sessions, you can discover the most current strategies and resources for generating passive income from rental property and growing your real estate investing business.

As an example, a seminar may emphasize to you the value of creating a detailed business plan for your company. Following the conference, you may become motivated to develop a comprehensive plan and even enlist the help of a dedicated coach to assist you in achieving your real estate investing goals.

Learn How to Solve Problems and Improve Your Portfolio

Another significant benefit of going to a real estate investing conference? You get to surround yourself with smart and giving individuals who are active in real estate.

You can share any challenges you might be facing with your portfolio with the individuals there and get some insight into how to solve it. For instance, you may speak one-on-one with an expert about your need to expand your portfolio, and he or she might offer you the chance to invest with them on their next apartment syndication.

All in all, real estate conferences are an excellent springboard for seeing new possibilities when it comes to producing passive income from rental property.

Grow Your Business (and Passive Income)

Attending an investment conference is also a good idea if you’re looking forward to growing professionally as a real estate investor. After all, you can’t help but grow if you tap into the expertise of other entrepreneurs who realize that real estate remains among the top investments for accredited investors.

In addition, an investment conference gives you a chance to finally slow down by taking a break from your daily grind. Rather than hustling after deals, you can focus on being a little self-reflective. Specifically, you can ask yourself how the information you’re learning can help you to accomplish your real estate investing goals as efficiently and effectively as possible.

Build Your Network

Yet another major reason why accredited investors should attend an investment conference this year is that it will allow them to effectively network.

Being able to connect with experts of various backgrounds and in different niches can open your mind to a number of possibilities when it comes to real estate investments for accredited investors.

While networking with other people, consider how you can add value to their businesses. Also, assess who you’d be interested in meeting and building relationships with. Furthermore, try to focus more on listening and less on talking.

All in all, try to socialize with new people, not just people you already know. And don’t forget to take part in happy-hour times, as they can be as useful for networking as breakout sessions are.

Start Boosting Your Knowledge Through a Real Estate Investing Conference Today

If you’re serious about strengthening your bottom line in the year ahead, it only makes sense for you to take advantage of an investment conference right away.

In fact, I have created a first timer’s guide to real estate conferences. In addition, to make things even easier for you, I am personally offering you the opportunity to take part in the Best Ever Real Estate Investing Conference.

At the conference, you’ll have the chance to hear from more than 50 influential speakers who can show you why real estate is one of the best investments for accredited investors. You’ll also have the chance to network with fellow real estate moguls from across the globe. With these resources, you can be well on your way to earning passive income from rental property.

Contact me today to find out more about how to experience today’s best real estate investing conference and what your conference goals should be this year.

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The Benefits of Becoming an Accredited Investor in Real Estate

You’re ready to finally stop spinning your wheels and start bringing in large sums of revenue as a real estate investor. But to achieve this, you need two M’s: motivation and moolah. This is particularly true if you’re seeking to become an accredited investor in real estate.

The good news is that, if you meet the special requirements for becoming an accredited investor, you can reap the many rewards that come with holding this title. Here’s a rundown on the benefits of becoming an accredited investor.

What Is an Accredited Investor?

First, let’s answer the question, what is an accredited investor? An accredited investor is essentially an individual whose net worth, individually or with a spouse, surpasses $1 million. In addition, you can become an accredited investor in real estate if you made more than $200,000 per year during the past two years, or if you and your spouse made more than $300,000 during this period.

Experience Greater Returns

A major benefit of becoming an accredited investor is that you can expect greater returns. Ideally, you should pursue a return greater than 8%, which is the average return received in the stock market. Some development deals that carry a greater risk may give you an internal rate of return of 15 to 25%. The more risk you take on, the higher your return may be.

As long as you educate yourself, work with other experienced investors, and exercise due diligence, you should have no problem experiencing excellent returns. With an average return of 8%, you may double your money in nine years. However, a higher return of 12%, for example, will allow you to double your funds much sooner—in just six years.

Diversify Your Portfolio

Yet another benefit afforded to accredited investors is that they can diversify their investments in this role. Stocks tend to be volatile, but you can diversify your portfolio via commercial real estate investing. Real estate is uncorrelated or less correlated to the stock market, so even if stocks end up tanking, your real estate investments can help to buffer your losses.

Become an Accredited Real Estate Investor

Now couldn’t be a better time to stretch your real estate investment muscles by becoming an accredited investor in real estate. Work with me as I complete my next apartment syndication deal. I’ll help you to make the most of the deal so as to maximize your return.

I control over $700M in property, so I am adept at finding properties, creating plans for improving cash flow, and negotiating deals for winning returns. By working with me as an accredited investor, you can earn money passively—without having to work a 9-5. Get in touch with me to learn more about how I can help you to grow your bottom line as an accredited investor in real estate.

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Best Real Estate Investing Books

If you’re serious about becoming an expert in real estate investing, you’ll want to start with a general crash-course. And real estate investing books are some of the best resources you’ll have at your disposal as you move along your journey to more financial independence.

Of course, not all books are created equal. Not even close. Fortunately, you don’t have to waste time with the wrong books to finally discover the right books for any avid real estate investor. Here’s a rundown on just some of the best real estate investing books on the market today.

Best Real Estate Investing Advice Ever

Consider adding the book, Best Real Estate Investing Advice Ever, by Joe Fairless and Theo Hicks to your library. This book discusses how you can transition from investing in single-family homes to purchasing multifamily properties. You’ll also learn how to raise funds for a deal, as well as how to be an innovative investor, no matter what your financial situation might be.

Rich Dad, Poor Dad

Develop your wealth mindset with great advice from Robert Kiyosaki when you read his book, Rich Dad, Poor Dad. Discover the power of creating a passive income for yourself, even if you’re not already wealthy, using wise real estate investments.

The Complete Guide to Buying and Selling Apartment Buildings

If you’re especially interested in apartment syndications, The Complete Guide to Buying and Selling Apartment Buildings by Steve Bergs is one of the best real estate investing books for beginners. Learn how to find apartment communities, secure funding, and more through real-life case studies.

Best Ever Apartment Syndication Book

In Joe Fairless and Theo Hick’s newest text, the Best Ever Apartment Syndication Book, you’ll explore how to access private capital so that you can buy a potentially lucrative apartment community. You’ll learn how apartment syndication works, how to establish quantifiable goals, and how to build a strong brand that will attract passive investors to you. In the end, you should know how to surround yourself with a winning team in real estate.

Become a Successful Real Estate Investor

As you enter a new decade, it’s critical that you take your real estate investing education up a notch if you want to compete like never before. In addition to reading all of the best real estate investing books you can get your hands on, check out the Best Ever Show. We interview real estate experts and entrepreneurs to get their best ever advice that you can then apply to your own real estate business.

Also, consider listening to our newest series, Apartment Syndication School. Learn all about how to complete a syndication deal from start to finish.

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11 Questions to Ask Someone With a Trillion Dollars to Invest

“Hey Joe. My cousin’s friend’s grandfather’s former college roommate is a Russian Oil Tycoon with a trillion dollars to invest. Do you want me to make an introduction?”

Okay, maybe not that extreme…

While I do receive the majority of my potential inquiries through my Invest With Joe landing page, I also receive inquiries from people I meet who say they or someone they know has a whole bunch of money and either want to buy a piece of real estate or passively invest in one of my future deals.

If you have had some level of success in apartment investing, you do or will run into similar scenarios – even if you aren’t currently raising capital.

Many high net-worth people know the wealth conservation and wealth building benefits of multifamily real estate. However, just because someone has enough capital to invest in your deals doesn’t mean they can, will, or even should invest. In order to determine if a high net worth individual is serious about investing in one of my deals, here are the 11 questions I ask:

 

1. Do you want to invest in multifamily, value-add projects?

Our business plan is to purchase stabilized multifamily deals that have the opportunity to add value. That is, either increase the income or decrease the expenses by improving the physical property or improving the operations.

Value-add multifamily projects are just one of many syndication business plans. Maybe they invest in value-add deals that aren’t multifamily. Or maybe they invest in multifamily deals that aren’t value-add. If the high net worth individual doesn’t invest in value-add deals and multifamily deals, then my business may not be the ideal fit.

Obviously, if you’re business model isn’t value-add multifamily, then replace “multifamily, value-add projects” with your investment strategy.

Keep in mind that just because they haven’t invested in your investment type in the past doesn’t automatically disqualify them. Instead, you should provide them with a resource that educates them on your business plan (like my Passive Investor Resources Page).

 

2. What are your return expectations?

Most passive real estate investors’ base their return goals on the cash-on-cash return and the internal rate of return. Therefore, those are the two main return factors we analyze when underwriting and presenting new deals to our passive investors.

When speaking with a prospective investor, I want to know what their return expectations are. Most high net-worth individuals will be familiar with these two return factors. If their cash-on-cash return and internal rate of return expectations differ greatly from the returns we offer to our limited partners (LPs), our deals may not be an ideal fit.

Of course, you may run into high net-worth individuals who care more about another return factor or care more about capital preservation than the ongoing returns. The purpose of this question is to determine if the returns you offer to LPs are aligned with their return expectations. If they aren’t, this individual likely won’t invest in one of your deals.

 

3. What is your investment minimum and maximum hold time?

Another important question I ask prospective investors is when they need to receive their initial equity investment back. Generally, our exit strategy is to sell our deals within 5 to 7 years. On some deals, we are able to return a portion of the LP’s initial equity upon a refinance or supplemental loan. However, this question is focused on the investors’ entire equity investment.

If I ask a potential investor this question and they say “I would like all of my capital back within 2 years” or “I don’t want my capital back for 10 years”, then our deals may not an ideal fit.

 

4. Can you show proof of funds?

I may speak with an individual who claims to be an accredited investor, but doesn’t actually met the liquidity and net worth requirements.  Asking for proof of funds is a simple way to confirm their accredited investor status.

If you are doing a 506(b) and are accepting non-accredited investor money, you may still want to ask for a proof of funds. If you have a minimum investment of $50,000 and they send you a screenshot of their bank statement that shows a balance of $15,000, they likely won’t be able to invest in your deals (or at least not in your next deal).

 

5. Have you invested as a limited partner on a syndication deal?

I ask this question to gauge the experience of the high net-worth individual. From my experience, if I receive an inquiry from someone who hasn’t invested in a syndication deal before, the chances of them investing in one of my deals is very low. Apartment syndication is a complex investment strategy. Heck, the PPM is usually over 100 pages long. It takes time for someone to not only become educated on the syndication investment strategy but to become comfortable with it as well.

I don’t recommend that you reject someone who has never invested as an LP before. However, while it is definitely possible, don’t expect them to invest right away.

 

6. Are you comfortable investing with other LP’s or would you require to be the only LP in this investment?

The majority of my investors are comfortable investing alongside other LPs or they don’t have enough capital to cover the entire LP equity investment themselves. However, I do have a handful of investors who want to be the only non-general partner (i.e., my business partner and I) LP on the deal.

When speaking with a prospective investor, I like to know if they are comfortable investing alongside 10, 20, 50, or more other investors or if they would like to be the only LP. If it is the former, great. If it is the latter or if they are investing a substantial portion of the equity, I will ask them if they are willing to commit non-refundable equity (we will do the same) to create an alignment of interest to close. Our reasoning is simple – if they are investing all or most of the capital and back out last minute, we have to scramble to find other investors on very short notice.

 

7. What is the amount you are looking to invest should we both find this to be a good fit to move forward?

I also like to get an estimate on the amount of capital they are able and willing to invest. First, we have a minimum investment amount for all of our deals, so I need to confirm that they will exceed that threshold.

Second, if someone invests more than 20% of the equity required to close, the lender will perform additional due diligence on that person, which includes looking at bank statements and tax returns.

Third, see question 6.

And lastly, and this is more important for investors who are just starting out, the size of deals you look at is dictated by the amount of money you can raise. For example, if you are capable of raising $1 million, your maximum purchase price is around $3 million (generally, you are required to raise 30% to 35% of the total project costs). Additionally, a good rule of thumb is to have verbal commitments equal to 150% of the project costs, because not every single one of your investors is going to invest in every single deal. If you need to raise $1 million, you want verbal commitments of at least $1.5 million. By understanding the maximum amount of money someone is able and willing to invest will allow you to calculate your maximum purchase price.

 

8. What is your timeframe for investing that equity?

Assuming this high net-worth individual is a good fit, I want to know when they are able to invest their equity. Some people are ready to invest right away. Others may need to liquidate other investments before investing. The individual’s answer to this question isn’t a disqualifier, but if they account for 50% of your verbal commitments and cannot invest in a deal for 12 months, then that will affect your maximum purchase price for those 12 months.

 

9. (If out of the country) Have you invested in the US real estate market before?

If you are speaking with an international investor, the first thing you need to determine is if your offering type (i.e., 506(b), 506(c), etc.) allows you to accept international money.

If you are able to accept international money, you want to know if this international individual has invested in the US real estate market before. There are extra steps required on the part of the international investor to place capital in US real estate. If they haven’t completed those steps, their capital might be delayed to the point where they cannot invest in one of your deals. If they committed a substantial portion of the equity, that is a huge issue.

 

10. Should we both think this is a good fit, who is/are the decision maker/s when deciding to invest or not invest?

The answer to this question also isn’t a disqualifier. It just lets me know how to approach this individual. If they are the sole decision-maker, great. But if I know that they have a partner, significant other, or someone else that needs to sign-off on the investment, I want to also speak with that person as well.

They may have different passive investing expectations or concerns than the person I’m speaking with that I would like to know and address upfront, rather than in the middle of the capital raise.

 

11. Is there anything else we should know about you?

This final question is to obtain information about the potential investor that wasn’t provided in the answer to one of the previous ten questions on this list.

 

The entire purpose of asking these questions is to gauge the seriousness of the investor. Whenever you send out a new offering to your list of investors or present the deal on a conference call, expect to receive a lot of questions from investors. When you understand each investors’ specific situation, you will have a clear picture on who will and who won’t ultimately invest, which can save you a lot of time and headaches while raising capital for a specific deal.

 

Are you an accredited investor who is interested in learning more about passively investing in apartment communities? Click here for the only comprehensive resource for passive apartment investors.

 

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Top 9 Cities with the Largest Increase in Renter-Occupied Units

In a recent blog post, I outlined the three economic metrics that will encourage you about the impact a potential market correction will have on the multifamily industry (which you can read here).

 

Essentially, the economy has been extremely strong since the last market correction in 2007-2009 while, at the same time, the overall number of renters and the overall share of renter-occupied units has also increased.

 

In 9 cities, the percentage of renter-occupied units has increased by 30% or more. And in one of those 9 cities, the increase was more than 50%.

 

Those 9 cities are:

 

9 – Glendale, AZ

AZ Sedans

  • 2006 % renter-occupied: 34.6%
  • 2016 % renter occupied: 44.9%
  • 10-year % change: +30.0%

 

8 – Mesa, AZ

desert scenery

Hotpads

  • 2006 % renter-occupied: 31.6%
  • 2016 % renter occupied: 41.2%
  • 10-year % change: +30.1%

 

7 – Virginia Beach, VA

Virginia Beach real estate

Unpakt

  • 2006 % renter-occupied: 28.6%
  • 2016 % renter occupied: 37.4%
  • 10-year % change: +30.9%

 

6 – Fremont, CA

Elegant cityscape

City of Fremont

  • 2006 % renter-occupied: 32.1%
  • 2016 % renter occupied: 42.1%
  • 10-year % change: +31.0%

 

5 – Toledo, OH

International Cash Systems

  • 2006 % renter-occupied: 38.3%
  • 2016 % renter occupied: 50.3%
  • 10-year % change: +31.3%

 

4 – North Las Vegas, NV

North Las Vegas sign

Review Journal

  • 2006 % renter-occupied: 33.4%
  • 2016 % renter occupied: 46.2%
  • 10-year % change: +38.5%

 

3 – St. Petersburg, FL

beach apartments

St. Pete Rising

  • 2006 % renter-occupied: 28.6%
  • 2016 % renter occupied: 39.8%
  • 10-year % change: +39.4%

 

2 – Plano, TX

Plano Texas apartment real estate

Cross Country Moving Companies

  • 2006 % renter-occupied: 24.2%
  • 2016 % renter occupied: 33.8%
  • 10-year % change: +40.0%

 

1 – Gilbert, AZ

Street Scout

  • 2006 % renter-occupied: 19.9%
  • 2016 % renter occupied: 30.6%
  • 10-year % change: +53.4%

 

Source: US Census

 

 

 

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Top 4 Real Estate Market Trends & Red Flags to Look For, Before Investing

You no longer have to sip your cup of joe on your way to your 9-to-5. Instead, you’re sipping coffee as you browse the Internet from home, looking for the next piece of real estate to flip for a profit. All of a sudden, you shake your head and snap back to reality. You were daydreaming. But who says your dream of becoming your own boss as a real estate investor can’t become your reality?

 

Research shows that investment in commercial real estate in particular increased 17% between the fall of 2017 and the fall of 2018, and residential real estate also remains attractive to investors. So, if you’re asking yourself, “What is the best long-term investment?”, now appears to be as good a time as any to seriously explore investing in single-family homes, apartment communities, or even business spaces as your next career move.

 

Of course, just like the greater economy, the real estate market goes through various highs and lows, so it’s critical that you assess the current market before simply diving in. Here’s a rundown on the top four real estate market trends or red flags to look for before investing in a deal.

1. The Demand for Property

If you notice a slip in property demand and/or you see businesses folding in a real estate market, this is a sign that you should not invest your money in the area right away for two reasons.

 

First, if companies are shutting down rapidly, this means that property values overall may start to decline as people move away and seek new job opportunities. Second, if business owners are avoiding the area, this might mean that the demand for properties in that area is low for one reason or another. If you ignore these signs and move ahead with a property purchase there, you may not get much return on your investment when you decide to sell. Or it might take a while for you to unload it.

 

Reasons for Low Interest in an Area

If a certain area is not piquing the interest of buyers, the culprits could be increasing crime rates, new developments close by, subpar school systems, or a less-than-stellar economy. No matter what the situation may be, it’s a good idea to select locales that are established or are rising in popularity if you want to avoid profit loss in the future.

2. The Job Market

In a similar vein, before purchasing real estate in a certain market, you should take a detailed look at your target area’s current job trends. For instance, are hiring volumes climbing and what kinds of positions are available?

 

This is critical because job market trends have a correlation with real estate market trends. For instance, if jobs in an area are not high-paying and don’t offer much growth potential, there will be fewer reliable renters or buyers available to you.

3. The Commercial Sector

A commercial sector that is stagnant in an area is a major red flag for investors. If businesses in a locale haven’t been there very long or if there aren’t many new companies moving in, this area might not be the wisest place to pursue an investment property. Many companies invest in their communities, so areas with lots of industry or other businesses are likely more financially sound.

 

Also, see if any major employers are planning to close their doors or downsize in the near future. If it appears that large employers plan to stay put long-term, this is good news for you. You can find information about which companies are planning to stay or go by reviewing local newspapers or even city council meeting and zoning board meeting minutes.

4. Community Planning

If the community you’re targeting for your investment property has a solid master plan in place, it’s likely a good one to stick with. That’s because master plans essentially lay out communities’ visions for themselves, and visionless communities will likely end up fizzling out at some point.

 

Elements of a Solid Master Plan

 

A strong master plan at the community level should explain not only how the community sees itself but also how it plans to turn its vision for itself into a reality. This plan outlines truly realistic and relevant changes, and it also focuses on actual solutions. Furthermore, it fosters innovation and promotes problem-solving. If there is little evidence that a community’s master plan is being executed, you may want to bypass that community when it comes to looking for a real estate investment property.

Start Real Estate Investing Today!

If you’re asking, “What is the best long-term investment?” and you are interested in getting your feet wet in real estate investing, I can help. In no time, you can experience the unique monetary potential that real estate has to offer. Get in touch with me today to find out more about the current real estate market trends and to start earning money as a real estate entrepreneur.

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