My story ends with me having a net worth of millions of dollars, an annual income in the hundreds of thousands of dollars, and the liberty to do what I want when I want. When this story began twenty plus years ago, I had nothing but fear and low self-esteem on which to build a future. Doubts plagued me. I worried about pleasing my boss and keeping my job.
So how did an ordinary guy like me end up with a portfolio consisting of hundreds of rental units and a cash flow that's more like a cash torrent? How did I become a mini-mogul, enjoying freedom and self-confidence? I would love to share the details with you because I believe you too can accomplish what I did.
Making money as a real estate investor is not unusual. Thousands of people representing all the diversity humanity has to offer have done well in real estate. Do you have what it takes to be a Mini Mogul? To become a mini-mogul and beyond, you have to believe you can attain the real estate dream and then take action. I'll show you what action, so you won't waste time and money with missteps and miscalculations.
In my three part series, the first step is a simple self-evaluation. I will discuss the essential traits that most successful investors possess and provide you with real life examples.
Do You Have What It Takes?
Trait #1: Determination
Most of us have set goals for ourselves: losing weight, getting in shape, watching less television, setting aside enough savings to take an annual vacation. Do you have the necessary focus and determination to succeed in real estate?
Are you able to set your mind on a goal and remain focused on that goal until you achieve it? Are you capable of intense focus? Are you likely to be so intent upon a project that you lose track of time or forget to eat?
Here is practical exercise: On a separate sheet of paper, list three recent objectives you have set for yourself. How would you rate the success you've experienced with them?
In my early days as an MMM (Mini-Mogul in the Making), a successful friend told me, “Jim, if you want to succeed in the real estate game – or in anything else, for that matter – you'll need grim resolve.”
Grim resolve? As I thought about it a distressing image came to mind: I was wearing a Puritan's wide white collar, black coat and short pants, and white stockings, and I was about to give myself a rhinoplasty on a grindstone.
The idea did not go over well with me. I wanted to work, sure, but I wanted life to be fun. I loved to laugh and make jokes. A puritanical work ethic had never appealed to me. As I thought further about my friend's advice, though, it made sense. I replaced the phrase “grim resolve” with the words “focus” and “determination”, neither of which implied a life without fun.
If your goal is to own or control one thousand rental units, then you are always focused on building your portfolio and being alert for new opportunities. Along the way you may suffer setbacks, but they won't lessen your intention to achieve your goal.
Becoming a mogul or mini- mogul was a high priority in my life, and I was willing to make the sacrifices and climb over the hurdles necessary to get there.
What sacrifices have I made? I am a rabid sports fan. Every year I look forward to watching the NCAA basketball tournament on television in March . . . which is also the peak rental season in Chicago, where I live and work. Would I rather watch college basketball from my nice, comfortable recliner or get into a frigid car and drive thirty minutes to unlock a vacant apartment for a prospective tenant who may or may not show up for the appointment? Duh. But part of the deal of my success is the sacrifice. Yes, I miss a lot of tournament games, but I am willing to do whatever is necessary – and legal and ethical – to ensure my investments' success.
Trait #2: Energy
Everyone has a different level of energy to expend on physical activities. Real estate mogulism demands so much running around, I get tired just thinking about it. Investors search for property, negotiate offers, check on malfunctions and make repairs or arrange to have them done while supervising, pay bills, deal with lawyers, bankers, and contractors. Do you have the energy and stamina to be a mini-mogul?
I love the idea of snoozing in my recliner while money rolls in. I would recognize an “armchair investment” immediately and buy it right away. Although I have looked hard, one has yet to show up.
My industrious neighbor Mr. Hayes once said, “The hardest part of doing any job is thinking about it, Jim. Just do it.” This is particularly crucial with rental investments. A tiny discoloration in the corner of the ceiling could mean a leaking roof or pipe. Unless someone investigates why the white ceiling has a yellow stain, a small leak can turn into a huge, expensive roof repair or rotting wood inside a wall.
Trait #3: Persistence
Sir Winston Churchill, the British prime minister during World War II and the secretary of the navy before that, was the commencement speaker at the Harrow School in October 1941. Churchill was no stranger to the campus; he had flunked out of Harrow three times. Despite his spotty academic performance, Churchill was a brilliant man. Aside from his illustrious political career, he was an accomplished writer and public speaker. His address at Harrow was among his most memorable. He stood at the podium, eyed his audience, and said, “Never give up!“
He paused, examined the gathering again, and repeated: “Never give up!” He paused, slowly looked at every graduate and told them, “Never give up!” He then returned to his seat.
Property investors must be persistent to be successful, and if they have chosen a particular realtor to represent them in a transaction, that real estate professional must persevere in the investor's behalf. People who give up never get the deal.
Are you persistent? Are you aware of the importance of patience? Can you draw the line between being persistent and making a nuisance of yourself?
My friend Suzanne saw a gem of a downtown property in a small southern city. She immediately submitted a full-price offer through her agent. The sellers – three siblings and a bank trustee – decided to take the property off the market. It had been listed for one hour.
Suzanne's viewing was its first and only.
Every week for a year thereafter, Suzanne's realtor placed a call to the bank trustee and to the siblings' realtor, asking if they had changed their minds about selling the property and reminding them that an offer was on the table.
The bank and two siblings were eager to sell; one sibling held out. Finally she changed her mind. The property was not listed again for the general public. Because of her realtor's persistence and the offer she had submitted, Suzanne was invited to adjust her offer to compensate for the property's appreciation. She did so and closed the deal.
The fine little investment she purchased for $230,000 in 1998 she sold for over $1 million in 2004.
Trait #4: People Skills
Real estate is a people business that requires good interpersonal skills. Property owners and investors deal constantly with tenants, employees, bankers, attorneys, accountants, vendors, and other owners. Each individual plays an important role in the operation of a real estate business. Their desire to work hard for you and their loyalty are key to your success.
To get what you need from these people, you must make them feel comfortable and confident when dealing with you.
What are good interpersonal skills? I believe they include the following attributes:
- the ability to listen and understand accurately what the other person has to say
- the ability to look at a situation from another person's perspective
- the ability to exert self-control and remain calm when you are about to act angrily or impulsively.
- the ability to express yourself clearly and concisely, to make certain the other individual understands you in the way you intended it
I also believe good interpersonal skills means that you are honest, reasonable, consistent, and fair, and that you will keep your word. None of us is perfect, but we must be willing to work on improving those areas where we fall short.
Trait #5: DECISIVENESS
Real estate requires decisiveness. You must be able to weigh your options and select which one is the best among them. That's only half the process, though. Once you've made a decision, you must have the courage to move forward with it. When you purchase a property, you have to decide you want that one from among the various places you've considered. Next, you have to decide how much to offer for it. Once an offer is on the table, negotiations begin, and you must make multiple decisions on the way to a deal.
When the property is yours, the decisions are endless: how you plan to manage the property; determining the correct rent; how you will upgrade a property; when you should sell and at what price; and, perhaps most importantly, where to have the employee holiday party.
Do you believe you can make a series of quick, good decisions and enjoy the process? Some people are afraid to make decisions and take action. If you know yourself to be indecisive or a procrastinator, then active real estate investing is not for you.
I made a commitment to be independent of other people's decisions, especially those that could affect my financial well-being. My goal is to touch you from my soul and equip you to be a street-smart, hugely successful real estate investor. Does that sound inviting to you? Good! Let's get started on the remainder of the successful traits in Part II of “Do You Have What it Takes to Be a Mini-Mogul”.