By most definitions a “real estate investor” is someone who purchases property with the intention of earning money and/or building wealth. On the surface this seems worthwhile to pursue. It may be something to aspire to, but it’s not a career or a business. And that is the inherent misunderstanding.
Yes, if you happen to buy right in the right area and ride the wave of appreciation, you can definitely build wealth. However, simply buying a property for a long term hold, while calling yourself a real estate investor and hoping for the best is not a sound strategy.
The same holds true for buying properties at a discount with the intention to fix them up and flip them or wholesale them a higher price. Yes, you can call yourself a real estate investor and earn some money, but this is not a strong end game approach.
“But wait,” you may say, “what about commercial properties?” Of course, if you are in commercial properties like mobile home parks, apartments, self-storage, etc. where you have economies of scale due to a large number of units, you can force appreciation to build wealth and you can manage the business to create income. In this situation are you a real estate investor or a business owner?
This the crux of the matter. When I first began investing in real estate, what I wanted (besides money) was to be a “real estate investor”. I thought that sounded really cool and to some degree, unfortunately, it still does. What that meant for me was that I went about buying, selling, and holding properties for years, because that’s what real estate investors do, right? What that also meant was that my goal was too easily achieved and I missed the real opportunity. The real opportunity is to build a business that invests in real estate and create life-changing income and wealth. And if that business is scaled properly, that could turn into generational wealth.
I bought and studied tons of real estate courses, attended seminars, attended local real estate clubs, and spent time online learning. I did all types of deals – wholesale, rehabs, lease options, subject to (get the deed), pre-foreclosure, foreclosure, REO’s, and more. I bought, sold, and held a large number of deals, somewhere between 75 and 100, over a five year period. I never kept track of all the deals, because I never planned to share my story.
By most standards, that’s a lot of deals. By the standards of a business owner who fixes and flips real estate as an active operator, those numbers may not even be six months’ worth of inventory.
At one point I had 35 doors with tenants, so I was also in the “Property Manager” role as well as the “Real Estate Investor” role. Obviously, neither role received my best performance. Additionally, I was also the Marketing Department, the Negotiations Department, the Acquisitions Department, the Rehabbing or Make-Ready Department, the Dispositions Department, along with Customer Service and more. That’s way too many hats to wear.
To my credit I did have quite a few checklists and some processes. Otherwise, I never would have been able to keep up all those years. Primarily, I kept up through long hours and hustling from one deal to the next and from one task to the next.
What I did not have was business systems or a business owner mindset. I did not seek out other mentors who had real estate investing businesses. I did not seek out masterminds composed of owners of real estate investing businesses. Nor did I know how to properly structure my real estate investing as a business or hang out with those who did. I did not fully understand that property was just my “widget”, my inventory.
No, I was a Real Estate Investor. Contrast that to a business owner.
A business owner understands that creating business systems and processes are critical to long term success. A business owner knows the importance of being able to duplicate actions to generate consistent successes and of being able to hand off systemized tasks to others. A business owner realizes it takes a strong team to build a business and strong systems to scale a business.
Understand the end game is to own and operate a business that invests in real estate. It’s definitely not about buying and selling properties. Don’t be a Real Estate Investor.