The Millionaire Real Estate Investor (Part 2): The 4 Stages

After going through all of The Four Stages of the Millionaire Real Estate Investor 

1. Think A Million

  • The pursuit of money is a spiritual journey. Money reflects your innermost values and has the power to reveal you.
  • Money is also about choices. The more you have, the more positive choices you have.
  • True financial wealth is a place of security and abundance, where you are finally free to stop working for a living and start living for your work — your life’s work.
  • Motivation matters. Discovering your Big Why enables you to prioritize your needs, as well as the choices and actions that will fulfill them. It brings power and stamina to your financial goals.
  • Thinking big is not enough. You need Big Goals, Big Models and Big Habits to drive you towards your Big Why and protect you along the way.
  • For Millionaire Real Estate Investors, money matters. They take their financial education seriously and make investing a priority, and so should you. Understanding money will pay dividends in your life.
  • Understanding the Money Matrix is imperative to your education. Are you an Investor or a Consumer? Investors build their financial life on Capital, while Consumers build theirs on Consumption. In the end, either you work for your money or your money works for you.
  • The best and most definitive measure of financial wealth is net worth. So in the game of financial wealth building, keep a scorecard. Track your net worth over time to see which investments have the greatest positive impact on financial wealth.
  • No other investment has had such a consistent and powerful effect on the average person’s net worth as real estate ownership. It’s attainable, appreciable, leverageable, rentable, improvable, deductible, depreciable, deferrable, stable, and livable — real estate is a most “able” investment indeed!
  • Real estate investment thinking follows a process, a process that saves time, reduces risk, and keeps you focused. Simply put, you must know value to recognize opportunity, and you must find opportunities before you can do deals.
  • Investing requires Action. Successful investing requires the right Action. Observers, Speculators, and Collectors are not true Inevestors — Investors take action, minimize risk, and buy based on investment value; they are a breed apart.
  • Follow Nina’s Rule and develop the financial posture of a Millionaire Real Estate Investor. Little decisions set the stage for big decisions, so build and be conscious of the right kind of mental habits, those that will lead to financial wealth.

2. Buy a million

  • Proven models allow you to learn from the mistakes of others as well as build on their successes. The five key models in real estate investing are the Net Worth, Financial, Network, Lead Generation, and Acquisition models.
  • Net Worth Model

    • Learn the Path of Money — Money has a path and you must guide it to places that will yield the greatest financial growth and most substantial net worth.
    • Budget for Investments — Stay on the Path, differentiating between what you want and what you need. Make a personal budget and hone the discipline to stick to it.
    • Track personal net worth — Keep a household P&L and balance sheet to track net worth over time. Examine your total often, and ask yourself, “How can I make it grow?”
  • Financial Model

    • There are two ways to build wealth by investing in real estate; Equity Buildup and Cash Flow Growth
    • Equity Buildup — increases your net worth in your real estate assets and comes from the twin forces of price appreciation and debt paydown.
    • Cash Flow Growth — provides a stream of unearned income, possible when you buy it right, finance wisely and control your expenses
    • Adopt the motto “Buy it right — Pay it down — Pay it off!”
      • “Buy It Right” — make your money going in, assuring yourself the best of Equity Buildup and Cash Flow Growth
      • “Pay It Down” — as you do so, you add significantly to your Equity Buildup
      • “Pay It Off” — thus ensuring a growing stream of unearned income, where your money starts to work for you.
  • Network Model

    • Your Work Network in your investing lifeline. Build it by bringing together a powerful group of people, a dream team, who can play the right roles at the right times so you can achieve your financial dreams.
    • The Three Circle of Your Work Network
      1. Inner Circle: the select group you trust the most. They are your mentors, consultants, partners, your “informal board of directors.”
      2. Support Circle: the key fiduciary people in your real estate investment life. They are the professionals you rely on to advise you on both the details of specific transactions and the people you will need to complete them.
      3. Service Circle: the specialized independent contractors and freelancers who perform specific functions for a particular property or transaction.
    • Work your Work Network — Build it, Maintain it, Engage it. 
  • Lead Generation Model

    • To find great investment properties, you need leads, lots of them. The Lead Generation Model informs your property search and powers it, and is one of the main ways you can take luck out of the investment game.
    • The Lead Generation Model is built around four core questions:
      1. What am I looking for? Establish your Criteria: location, type, economic, condition, construction, features, amenities. Then devise an APB describing the real estate investment for which you’ll be prospecting and marketing.
      2. Who can help me find it? Identify the people who can connect you to properties that meet your Criteria (Owners, Intermediaries, Leads Network)
      3. How will I find the property or the people connected to it? Systematically prospect and market for real estate invesmtent opportunities.
      4. Which properties are the real opportunities? Separate the suspects from the prospects.
    • Build your investing posture on the Five Laws of Lead Generation
      1. Never compromise
      2. Be a shopper, not a buyer
      3. Timing matters
      4. It’s a numbers game
      5. Be organized and systematic
  • Acquisition Model

    • By following the Acquisition Model and buying right, you virtually guarantee the success of your investments. The key? Make your money going in.
    • There are two fundamental acquisition strategies: Buy for Cash or Buy for Cash Flow and Equity Buildup.
      • Buy For Cash: Use one of the four cash-building strategies (Find & Refer; Control & Assign; Buy & Sell; Buy, Improve & Sell)
      • Buy for Cash Flow and Equity: Explore the three options for building and attaining them (Lease Option; Buy & Hold; Buy, Improve & Hold)
    • Of all these strategies, the two that stand above the others are Buy & Sell and Buy & Hold:
      • Buy & Sell: with this strategy, you are looking for one thing, cash, ensuring a fast net profit payoff by quickly buying and selling. But you must know your numbers going in, so work them carefully with a Terms Worksheet: Buy & Sell.
      • Buy & Hold: This is a true financial wealth-building option, a long-term strategy employing the twin forces of Equity Buildup and Cash Flow Growth. It’s still a numbers game, but over the longer term, so vigilantly employ the Term Worksheet: Buy and Hold as your guide.

3. Own a Million

  • Owning a million is about turning your investments into actual net worth that shows up on your balance sheet. To do so, you must concentrate on the Buy and Hold strategy, mazimizing and accelerating your Equity Buildup.
  • Along the journey, you are likely to encounter issues in five principle areas:
    1. Criteria: The Guiding Light
      • Stick or Switch — Pick a niche, learn it and master it. Repetition is the mother of mastery.
      • Become an Expert — Learn your niche through study and observation, experience and doing, asking and listening.
      • Think in Units — Consolidating management costs and limiting potential losses on inidividual units is efficient, and can increase the net cash flow of your investment.
    2. Terms: Hold Them Dear
      • Acquisition Terms — Put the property under contract quickly, negotiate everything, and master creative financing.
      • Operating Terms — Maximize your NOI by increasing gross rental income, controlling expenses and minimizing vacancies.
      • Disposition Terms — Knowing why you are selling determines your strategy. Remember, selling only makes sense when you can maximize the cash you take out and then put it into another investment that brings a better return.
    3. Network: Together Everyone Achieves More
      • Associate with Talen — Hire carefully and have a process to do so.
      • Top-Grade — Find the best and demand the best.
      • Work from Written Proposals and Contracts — “Get it in writing” every time.
      • Protect Your Reputation — It’s your most precious asset
    4. Money: Give It a Work Ethic
      • Hold It Accountable — To be wealthy, your money must be healthy, so know what condition it’s in (dead, safe, healthy, wealthy) and how well it is being paid.
      • Minimize Tax Exposure — Reduce realized income in which you pay taxes, and reduce Capital Gain taxes (through IRAs or 1031s)
    5. You: Your Primary Asset
      • Protect Your Time — Hire others, like property managers, to tend to daily tasks
      • Protect Your Assets — Prioritize entity and estate planning.
      • Be Learning Based — Knowledge is power, so endeavor to be at the top end of the Learning Curve.
      • Be Accountable — Get feedback and use it to inform and motivate your future actions

4. Receive A Million