What’s your standard operating procedure for getting into the pool? Do you jump in, full immersion, or do you dip a toe in and then walk gingerly down those steps? As far as getting into a pool, there’s no wrong answer here.
But when it comes to real estate, dipping a toe in might not get you very far. Don’t get me wrong, dipping a toe in is a great way to start but I want to share some insights about how a real estate portfolio can make a big splash for you. And I promise to ease up on the pool metaphors!
We hear this story pretty frequently. People contact us and tell us they are considering real estate. They start dabbling. They buy a rental property and wait for the money to start rolling in. But when the money from that one property feels more like a trickle, they sometimes get discouraged. Their bases are covered, and they are building equity, but it’s not a win the lottery kind of windfall. But of course, besides the lottery, there’s no such thing as that kind of something for nothing windfall.
When looking at real estate – and we have written about this a little before – you can’t just dip a toe in and expect it to dramatically change your life.
I recently saw a study that showed that the average American would benefit greatly from an average of $500 more a month in income. For many, many people, that would be a big deal.
My question is, why stop there? Dipping your toe in the water with one rental property is just the start. You may find that property management is just not your cup of tea. If you find you don’t like it then yes, stop there. But if you can stick with it and build a portfolio of properties, things get truly exciting.
In a previous article, I outlined how you can benefit from building up a real estate portfolio of 4 to 5 houses over the course of 7 years. If you can take the plunge rather than just dipping a toe in, we would challenge you to purchase those first 4 to 5 properties, then reevaluate your position. How’s it going?
Again, when we looked at this in the earlier article, it meant the potential for quite a big bump in liquidity. We are big fans of liquidity. Going all in with real estate over the long haul also means residual income that has the potential to keep growing. It means you have assets with greater value over time, as housing values increase and – more importantly – as someone else pays down your mortgage to gain you greater equity.
Staying in for the long haul in real estate – or most any worthwhile venture – is not very common. Looking past the first year or two takes uncommon thinking. Thinking uncommonly is a change in mindset – moving to an abundance mindset, a growth mindset, and a learning mindset. It is about specializing and intensifying your understanding of something and mastering it.
What could happen if you grew to master real estate investing? If you just dip a toe in, you’ll never really find out.
So if it’s not for you, it’s not for you. But if you can stick with it past the first home purchase, it will make all the difference. The confidence you will have once that is done – that accomplishment and achievement will be very rewarding. Then you can pull back and evaluate your position. Maybe you could sell those 5 homes and buy an 8 plex or a 24 plex? Maybe you could use that money to launch a business you are passionate about.
Don’t just put a toe in. Jump in head first with a plan and principles that can guide you to a larger goal. Stop dabbling and start dominating.