I heard an analogy a while back and it stuck with me as so profound and powerful – If you were going to plant a forest, you wouldn’t just plant one tree at a time and wait for it to mature before planting the second tree, would you?
Too often that’s exactly how we look at residual income or investing. We focus on the first tree and nothing more. That’s a bad way to grow a forest. And when it comes to our first forays into residual income building, most of us are only able to see that first home or stock purchase – but nothing after that.
I think people have trouble imagining beyond that first move because we have a fear-based mindset. We imagine everything that could go wrong – What if I screw this up and lose my money? What if I make a mistake with this one play? When we’re in that fear-based mindset, buying stock or a rental property takes all the courage we have.
So how do you get the courage to grow a forest? How do you get beyond that fear-based mindset? Who grows a forest, anyway? Too often, we think it’s beyond our capabilities.
To be clear, when you grow a forest, things can go wrong. It’s not that we shouldn’t go into these things with eyes wide open, I’m not talking about irrational exuberance here. What I am saying is that when building a rental portfolio or a forest, sometimes the numbers aren’t going to go your way. We won’t hit our break-even in terms of profitability 100% of the time.
But you can and should build a mindset that is both rational and optimistic. Because when you are strategic and understand your market, over the long-term, even with some missteps along the way, you will still have a healthy forest, a healthy portfolio of properties.
The idea of growing a forest is compelling. When we have the vision of building multiples of something – not just one thing – it’s powerful. It builds enthusiasm and momentum within us. It also forces us to be more strategic, considering our need to plan, understand our costs, figuring out where we’re going to get our materials, and how to approach things so they are a huge success.
There is a great example of this principle in the book Cash-Flow Quadrant, by Robert Kiyosaki. He tells the story of a family carrying water from it’s source all the way back to their town in buckets. Someone from town took the time to evaluate the distance and found a way to bring the water into town more efficiently. After 6 months of preliminary study and evaluation, an entrepreneur builds a pipeline.
We have shared examples of this, specifically as it relates to building a real estate portfolio, in a recent post. In that post, I played out a scenario that, yes, started with one rental property but was just the start of a bigger plan, one where you would build up to 5 or more properties over the course of 7 years. The returns can be pretty exciting and the cash flow it can generate while you build equity from other people’s money is a wonderful thing.
So go ahead and plan for that forest! Having an abundance mindset instead of a fear-based mindset does not mean you have left reason and rationality behind. It is about thinking bigger. Plan, ask for help and go on a mission. This, in our opinion, is a more exciting, potentially more successful strategy.
Why put all your energy, hopes, and resources into one thing and stop? Why not grow a forest to enjoy and to serve as a legacy for you and your family to benefit from for years to come?