May 06, 2004
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Issue #001
May 6, 2004
Today's Topic:
Simplicity
The Key To Enjoying Real Estate Investing Real estate investing is an interesting animal. Over time, you either love it or hate it. People who make lots of money in the business tend to love it. People who struggle usually burn out before they succeed. Much of the outcome is a function of simplicity. The simpler you make your real estate investing life, the better you will enjoy it. The key is to simplify it before you burn out and hang in there long enough until you figure out what works for you - and your family. Apply The K.I.S.S. Principle To Everything The K.I.S.S. principle comes up over and over again in our lives, in almost every learning situation. Yet few of us actually apply it to our personal lives, much less real estate investing. Effective management embraces the concept of keeping all the processes to running a business as simple as possible. Relationships grow most effectively using a simple tool - communicate more. Each time you clean up a mess, you can use what you have at your disposal more effectively whether we're talking about organizing the garage or personal financial matters. The reason for this is simple too. Here it is: Acquiring skills necessary to handle complex situations and processes comes from mastering the basics in any subject. So focus on handling all the basics all the time. Master these processes piece by piece as you accumulate experience and a working knowledge of the details. Learn to break down the complex into manageble, simple components that you can handle easily and then tackle them one at a time until completion. ---Simple Works Best--- In his real estate investing seminars and audio tapes, Ron LeGrand 's mantra for a number of years has been: "The less you do, the more you make!" Boy, howdy. Many investors get out of the business because they find landlording and investing to be frustrating, time consuming and complicated. Yet why do others love owning rental properties? It's because they put their business on autopilot and get someone else to do the stuff they don't like and are not good at doing. Those of us who quit are probably doing it wrong - compounding the process by consistently making things more complicated than they need to be. And the good news is that almost everybody does it wrong in the beginning. That came out differently than it was supposed to. Doing things wrong is not the good news. Knowing that almost everyone else does the same thing in the beginning makes us feel 'less alone' in our frustation. Learning how to achieve simplicity is part of the learning process that most need to experience before it sinks in. Simplicity Applied It really hit home recently from our interactions with Seattle real estate investing guru, Greg Pinneo . Here are some of the reasons: As a mentor, he demands simplicity through basic and tough assignments. 1)Sit down and think about it and decide what you want.2)Write down 50 questions of proposition about each of the things that you want. They must be questions that will get you closer to what it is that you want. And they must be yes or no questions.
3)Ask at least 50 of these questions a day.
4)Whenever you start to do anything or take on a new project (in real estate investing) ask yourself these questions:
If, the answer is no, don't pursue it.
"What do I want?" never seemed like that tough a question before this approach. But perhaps that is because we want too many things and we are not focused enough.
Don't think so much.
This is perhaps my greatest downfall. I can think through arguments logically and collect supporting data to justify a decision I want to make, ad nauseum.
It is usually not a conscious activity, either.
But it easy to catch.
Ask yourself: Will this thing get me closer to what I want?
Tackle the simple deals first and look for them the most. Greg made it infinitely clear that he has very well defined criteria for 'buy and hold' properties developed from experience and analyzing the numbers and results. Simplicity is included in the mix. If a potential deal matches that criteria, he follows up and usually buys it. He also has mastered the basics that are components of his decision making criteria. For example, he knows the value of properties in the targeted areas where he buys property for his portfolio. He knows because he has looked at all of them over and over again. He gets mls reports on 'solds' every week in the neighborhood. He has mailed every single address in his target area, every quarter for many years. The simple fact here is that he knows more about his business and his market than the competition. He also looks at as many as 200 deals before he does one. But it comes from doing the simple things right - over and over again. And doing simple deals without 'a lot of moving parts'. Summary 1) Study everything you can about real estate. Read, take courses and attend seminars.
2) Decide what you want and find out where it is.
3) Ask everybody who owns property in that area if they or anyone else they know has a house they want to sell.
4) Learn the values of properties in your area thoroughly. Elimiinate the guess work.
5) Concentrate on what you want and elmininate everything else.
6) Say 'no' more often.
7) Before you get ready to decide something, after you have done your homework, ask yourself, "is there a simpler way to do this?"
8) Ask more questions everyday about the things you want.
9) Make sure that the people you get advice from are good at what they do.
Nothing in the mix is complicated. Do the simple things. Be persistent. Find people who can do the thing you need if you don't have the skills.
Delegate, delegate, delegate all the busywork and concentrate on what you like.
Get rid of all the clutter and start thinking about implementing simplicity in your own life by staying focused on the things you like the most and eliminating whatever you can that is complicated.
Real estate investing is like dancing. Once you learn the basic steps you can start doing combinations. The more thoroughly you learn the basics, and practice, the easier you can improvise to different styles of music and different styles of dance partners.
Really good dancers make it look really easy - and it is for them. But it took a lot of repetition to get good and master the basics. The better they dance, the more they enjoy it.
So it is with real estate.
One of the best ways to achieve simplicity in the real estate investing business (and life for that matter) is to implement systems to automate repetitive tasks.
But we will focus on the topic of implementing systems in another discussion. Thanks for reading. See you next time. Michael Barrett
Seattle, WA