Foundation Series - Episode 1 - Why Invest in Real Estate? If your goal is to master any subject it is vital to to start with the foundational knowledge and principles on that topic. Building knowledge is a little like building a pyramid, take a minute and visualize a pyramid in your head, wide at the bottom, pointy at the top right? Well, if knowledge is built like a pyramid and you tried to start building it with the pointy top then it would topple right over wouldn’t it? Of course it would, it’s silly to even think about building a pyramid that way. To get to the top of a pyramid, whether a real one or a knowledge pyramid in your head, you absolutely must start with a strong foundation. This is episode 1 of the foundation series. You can listen to all of these episodes in a row for a broad view of real estate investing or you can start with this episode and then jump to the topics that interest you most. If you are just getting started I highly recommend listening in order because, to be quite candid, it is hard to know which investing strategies will interest or suit you the most until you know what is out there. This is especially true if what you know, or what you think you know, comes from social media influencers or tv shows. Often, those types of sources have a vested interest in showing you only the exciting or dramatic parts and don’t give you a realistic picture of what is happening in real life. I assume that, like me, you operate in real life and that you’ll go through the entire experience and not just the parts that make it on tv or your social media feed. I’m going to do my level best to bring you the truth on real estate investing whether it’s pretty or not. Our topic for today is a highly personal one. Not personal to me per se but personal to each and every person that listens to or watches this episode. That topic is: Why invest in real estate? With all of the different types and strategies of real estate investing you can bet that there is something to suit almost every investor and that there are many practical and concrete answers to the question “Why should I invest in real estate” and while I will certainly get to those but it’s absolutely vital that you start with YOUR own personal reasons for investing in real estate. If your investing strategy, no matter the benefits of that particular strategy, doesn't align with your personal goals and resources then you are much much more likely to fail in the long run. I’ll start with my reason for investing in real estate. I invest in real estate for security. Personally, my goal is to be financially independent. I want to be in control of my life and my time. Real estate investing is my retirement plan and my goal is to be able to retire early should I choose to do so. Practically that means that I’m not investing for funds to use today, I can choose strategies with a long time horizon that pay off over time or at a later date. Someone needing to use the money immediately would probably choose to invest differently than how I personally invest. Just a handful of possible goals for other people include: the need to replace the income of a spouse that wants to stay home with the kids, or to fund college expenses, pay off student loans, or to generate money to support a loved one that needs full time care due to health or a disability. It could be that you hate your job and want to replace that income or at least set up enough of a safety net to quit and look for something else. Maybe you are investing in real estate to offset taxes from a high income career, as a store of value, or to finance hobbies like sailing, owning a race car or traveling the world. Whatever the reason that you are investing - take a moment and write it down - this will help you figure out what is best for you, personally, as we review investment strategies in future episodes. Next: Let’s take a few minutes to take a personal inventory of your skills and available resources. Do you have great carpentry, electrical or plumbing skills. Whether you do or do not have the skills, are you interested in being hands on and doing that type of work yourself? Will you hire it out? Do you have good management skills to oversee contractors or trade people? Do you have the time to visit the job site, meet with contractors or pick up materials? Would you rather avoid projects that need a lot of work all together? These are important things to consider at the outset as they will determine the criteria you set and what kind of projects that you are willing to take on. How will you finance your projects? Do you have a large savings or brokerage account that you will use to fund your real estate investing? Do you have friends, relatives or potential investors that will help you financially? Will you partner with other investors? Do you have good credit? Can you live in ...
