By now, you know that real estate investing is not a walk in the park, but it provides tremendous opportunities to build real wealth, offers a path to financial independence, and offers a unique method to diversify your existing investments even if being an active investor is not for you.
Chapter 9: Find Your Why– from What the 1% Know: How Everyday People Use Real Estate to Build Wealth
If you have skipped over the investor interviews in this book, go back and read them before moving on. There is so much experience and wisdom shared there that it’s impossible to overestimate their value. So why do I now want to talk about a soft subject like purpose, and what in the world is internal capital?
Investing in real estate will require you to learn about the building and renovation of buildings, financial analysis, and banking and finance. It will help you to grow in your ability to form teams, manage them, and produce results. You will not be required to be an expert in any of these areas, but you need to know enough to hire, manage, and evaluate people who are.
You do not need to build an empire of thousands of units, but you could. For all these reasons, defining why you are doing this is vitally important. Consider the following quote:
“Compare yourself to yesterday, not to younger people who are not you. Everyone progresses at a different rate, so don’t let anyone else make you feel left behind. You probably don’t even know where you are going, so feeling behind doesn’t help.
“Approach your own personal voyage and projects like Michelangelo approached a block of marble, willing to learn and adjust as you go, and even to abandon a previous goal and change directions entirely should the need arise.”
—From Range by David Epstein
As you research real estate investing, you’ll hear a lot about financial freedom and FIRE: Financial Independence Retire Early. I am going to share some insights about freedom and purpose here.
First, there is no freedom outside of your core values and principles—your why. Your purpose could be to leave your 9-to-5 job. It could be to invest on the side as you continue to work or even after you retire. Think of a ship readying to sail: Determining your destination is important. Isn’t it? Your core values are the rudder that allow you to steer your ship and maintain control. Your destination can change, or you can have more than one, but you need to have one. And determining why you are sailing is essential. But also, your values, how you steer your ship as you sail, are important as well. Honesty, trust, diligence, and a willingness to learn from failures are good ones to start with. What others would you add?
Second, there is no freedom without responsibility. I remember the story of a young man who complained to his parents and teachers about all the rules and expectations placed upon him. His response was to join the Army. I’m sure you can guess how that worked out. He thought this would give him freedom, but before he could have any freedom within this new system, he would have to learn an entire new level of responsibility. If we want freedom, financial and otherwise, we need to take responsibility for our actions.
Third, there is no freedom without results. In life, effort is not enough, nor are ideas. You have to endeavor to sail your ship to its destination, using the tools of your purpose and core values to get you there. You had to learn how to win and how to lose growing up. Your results in life apply to investing in real estate and any activity. When you learn from your wins and losses, it provides a compounding effect. Just as small deposits of money earn interest over long periods of time, so do our actions.
What powers your journey is tapping into your internal capital. As an investor, you know that using your monetary capital to invest in properties that can provide cash flow, appreciation, equity, and leverage provides almost unlimited power. Learning how to use them determines everything. Your internal capital is your inner resources. These include your confidence, knowledge, and unique experiences in life. This could include your faith tradition. It is the ability to find hope when faced with difficulty. It is the ability to learn from failures, to get up and start again. It is the ability to cultivate gratitude as a daily mindset, something you choose each morning and end each day with. I want to leave you with my favorite poem, one that has always remained valuable to me:
Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend. It turns problems into gifts, failures into successes, the unexpected into perfect timing, and mistakes into important events. It can turn an existence into a real life, and disconnected situations into important and beneficial lessons. Gratitude makes sense of our past, brings peace for today, and creates a vision for tomorrow.