Blog | Real Estate

I NEVER Buy Real Estate Without Following This First Step

A simple secret that everyone overlooks

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Many people ask me, “What’s the first step to real estate investing?” It might sound overly simplified but I always tell people that step #1 is goal setting.

I talk about goals first because a lot of people jump into real estate without having a plan. What people don’t realize is that when we set goals and benchmarks for things we want to accomplish, we gain the capability to accomplish them.

My Definition of a Goal

Simply stated, a goal is something you want to achieve. Maybe you want to buy one investment property within a year. Or maybe you’re determined to earn $5,000 per month in extra income within two years. Whatever your goal may be, it’s important to make sure that it’s something you plan to achieve.

Investing without goals is random investing. In other words, gambling. And as Robert Kiyosaki would say, gambling is for losers. That’s why if you want to be a successful real estate investor, you need a plan.

Now that we know what a goal is, the next step is creating one. Anytime I set a goal, I know that there are five things I need follow.

5 Steps to Goal Setting

S for Specific

The first step is making sure that your goal is specific. What we’re really talking about here is the how, when, where and why. These are very important because they paint an overall picture about your goal. Let’s go with the example that you want to buy one investment property within a year. How are you going to raise the capital? When is your ideal time to close on the property? Where is your ideal location? And why are you wanting this property?

These questions help shape the goal and make it more realistic, which in turn, makes the goal easier to attain.

M for Measurable

When setting a measurable goal, you need to know the answers to “how many” and/or “how much”. Keeping with the example above, we’ve answered the “how many” question because the goal is to buy one property within a year. The next thing to identify is “how much” you’re willing to spend. Goals that are vague are harder to attain and are even harder to stick to. If you have no time limit, dollar amount, or any comparison, how will you know that you’ve reached your goal? It’s impossible.

Give yourself a tangible mark to go after. It will strengthen your chance of success.

A for Attainable/Accountable

Goals have to be attainable. If you’re new to real estate and your goal is to own 10 apartment complexes in 3 months, that’s probably not realistic. That’s why I say that goals need to be reasonable, otherwise, they are never acted on and become more like a dream or a fantasy. That’s also why “A” stands for accountable. You want people you trust to keep you accountable for your goals and to help keep you reasonable. And when you have someone that’s good at that, you start to put things in motion.

For example, I meet with a coach and mentor every month. When we meet, we recap on the things we discussed the previous month. That way, I’m kept accountable for the promises I made to myself.

Accountability offers more than a great support system, it’s a strong strategy to help motivate you to finish what you’ve started.

R for Realistic/Relevant

This is a very important piece. It’s more common than you think for people to want to own 10 apartment complexes in 3 months. That’s why I suggest you ask these questions: Is this something you really want to do? And can it be done?

People usually make one BIG goal when they should really be making several little ones. There’s a saying that goes, “Even when you eat an elephant, you have to eat it one bite at a time”. Even though the overall goal might be something very large, what you really want to do is break down the goals into smaller pieces. It gives you a good sense of accomplishment when you’re able to meet attainable goals. If a goal is too big and you’re getting anywhere, you get frustrated and discouraged which only puts you at risk for not completing the goal at all.

T for Timeline

I find it interesting that a lot of people don’t use timelines. A timeline would be your benchmarks for completing your goal. Keeping with the example, if you planned on purchasing a property within a year, you might want to have financing figured out in 30 days. You might want location solidified in 40 days, etc. It’s a way to keep yourself accountable for the steps you take to reach your goal. It’s been said that a goal without a timeline is just a wish.

As you can see, I refer to these as SMART goals. They are extremely important in making sure you make smart decisions when looking at investments. So as silly as it seems, the first step to real estate investing is goal setting. If you follow this structure, I promise you won’t be disappointed. It can only better help you build out your goals.

To learn more about the ins and outs of real estate investing, take a look at my book The ABCs of Real Estate Investing: The Secrets of Finding Hidden Profits Most Investors Miss.

-Ken McElroy

Original publish date: August 22, 2018

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