6
WHY DID THE CHICKEN CROSS THE ROAD?
Secrets to Achieving Your Goal (Any Goal!)
Question: Why did the chicken cross the road? Answer: Because crossing the road was the chicken’s goal. It’s that simple. Once the chicken set its eyes on the other side of the road, it didn’t turn back. Turning back could have meant getting stuck in limbo-land and eventually getting squashed by the farmer’s pickup truck coming around the corner! That chicken just kept going until it reached its goal of getting to the other side.
Like the chicken, you can’t arrive anywhere unless you know where you’re aiming to go. When you drive to work, you remain focused on where you’re going so that you actually get there. Imagine if you whimsically decided to meander off, getting completely sidetracked by the various sites along the way, never making it to your place of work. One or two times of not showing up and you’d probably lose your job!
While this example may seem ridiculous, we so often treat our personal goals this way. And yet, why should we be any less accountable to our own goals than we are to our boss’ goals?
The goals we set are vital. They determine where we end up. The goals that we don’t set are also vital, because they determine where we will not end up. If we never set out to own rental property, we never will. If we never set out to diversify our retirement accounts beyond what Wall Street and our 401(k) can offer, we never will. And this could be a decision that we eventually pay the price for . . . severely.
Why should you be any less accountable to yourself
than you are to your boss?
K. KAI ANDERSON
BECOMING SELF-SUFFICIENT
At the end of the day, don’t we all just want to be taken care of? A good shoulder rub? Free dessert on our birthday at our favorite restaurant? And, most of all, a worry-free, financially secure retirement?
I’m sorry to say that, for this last one, I have bad news for you: Your retirement prospects are completely and totally in your own hands. As I’ve shown in chapters 1 and 2, if your pension is small or nonexistent, your workplace won’t be taking care of you when you walk away from that paycheck. Even if you have an employer-sponsored 401(k), decisions related to how much to contribute and how to allocate funds are entirely in your own hands. The stock market is a gamble in and of itself and may or may not be there for you at the time you need it. Likewise, Social Security may or may not be there for you in the same form it’s in today, and it should only be expected to play a minor role after you stop working. Even your financial adviser, if you have one, may not always put your best interests above their own, and they may or may not make perfect decisions along the way. And as for your savings . . . again, there’s simply no way to really know how much will be enough and when, or whether, you can ever stop working.
In spite of this, many of us have been conditioned to be passive when it comes to saving for retirement. Whether it’s our 401(k), IRA, or financial adviser, we are told to simply sign up, enroll in automatic deductions, put someone else in charge, and never worry about our finances again. The company prospectus is too boring and too confusing to bother reading, something that is probably not an accident. Plus, we are too busy and too overwhelmed with life to bother with the details. We trust that everything will work out fine.
Unfortunately, this hands-off passive approach to retirement planning actively puts our financial futures at risk. More than ever before, we need to learn an active approach to invest for passive income, income that is received on a consistent, regular basis with little effort required to maintain it: for example, monthly rental income.
This book is all about developing self-sufficiency and taking action. One small move now could lock in financial security for years to come. And this one small move is simply buying the right rental property or converting an existing home into a good, cash-flowing rental property.
PREPARE TO ACHIEVE YOUR LEVEL I, II, OR III GOAL
To achieve the Level I, II, or III Goal, it is essential that you first set it as a goal for yourself. Claim it. Thereafter, certain strategies will increase your chances of successfully attaining it. Here are some suggestions to get you started, each of which I’ll cover in more depth in this section:
1. Make your goal SMART.
2. Embrace the power of positive thinking.
3. Put your goal in your face.
4. Develop a mantra or a theme song.
5. Persevere.
A goal is a dream with a deadline.
NAPOLEON HILL
Make Your Goal SMART
You may have already heard of the “SMART” acronym for goal setting. It is widely used in goal-setting classes, and for good reason. There is brilliance in its simplicity and on the emphasis on the fact that you’ll know when you’ve achieved it. The letters have taken on slightly different variations over time by different goal-setting gurus. In the context of the Level I, II, and III Goals that I’ve put forth in this book, my preference is the following:
S—Specific
M—Meaningful
A—Action-oriented
R—Realistic
T—Time-specific
An example of a SMART goal, in the context of this book, might be something like this: “I will purchase one rental property in the next nine months, in order to diversify and protect my retirement, and I will do at least one thing every day that brings me closer to that goal.”
You can see that this goal is SPECIFIC to the purchase of one rental property; therefore, you’ll certainly know when you’ve achieved it. It is MEANINGFUL, since there is a reason why this goal is important: It is to safeguard and diversify your retirement picture, of course! It is ACTION-ORIENTED, in that you recognize that it is your responsibility and you are promising to do one thing each day to bring yourself closer to achieving your goal. It is REALISTIC, in that this is a feasible goal (whereas one property in the next month, or two properties in nine months, would probably be unrealistic, and even unwise, if you are just starting out). And it is TIME-SPECIFIC, in that you’ve given yourself a deadline of nine months.
To see the beauty of the SMART goal, it might be helpful to see the absurdity of a related non-SMART goal. Consider this non-SMART goal: “I hope to buy a lot of rental properties sometime really soon.” It’s almost ridiculous! You can see that this non-SMART goal is way too general, not personally meaningful at all, with no action tied to it to make it happen, totally unrealistic, and not at all time-specific. In its complete opposite form, this non-SMART goal is doomed from the start. And yet, this is what people do all the time when they say things like this to themselves:
“I hope to win the lottery.”
“I’m going to retire one day.”
“I hope my 401(k) account will be enough to retire on.”
“I hope Social Security doesn’t go away.”
“I plan to get rich in real estate.”
“I want to buy a rental property, once I have the time.”
Harness the Power of the Mind
According to Dr. Srinivasan Pillay, a psychiatrist, brain-imaging researcher affiliated with Harvard University, and author of The Science Behind the Law of Attraction, and Tinker, Dabble, Doodle, Try: Unlock the Power of the Unfocused Mind, there is scientific merit behind the power of positive thinking. Referencing multiple scientific studies, from monkey studies to neuroimaging studies to obesity studies, he teaches that like attracts like and that thoughts influence reality. These concepts are known as the “Law of Attraction.” This law states that we tend to draw things, people, and results into our lives that are directly in line with the thoughts we put out. In other words, positive thoughts attract positive results and negative thoughts attract negative results.
The concepts of the Law of Attraction date back to at least 391 B.C., when the Greek philosopher Plato asserted that “likes tend toward likes” (or “like attracts like”). Fast-forward to the early 1800s, when Phineas Quimby taught similar “New Thought” principles. More recently, these concepts have been popularized by Louise Hay, the “mother of positive thinking” and the author of numerous books on the power of the mind, as well as Esther and Jerry Hicks, authors of The Law of Attraction: The Basics of the Teachings of Abraham. Finally, the movie called The Secret popularized these concepts and brought them into the mainstream.
We are connected within and without. What we think and feel affects how we will act and how others will act as well. The depth of our feelings and actions is a critical variable in “attracting” what we want to our lives.
SRINIVASAN PILLAY, M.D.
Psychiatrist, brain-imaging researcher, and CEO of NeuroBusiness Group
According to the Law of Attraction, if you state your goal as if you are already on the road to success, then your mind will believe it and make it happen. Consider the difference between the following two messages that we might tell ourselves. On the surface, they seem to mean pretty much the same thing. To the mind, however, they are total opposites. Which one do you think sends a more powerful message to your higher self, and in the right direction? Which one could potentially create a negative result?
Admonishing: “Don’t buy clothes that you don’t need!”
Encouraging: “Each day I am becoming smarter about purchasing
only the clothes that I really need.”
Do you see the difference? By the way, this works on others, too! Try this on your child or your partner/spouse. For example, how many times have you told your child, “Don’t interrupt,” only to have her continue to interrupt? Next time, try this: “You are getting better and better each day about waiting your turn to talk. Keep up the good work!”
I had the opportunity to try out the Law of Attraction with my daughter one day as she was practicing cartwheels in our basement. Just before one attempt, she exclaimed in frustration: “I’m terrible at this. I’m never going to get this!” Then her brain literally guided her body into a “terrible” cartwheel in which she landed squarely on her bottom. Unable to resist this teachable moment, I explained that her brain had literally brought on that outcome itself. I suggested that she declare, before each cartwheel, “I’m getting better and better at this each time!” Lo and behold, her cartwheels did get better and better. That is, until we went outside to the rough ground and she had to start all over again! At that point, being on new terrain, she had to redevelop the confidence that she had just attained inside.
Across many different real estate investing situations, I have discovered the power of staying positive. From navigating the roadblocks in a complicated property purchase to cleaning up our property after our “Tenant from Hell” moved out, and everything in between, the phrase I keep telling myself is this: “I’m getting better and better at this each time!” And it continues to be true.
Similarly, there is something called Ironic Process Theory, a term coined and studied by Daniel Wegner in the 1980s that explains why many of our goals—think New Year’s resolutions—fail. According to this theory, our minds tend to see the big picture of what is being conveyed, especially in our world that is overflowing with distractions. We often don’t hear, or we mentally overlook, small (albeit important) words like “not,” “don’t,” and “won’t.” As an example, if we state a goal of “I will not eat junk food!” we will naturally start craving junk food and eat it. This is because we will have created an advertisement or billboard in our own minds that broadcasts “JUNK FOOD” and fails to convey that small, but critical, word “not.” You will be much more successful if you state your personal goal (or even your directions to your kids) in the positive. For example, consider this alternative: “I am becoming better and better about choosing healthy foods to nourish my body.”
Try to pose for yourself this task:
not to think of a polar bear, and you will see that the
cursed thing will come to mind every minute.
FYODOR DOSTOEVSKY
Russian novelist (1821–1881)
Put Your Goal in Your Face
Napoleon Hill, of the last century, was one of the best-known writers on the power of the mind in achieving our goals. He coined the word “autosuggestion,” defining it as “the agency of control through which an individual may voluntarily feed his [or her] subconscious mind on thoughts of a creative nature, or, by neglect, permit thoughts of a destructive nature to find their way into this rich garden of the mind.” In other words, we can control our thoughts, and our thoughts determine our destiny.
He recommended a few key actions. For starters, he urged writing down one’s goal and posting it in an obvious place so that you are reminded of it on a daily basis. This could be your bathroom mirror, the dashboard of your car, or even as a reminder on your computer or smartphone. He also recommended saying the goal out loud to yourself at least once or twice daily.
Most importantly, Napoleon Hill spoke of the importance of passion. In his seminal book, he writes: “Your ability to use the principle of auto suggestion will depend, very largely, upon your capacity to concentrate upon a given desire until that desire becomes a burning obsession.”1
It helps if you can put things in your environment that help you keep your goal in the forefront of your mind. This is because, no matter how important your goal is, there is a natural, albeit self-sabotaging, human tendency to put off important tasks. For example, most of us experience this tendency with seemingly arduous tasks such as creating budgets, consolidating 401(k) accounts, and setting up wills. Getting your first rental is an equally important item on this list.
The thing is, if we put something off long enough, it simply doesn’t happen. In fact, and odd as it is, it seems that the larger or more financially significant the goal, the greater the tendency to procrastinate, probably due to our feeling overwhelmed and intimidated. This is why it’s good to post reminders, even sticky notes, around your personal world until you’ve achieved your goal.
As a last word on procrastination, with rental property it really doesn’t pay to delay. Consider that the sooner you get your first rental, the sooner the renters begin paying off the mortgage, and the sooner you will achieve the Ultimate Goal of owning a fully cash-flowing asset for your new and truly diversified retirement plan.
Develop a Mantra or a Theme Song
I’m going to share with you my secret for achieving a major goal: Develop a mantra or find a theme song. Say it, sing it, and listen to it as much as humanly possible. Cast it into the background of your brain. In fact, you know how you can sometimes get a song stuck in your head and you can’t get it out, no matter how hard you try? Well, this is the opposite. In this case, you want it in there.
You are but the product of your thoughts.
What you think you become.
MAHATMA GANDHI
One of my favorite motivational songs is Rachel Platten’s “Fight Song.” I very intentionally play that song so much that the words and tune literally run through my mind almost all of the time. Over time, the song has made its way into my subconscious brain and has become an underlying electrical current within my mind. It subliminally fuels me and helps me keep my major goal at the forefront of my mind. (To easily play it on repeat, simply look up “Rachel Platten, Fight Song, one hour loop” on YouTube.)
You might have your own favorite song that you find particularly motivating. Whether it’s the Rocky theme song from the ’80s (“Eye of the Tiger”), or Alicia Keys’s “Girl on Fire,” find the song that works best for you. If these don’t cut it for you, check out my website, www.GetaChicken.com, for a list of other motivational song ideas.
Rachel Platten’s “Fight Song” played a major role in my efforts to get back in shape. When I first started jogging again, I began with just two “Fight Songs,” jogging out for one song and then back home for the next—which was only 6 minutes and 52 seconds, round trip. Perfect—no excuses. I knew I could do anything for 6 minutes and 52 seconds. I did this for a couple days and then I cranked it up to four “Fight Songs,” playing them over and over on my smartphone as I ran. After a while, I bumped it up to six “Fight Songs,” and then eventually eight and then nine, and so on.
It’s best to start with a goal that you think you can accomplish. With running, I only bump it up little by little. In fact, whenever I get back from a run, my daughter asks me, “How many ‘Fight Songs’ did you do today, Mama?” (I eventually progressed to running a 5k [roughly ten “Fight Songs”!] and then a half marathon [too many “Fight Songs” to count!].)
When using this method to achieve your real-estate-related Level I, II, or III Goal, it is usually best to break your goal down into pieces. Use your song of choice as motivation to get you through the first action step, and each next action step, until at last you have achieved your goal.
We’ve actually found this energetic, action-oriented, and positive song to be helpful in raising our daughter. Since she has been exposed to the song (a lot!), she knows it very well. Whether it is learning to ride a bike, passing the deep-water test, or cleaning her room, she enjoys calling whatever goal she’s working on, at the time, her “Fight Song” until she’s achieved it. Then she finds a new “Fight Song” for her next challenge. Sometimes it takes a bit of encouragement on our part, which is fine. We all need encouragement. But the self-confidence and pride she gains from achieving her “Fight Song” is all hers.
When your desires are strong enough, you will appear to
possess superhuman powers to achieve.
NAPOLEON HILL
Persevere
Another life lesson came during a fierce round of the Dora the Explorer memory game with my daughter. About halfway through the game, she became frustrated because she realized that I had accumulated more matches and therefore I was “winning.” In an attempt to teach her another valuable life lesson, I reminded her: “The only way to have a chance at winning the game is to keep on playing the game. Quitting is the same as losing.” (When she’s older, I’m sure she’ll find this kind of advice thoroughly annoying and totally uncool, so I figure now’s my big chance to dish it out!)
If you love life, don’t waste time,
for time is what life is made up of.
BRUCE LEE
Hong Kong martial artist and filmmaker (1940–1973)
Quitting is the same as losing. This is true in all areas of life. Giving up because the task that lies ahead seems too unfamiliar or too hard guarantees only one thing: not achieving that goal. On the other hand, forging ahead with a plan, in spite of the fear, also guarantees one outcome: the chance of success, and possibly great success!
The three main obstacles to success are lack of perseverance, self-doubt, and fear. Gaining some experience will help with these obstacles. However, we need the opposites of each obstacle (perseverance, self-confidence, and courage) to gain that experience. And perseverance—or simply not giving up, no matter what—is the master key. If you can persevere in spite of self-doubt and fear, then you will gain experience, you will begin seeing results, and you will overcome any lingering self-doubt and fear.
As you can see, there is a tension between the mind and the body (or the realm of persevering by taking action). It is one of life’s biggest Catch-22s. We lack the confidence to take action (due to inexperience), but we lack the experience to feel confident enough to take action. This is why your mind is your most powerful asset and why it’s one of the underlying themes of this book.
It is vitally important to train your subconscious mind to believe this one very important thing: If you decide that you absolutely must achieve your goal, then you know you will not stop until you’ve achieved it.
In addition to mastering the domain of the mind, you need to master the domain of action, since any goal needs action of some kind in order for it to come to fruition. I’ll spend the rest of this chapter going into this very important concept. The rest of this book is then dedicated to helping you come up with your action plan to achieve your Level I, II, or III Goal. Then you can get to work. Be accountable to your own goal so that one day when you are looking back on your life, you will view this period of time as a crucial pivot point between two radically different outcomes. And on that future day, you’ll be grateful that you took action today.
RETHINKING OUR OWN CAPABILITIES
I have a quote taped to my kitchen cabinet that is a modified version of one first penned by Thomas Jefferson. It’s a bit tattered because it’s been there a long time. It reads: “To get what we’ve never had, we must do what we’ve never done.” Thomas Jefferson’s version (on the next page), actually speaks to the necessity of being willing to do something new and unfamiliar. Without a doubt, willingness is the first step. The version taped to my cabinet reaches beyond willingness to the necessity of doing. In other words, taking that action by doing what you’ve never done before . . . in spite of the fear.
If you’ve never owned a rental property, you may be terrified by the idea. In fact, the very topic is known to generate a lot of fear among those who have no experience in the area. In this book, I attempt to help you move past the fear and show you how rental ownership could eliminate even greater financial worries later in life.
If you want something that you’ve never had, you must
be willing to do something you’ve never done.
THOMAS JEFFERSON
Founding Father of the United States (1743–1826)
Overcoming Fear of the Unknown
I live my life by a theory that I’ve privately (until the publication of this book!) referred to as “corridor theory.” My corridor theory has helped me forge ahead with different goals, in spite of not knowing all the answers, or even all the questions, in advance. Can you visualize a long corridor that leads toward your ultimate goal? Along this corridor, there are doors in front of you that you must open along the way to get to each next section of the corridor. There is no way to anticipate each new challenge that you might find behind each new door. In spite of the not-knowing, little by little you work your way down the corridor, opening doors as they present themselves. Eventually, you reach the end. You reach your goal!
If you let your fears stop you from opening the doors along the way, you never get to the end, where your prize is waiting. You must trust that you will be able to handle whatever challenge lies behind only the very next door in front of you. Don’t worry about all the doors that may or may not be in your path later on down the corridor. Only focus on the door that is directly in front of you, and have faith that as you go, and as you overcome each new challenge, the more equipped you will be to open the doors that follow.
If ye have faith nothing shall be impossible unto you.
MATTHEW 17:20
I offer the corridor theory as a visual reminder to remain calm and steadfast when working on a goal that is new to you. Calling upon this corridor theory has helped me countless times throughout my real estate investing, and in life.
Overcoming Other Mental Roadblocks
Another roadblock to action is the belief that we must first get out of debt. Nothing could be further from the truth. Don’t wait until you are out of bad debt to start creating good debt: this might never happen. Instead, create good debt to help you pay off your bad debt by creating a lifelong, potentially appreciating asset, one that you eventually own free and clear.
Also, don’t let yourself be a victim to perceived lack of start-up capital. There is no reason to let this stand in your way. Check out chapter 7, “Borrowing a Chicken,” on generating cash without ownership. These income-generating moves are a terrific way to meet two goals at the same time: getting out of debt (or saving money), and developing some familiarity with making money through real estate. Furthermore, as you will see in chapter 8, you may find that you have more resources than you first thought.
Another barrier to taking action is a belief that you are not educated enough to get started. Granted, a certain degree of education is important, as discussed in the next section in this chapter, but there comes a point at which you must just get out and do it. You don’t want to fall into the trap of being a simple observer, or “tire kicker,” forever. This won’t get you any further ahead in life. In fact, the more tire kicking you do without making offers and going through with purchases, the worse off you will be in the future. This is because, later on, in addition to simply not having the financial options made possible by a rental property, you also will know deep down that it didn’t have to be this way. You may regret having not pushed through your fears.
There are a number of natural fears that scare people off from securing their first rental. If you are not careful, these fears could be paralyzing. Here are some of the top fears that you should expect to bubble up:
2. The tenant might not pay their rent.
3. The tenant will destroy my property.
4. I will get phone calls in the middle of the night.
5. I’ll be too busy to manage the property.
If you think your fears might be significant enough to prevent you from taking necessary action, remember that a good property management company can eliminate many of the fears. (See the R.O.R.E. Blueprint for Success: A Step-by-Step Companion Guide at www.GetaChicken.com for tips on selecting an excellent and trustworthy property manager.) On the other hand, some fears might be legitimate red flags that should be taken seriously. Do your homework as you look at properties, and walk away from any properties with legitimate issues (financial, legal/title, zoning, structural, major cosmetic, etc.). Again, see the R.O.R.E. Blueprint for Success: A Step-by-Step Companion Guide on evaluating and inspecting properties.
Do not wait; the time will never be “just right.” Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.
NAPOLEON HILL
I can’t claim that I was without fear when I bought my first rental. You will probably have some fear as well. Keep in mind that you should simply expect a certain degree of fear along every step of the way. With this expectation in mind, you won’t be surprised by it when it hits you in the face. Nor will you feel the need to back out of a deal that could have been your saving grace in retirement had you gone through with it. Again, just be smart about it. Go over the numbers; bounce them off of professionals or experienced real estate investors whom you trust; expect some fear; and if the property continues to make sense, keep moving forward in a positive, results-oriented direction.
BUILDING YOUR KNOWLEDGE
The number one person with the greatest vested interest in your financial future is . . . (drumroll) . . . you! This means that you must be the one to take the reins. This will entail educating yourself, educating yourself some more, and then taking action.
I recommend starting with free resources. If you want to start online, check out the highly reputable website on landlording and property management called www.biggerpockets.com. In terms of books, I’ve shared my favorites in Online Appendix C, Recommended Reading and Other Resources, at www.GetaChicken.com. You can also explore your local library offerings and go to a local real estate–investor club meeting. Club meetings are a great way to learn from the experiences of others and to meet people with similar goals and aspirations. (As a side note to all the ladies in the house, many cities also have female-specific real estate investing clubs.) You can find experienced investors within these clubs who can help you analyze deals before you purchase. To find these clubs, simply google “real estate investment clubs” or look them up on a networking site like www.meetup.org.
Live as if you were to die tomorrow.
Learn as if you were to live forever.
MAHATMA GANDHI
Leader of the Indian independence movement and the inspiration for nonviolent civil rights movements worldwide (1869–1948)
FINDING SUPPORT
Children need to know that you believe in them. As adults, we need that, too. And since you are the grown-up in this situation, you are the one who must take control of believing in yourself. To do this, it’s essential that you funnel positive messages to your own mind constantly. If you have positive, supportive adults within your own personal sphere, all the better.
If you feel that you are lacking in this area, find people who understand your various life goals and can support you along the way. As I mentioned in the previous section, attending local real estate–investor club meetings is an excellent and quite natural place to start. And yet positive, proactive people can be found just about anywhere. You could decide to meet regularly with a friend or a small group of friends who are working toward their own personal goals, whatever they may be. You can each be a support or accountability partner to one another.
Better yet, find a buddy or put together a small group of friends who are also interested in protecting or even thriving in their golden years. You can work together through the R.O.R.E. Blueprint for Success: A Step-by-Step Companion Guide available at www.GetaChicken.com. You can help each other stay motivated. You can evaluate potential deals together. You might even end up partnering on a property. After all, owning half a rental is certainly a fine place to start. It’s still infinitely more than owning nothing. Plus, the experience that this affords is incredibly valuable. If you decide to buy a second property, it will be that much easier for you.
Becoming self-sufficient doesn’t mean doing it all on your own. It simply means being the conductor of your own orchestra. From time to time, you will most likely need to employ various experts across a range of different areas, such as:
A real estate agent
A mortgage broker (one who can get you the best rates)
A title company or real estate attorney
A tax accountant (CPA) who is familiar with real estate investing
A good home inspector (one who will be thorough and take his or her time walking you through the house)
An insurance company (for both homeowner’s insurance policy and a landlord “umbrella” general liability policy)
A handyman who is honest and can tackle most issues and can be available on short notice
A property manager (optional)
It is best to find these people through word of mouth. Other landlords and investors are probably the best resource. Take the time to interview these professionals and ask for references so you can lower your chances of discovering the hard way that they’re no good. You may want to steer clear of hiring friends or relatives, because if things don’t go as they should, it could be difficult or awkward to confront them and potentially destructive to your goals, the relationship, or both.
Sources of Bad Advice
You certainly wouldn’t look for legal advice from your plumber. And you wouldn’t seek plumbing advice from your lawyer. (Even though each might feel inclined to dish out such advice in casual conversation!) When it comes to buying and managing rental properties, it is amazing how many people love to share their opinions, even when they have no experience at all on the subject. Here are three reasons you should be careful when you receive such advice.
First, anyone who is not investing in real estate for the long term themselves simply has no business providing guidance on the subject. Advice is most relevant from those who can speak from personal experience. Rather than accepting advice based on your friend’s friend’s experience (or your friend’s friend’s friend!), get that individual’s phone number and talk to him or her yourself. There is probably a good amount of wisdom you can gain—both negative and positive—by having an actual conversation with that person.
The second reason not to take advice from those who are not long-term real estate investors is because there is a ton of unwarranted fear circulating on this subject. Yes, there are challenges, and yes, it involves work at times; however, we learn from the challenges and we benefit from the work in the long run. The future payoff, in terms of owning an income-producing asset, is unbeatable. Again, instead of indulging the fears of those who are inexperienced, seek out wisdom from those who are.
Even though misery loves company, there is nothing more miserable than settling for misery just because everyone else has done the same.
K. KAI ANDERSON
The third reason is simple. How dare they squash your dreams and goals!?! Don’t allow them to do this to you. Nothing is more depressing than seeing someone’s ambition or passion in any area of life squelched by a naysayer. And when it comes to securing your future economic needs by converting an existing home into a rental, or purchasing a new rental, the long-term consequences of not taking action could be dire. If this person is your spouse, encourage them to read this book with you from the beginning. (My wife was very skeptical of real estate until she began seeing that it meant we will actually retire one day.)
As you begin opening up the conversation beyond your inner circle of close family and friends, you will discover many individuals across every walk of life who own rental property. You’ll also find people who used to own rental property. You’ll notice that some of these former owners wish they’d stayed in the game. Others may be glad to be out; however, I’m not sure they will maintain this opinion in their older years when they are still working, or as they chip away at a visibly shrinking nest egg. The takeaway here is that everyone will have their own recommendations, based on their own unique set of experiences. The truth is, you can learn from them all.
Beware of Scams!
There are many real estate–investing classes, programs, seminars, coaching lessons, and even “boot camps” out there. Many are legitimate, but just as many may be either total scams or simply hyper-expensive for what they are worth. This section aims to help you sort out the lemons from the sweet oranges. I, and many people I know, have benefited from a little hand-holding when getting started in real estate. However, you want to stay away from courses that smell like fish. They could burn you financially and destroy your faith in real estate investing.
First, let’s look at one way in which a common training scam works. Using radio, television, postcards, Google Ads, or even the Goodyear Blimp, an instructor or company offers a free introductory class to the public. Their hope is that you will later enroll in their follow-up course, at cost, sometimes substantial cost. Note that this is not a red flag in and of itself. This is simply a form of marketing. On the other hand, if you are taking a free (or even paid) introductory course and the instructor starts trying to “empower you” by having you contact your credit card company to raise your credit limit, then you are most likely sitting in front of a scam artist. At this point, I would get out of there as quickly as possible. You can be sure that, toward the end of the session, the instructor will start dropping hints that you should pay for an expensive follow-up course with your credit card, while attempting to reassure you that the results of the course will far outweigh its cost.
When I was getting started in real estate, I would never pass up a free training session. This means that I’ve been witness to many courses, and spiels for courses, some seemingly legitimate and others downright fishy, with price tags ranging from a couple of hundred bucks to more than $30,000! Regrettably, I did end up purchasing a couple of products that were grossly overpriced for what I received. However, and thankfully, I did not fall prey to the most egregious of all scam attempts that I witnessed. I had enrolled in a free two-day seminar sponsored by the “Enlightened Wealth Institute.” It sounded pretty awesome at the time. It also seemed legit, given that a best-selling author’s name was attached to it. Indeed, the first day was packed with information! Our homework that evening consisted of a few items, including contacting our credit card companies to request that our credit limits be raised. The second day involved a hard sell for a course priced at over $30,000! They claimed we would make our money back within the first couple of months. You can now find countless reviews and personal stories on sites like Bigger Pockets and the Ripoff Report of how this company cheated people out of thousands of dollars and sometimes even people’s entire life savings.2,3,4,5
In her e-book The Guru Manifesto, Vena Jones-Cox, a seasoned investor and past president of the Cincinnati Real Estate Investors’ Association (REIA), the Ohio REIA, and the National REIA, provides additional tips for sorting out the legitimate courses from the worthless ones.6 For instance, if the refund policy is the mere three-day minimum that is required by most states, then do not purchase the product. Legitimate courses will have refund policies that are at least thirty days or, in some cases, even unlimited. Legitimate instructors stand by their product. Scam artists, however, bet on your not opening up, or otherwise initiating, the course within the first three days, leaving you stuck with a rotten apple and an expired refund policy.
Another red flag is a training program—and its table of contents—that are impossible to check out before you purchase. In Vena Jones-Cox’s own words, “If you can’t view the contents of the course because they’re online, or because it’s shrink-wrapped, be especially careful that the return policy is generous, and that you understand any ‘gotchas’ in that policy.”
Diligence is the mother of good fortune.
BENJAMIN DISRAELI
Two-time British Prime Minister (1804–1881)
Use common sense. If something seems too good to be true, it probably is, even if it is connected to a celebrity or well-known author. Also, if it seems too expensive for your personal budget, it probably is. It is best to avoid purchasing a seminar on the spot. The speakers do a phenomenal job of hyping you up. They usually suggest that their “low price” is only available for a limited time. If you are really tempted, and not wanting to lose a great deal, do some quick online research on your phone. Google the name of the presenter and the name of the course with the word “scam” or “complaints” to see if anything pops up. However, keep in mind that this method is not foolproof. Some legitimate courses have had their reputations tarnished by a couple of disgruntled individuals, while other dishonest courses have continued conning people out of their hard-earned money by simply changing their business name.
To summarize, you can often identify fraudulent real estate courses from the following three questions:
1. Did the instructor suggest raising your credit limit and/or paying with a credit card?
2. Did the course fail to offer a money-back guarantee of at least thirty days?
3. Are the course and its table of contents impossible to view prior to purchase?
If you are considering a training program, and if the answer is “no” to each of the above three questions, and if you can afford it within your current budget, then you just might have a legitimate course for you. Legitimate courses can be well worth their money. For example, I was very happy with the in-person approach of the bricks-and-mortar Investors United™ School of Real Estate Investing in Baltimore, Maryland. You can also find courses through your local real estate–investor association meetings and through the online discussion forums at www.BiggerPockets.com. Investor clubs can be good sources for finding high-quality training programs, since most clubs vet the courses before sharing them with their members. Finally, investor clubs and Bigger Pockets can be valuable resources, in and of themselves, because of human interaction (both in-person and online) with other individuals who genuinely want to share knowledge with no strings attached.