Why financial health is just as important as all other parts of your life.
Financial health means educating yourself on how money works, it means understanding the importance of saving (delayed gratification) and what it means to slow things down for a better and greater financial outcome.
As a real estate investor, understanding the 3 stages of real estate investing is very crucial and difficult at the same time. The first stage of investing involves saving up your own money this could mean saving up from their W2, other investments or wholesaling (wholesaling means that I am essentially buying a house and before any renovations has been done, I sell the home to another investor with enough margins for me to make a slim amount while the other investor makes a bigger profit).
The next stage of Real Estate investing means that you have finally saved up your money and now you have options. What should you do with your money, there are a couple of options within Real Estate investing. 1. You can do Flip projects to increase your money reserve after renovating a home. 2. You can lend your money to other investors for an average of 10-12% return on their money for 6-12 months. The 3rd option is to do buy and holds, this can range from single family homes to multi family homes. The 4th option is my favorite, this involves buying a house full cash without taking out a mortgage, the next step is to rehab the house, rent it out, refinance and take all your initial capital back out. This will essentially allow you to recycle your money over and over but keep in mind of the dangers of this. If the housing market tanks, you will be overleveraged if your tenant rents do not cover your current mortgage expenses. This is one of the best ways to grow but also one of the more riskier strategies.
The final stage of Real Estate investing is maintaining a healthy diversified portfolio across different spectrums, I believe that it is very important to have investment properties across different parts of the U.S. Each state’s economy and financial outlook are different. It’s safer in my opinion to spread your investments around. There are other areas to explore as well in Real Estate, you could become a hard or private money investor to other investors, this means that you will be lending them project for their varies projects (flipping, syndications, notes). There are also notes investing which means that you assume the role of the person or entity paid by the person who owes the loan. However you think best suites you and your needs, the options are limitless.
But before any of this happens, you have to gain knowledge of your financial understanding first. This is a subjective topic since everyone is different. Everyone grows at their own pace and will come into their own realization at different paces. The desire to change and grow usually comes from their circumstances, it could be that this person have increased more financial obligations through a growing family, family emergencies or they could hate their careers, jobs, regardless of what the situation is. This could all contribute to this person’s driven to reach financial understanding and make investments into their own knowledge. The most important takeaway is to really know yourself, always take the time to reflect at different stages of your life. This will continuously play a role in your own personal development. I was told before that your business cannot outgrow you, you have to continue to grow if you want to take your business to new heights.