Goal setting is an integral part of successfully investing in real estate. Most people do it in some way or another — but are you doing it effectively?
Effective goal setting will help guide you in navigating the complex world of real estate investment. Goal setting is very different and a far cry from making a list of things to do. I hate lists! They show me all the things that I can't do at one time and then feel bad about when I don't get them done in time! Do you know what happens then? We stop setting goals because they became lists and we start become haphazard practicers of any type of goal-setting techniques.
After all, real estate investing is a business that’s varied and, at times, unpredictable. The sheer number of options available to you can become downright paralyzing...unless you have a plan! And planning is all about good goal setting. So with that in mind, let's take a look at a few things.
Write down your real estate investment goals.
Simple. This is number one. Just get it down on paper. Why? Having a clear record of your goals means you can stay on track. It’s easy enough to say it’s all kept in your head, but without a concrete reminder of your goals, it’s easy to get side-tracked. But, simply writing them down is not good enough!
All of us know what CAN happen when we start something new like diving in head-first to setting some new goals. We head out to the Office Depot and pick up a brand new binder or notebook. It is always a nice notebook. We open it up and we write out our goals right there on page one. We put the date in the upper right corner, just like in school and we are super motivated. In order to make sure that we remember these goals and take good care of them, we want to put that binder or notebook into a safe place. So we go to a drawer that we know no one else is going to open and we put this binder/notebook right in that drawer.
Unfortunately, we forget that we don't ever look in this drawer either! So 12, 13 or 14 months down the road...long after we have forgotten about our goals list, we will get around to cleaning out that drawer and we find that binder. We open it up. We see those goals. We realize we are long past achieving those goals and not wanting a reminder that we didn't hit our goals, we tear out that page and immediately start to use it for our grocery list!
So just writing your goals down is the beginning. You need to post them everywhere so that you can see them. You need to remember what they are for and what you are trying to accomplish. You probably have some pretty grand ideas about where you want your investments to go — and that’s great! However, investors would do well to remember that their goals don't just need to be written down, they must be attainable!
Be detailed with both short-term and long-term goals.
Use specifics with your goals. Something as vague as “have money for a trip to Aruba” or “get rich” is unhelpful to you. Give yourself time frames and structure. Be detailed. Your sub-conscious mind thrives off you feeding it details. You tell yourself, "this is exactly what I want or exactly why I am doing this or exactly where I need to be" and your subconscious mind will go to work helping you get there. So you need to decide exactly the kind of real estate investor you want to be.
Being generic with your goals, both short and long-term will lead you to frustration and doubt. You may never know if you are close or not to your goals, because your goals are not specific enough for you to track measurement. Are you close? Are you far away? You don't know because a generic goal only lets you gauge whether or not you feel close and that is a dangerous place to be in goal setting.
Evaluate your resources realistically.
Don’t worry about what you could do if you had resources that you don’t have. That’s a waste of your time. When investing in real estate, you must make honest evaluations of your resources and limitations. That refers to your time as much as it does to your capital.
Biting off more than you can chew because you set a goal that you weren’t going to be able to meet in the first place will just end in disaster. If you don’t run into burnout with your investments, you’re likely to end up with a lighter wallet.
You can work up to bigger plans, but never use speculation and could-haves as a basis for goals setting. Use the here and now and make adjustments as you learn.
Focus on the right numbers.
Quality over quantity. You could have a fleet of investment properties, but if they aren’t providing you with positive cash flow, they’re no good to you. Two profitable properties are better than 20 that aren’t. Don’t worry about the size of your portfolio; worry about if you’re getting the most out of what you have.
Even more important is understanding and evaluating your options based on your needs. Lots of investors have set goals based on their desires and have purchased properties based on those desires. What would have been more appropriate for them would have been to buy based on what you as an investor bring to the table and making decisions based on what you need to accomplish your goals.
Lots of investors need properties. Lots of investors do not need more headaches in life! So buy based on how many headaches that investment brings to you when you own it. Buy with good partners and companies as well as services in mind. These are things that help you reach the outcome that your goals are set for!
It can be tempting to think that writing the goals down alone is enough, but you need to have a good, detailed plan of attack. What will you need to do immediately to move towards your goals? What about in the next six months? Think through how you want to achieve your goals — and do it.
Just don’t be afraid to make adjustments when things don’t go according to plan. Do some re-calculating and carry on — your real estate investment goals are still within reach.
How do you set achievable real estate investment goals? Share your strategy with us in the comments.