But the rewards are high, both personally and financially.
The most advanced financial advice released through mainstream media is usually save 10% of your salary and diversify with financial assets.
We still haven’t found anyone who has created some real wealth (several million starting from scratch) that way. Are we saying it’s not possible? Yeah, I guess we are.
Even the great Warren Buffet bought (and still buys) controlling interest in many of the companies he invested in. That’s being an active investor.
If you decide to go down the path less traveled and invest in some real estate you own and manage directly (or purchase a controlling interest in a small business) here are the top 10 things you’ll learn:
1. Self Confidence – Hands down the most important skill in dealing with possible tenants, investors and advisors (banking or otherwise). Beginners often feel that they have to know all the answers, you don’t.
After a few years you become extremely unafraid and realize that telling people that you don’t know something can be more valuable than fabricating an answer.
I now believe this only comes with the self confidence developed from years of taking ownership of problems as they pop up and handling them successfully.
Here’s a shocking quote from a convicted mafia felon that summarizes things nicely:
“I never lie to any man because I don’t fear anyone.
The only time you lie is when you are afraid.”
2. Understanding of The Market – When you are an active investor you automatically become more aware of interest rates, inflation and the overall health of the economy. You don’t need ticker symbols streaming across your desktop but you begin to get a feel for how the market as a whole behaves. Something not taught in school.
3. Above Average Communication Skills – After a few years of dealing with lawyers, accountants and tenants in your properties you learn the skill of clear communication. If you’re vague about anything you can safely assume your tenant heard what they wanted to hear.
Example, “Are you able to pay this month’s rent?” should be “Are you able to pay this month’s rent today? If not, when exactly will you be able to and why?”
4. Immunity to Criticism – If you become an active investor, whether by buying a business or investing in real estate you’ll need a super thick skin. And if you don’t have one to begin with you’ll develop one. Trust us! Everyone will be offering you advice on why what it is you are doing is wrong.
Do this: Ask them if they have EVER done what you are doing. That usually puts an end to things.
We have a friend who has been telling us that it’s not the right time to invest in real estate. The catch? He’s been telling us this since 1998! He missed the greatest real estate boom in history because he doesn’t look at the big picture. I’m assuming he’s now saying it’s still not the right time to buy. Sheesh. I guess there never will be.
5. Resourcefulness – Becoming an active investor means you’ll be able to come up with financing when others can’t. You’ll develop the unique ability to not accept “no” for an answer and call 15 other mortgage brokers until you find one that can get the job done.
This applies to advertising, placing tenants, dealing with issues at closing etc…
You end up becoming the person that people turn to when things just must get done.
6. A Strong Network – You will end up finding other people doing what it is that you do. And some of these will become life long friends. Action oriented people are magically attracted to other action takers. Before long you’ll have an amazing team of contacts that will come in useful for unexpected events that pop up. Invaluable.
7. High Stress Tolerance – Things will go wrong even with the best plans, properties and people. But your ability to deal with problems will go up, way up. Things that bothered you last year won’t even make you blink next year.
We’ve actually found something interesting:
If you keep creating bigger and bigger problems for yourself the smaller ones seem to just take care of themselves. There’s a universal principle in that somewhere, we’re not sure what it is though!
8. “Spidey Sense” – You’ll meet a lot of fantastic people while investing and some of them will try and take advantage of you. And until you’ve been burned once, you may not even see it coming. But after it happens you’re able to spot another unscrupulous soul a mile away. It’s a great ‘super power’ to have.
9. A Mission For Your Life – OK, this one sounds a little crazy but it can be true. You end up stumbling into something that really excites you and once you get good at it you’ll want to dedicate yourself to it.
10. Freedom – Ah, there it is. After you take on the responsibility of creating your own wealth you will not only gain a certain level of freedom but you also gain the independence to really live life on your own terms. Isn’t that what it’s all about anyway?
Your Life. Your Terms!