Building a Strong and Better Investment Mindset
I am coaching and consulting a Millennial to purchase his first investment in real estate property; his name is Alex.
If you have been listening to my podcast show you may have listened to a podcast episode titled; On the Move with Alex.
If you are a millennial or interested in purchasing your first investment real estate; give this podcast episode a listen.
On the Move with Alex; The Journey to Investment Real Estate
Coaching and consulting folks to purchase their first investment real estate property is very satisfying when “Mission Accomplished.”
I have coached several couples to purchase an investment property and when they receive their first rent cheque; this is when the true celebration begins.
As Alex and I work through the process of getting him closer to purchasing and renting his first investment real estate property I realized over the last couple of years I have been developing a duplicable process for purchasing and renting your first ever investment real estate property. ( Great news to share with you in the coming months)
I asked Alex to explain to me what he was finding the most essential element of the process and system we were using to get him started.
Alex said; “Rick that’s easy; it is how you have helped me with mindset.”
Alex went on to say; mindset is the first thing anyone who wants to get started in purchasing and renting their first investment property needs.
What is mindset? According to Wikipedia; Mindset is:
In decision theory and general systems theory, a mindset is a set of assumptions, methods, or notations held by one or more people or groups of people. A mindset can also be seen as incident of a person’s worldview or philosophy of life.
What is your mindset? Do you have the mindset to be a first-time investment real estate investor?
Let’s review your mindset and how this impacts you as a first-time investment real estate investor.
As this person overlooks the skyline of real estate, it is crucial for you as an individual to realize this skyline does not get built unless someone purchases the land; builds the properties, finds tenants to occupy the buildings and with the Mindset It Can Be Done.
There is such a small percentage of folks in North America that own investment real estate as part of their financial portfolio; the number is between 4% and 8% of North Americans own investment real estate.
The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes.
In my world of investment real estate I refer to the Harris Principle which states 20% of your funds effects 80% of the return on real estate investment. This principle requires you to change your mindset regarding investment real estate.
Let’s ask you the following question.
Why Are You Risking All of Your Money?
When it comes to investing most people put up 100% of the investment to earn a return on their money. Old Age Security, Mutual Funds, Stocks, Bonds, and many other investments; the government or wealth management companies want you to fund 100% of the investment, and then they promise you some return.
During the financial crisis 2008 most folks lost a ton of value in their investments. The performance of peoples’ investments was slow to recover but we have seen a long and healthy bull market; unfortunately over the last several days we saw much of the gains for 2018 disappear.
The markets are not for the faith of heart. The lack of control and volatility in the markets creates the bigger question is there a better way?
How do I get you to shift your mindset when it comes to investing and stop the madness of you putting your entire financial future; 100% in the hands of others?
The answer is simple: I need to introduce to an old friend; one that most of us have had a relationship with all of our adult lives. Who?
The Banks; They are Your Friends
Using a conventional mortgage in North America requires you to put up 20% of the purchase price of the investment property and the lending institution will provide you the 80% remaining balance.
You heard me correctly; you put up 20% of the investment funds and the lending institution puts up the balance. The incredible thing about this when you pay off the 80%; you own the property, and the financial lending institution does not have an equity stake in your property. If you purchase a property for $100,000; invested $20,000 as your investment stake and borrowed $80,000 and over the 25 or 30-year amortization you paid off the mortgage the entire value of the house is yours.
The Tenant’s Gift
Use this process to purchase your first investment real estate property and rent this property; the tenant over the 25 to 30 years of you owning the property makes your mortgage payment and pays off your entire mortgage; sweet!
Are You Ready to Build a Strong and Better Investment Mindset?
Ask Yourself the Following 4 Foundational Questions:
- Where is Your Investment Mindset at Now?
- Are You Ready to Take on the Mindset of a First Time Investment Real Estate Investor?
- Can you now see a different method of building your financial foundation and using the 20/80 investment real estate rule?
- What does your investment life’s skyline look like?
Let’s get started on your View?