The Addingham Project

Even in a hot market, we came across a clearly distressed single family home in dire need of some TLC after a failed attempt by DIYer/flipper.

It was very evident by the lengthy list of issues stemming from poor handyman work throughout this house to include: poorly laid laminate flooring, sloppy int/ext painting, uneven flooring, hazardous electrical, and no working HVAC system just to name a few. 

Addingham offered a home with great bones in a great school district ideal for families to be close to the military base and commercial centers in Fayetteville.

Of course, no NC project is complete without removing a ceiling fan from the kitchen!

  • Single Family Home in a Great School District
  • 3 Bed / 2 Bath; 1400 sq. ft.
  • Fenced-in Backyard
  • Attached Garage

Improvements

  • Complete HVAC System
  • LVP
  • Int/Exterior Paint
  • New Cabinetry and Vanities
  • Granite Countertops
  • Updated Light Fixtures (Recessed, Fans, Flood Lights, etc.)
  • Electrical wiring to code
  • PEX Plumbing
  • Moen/Delta Plumbing Fixtures
  • RING Security System w/ Ext. Cameras

Surprise Real Estate Journeys​

Bidding on investment properties is always tricky, especially in our highly competitive market which benefits heavily from the densest US military base in the continental United States.

We put in the highest and best offer with a slightly over asking offer with no walk-through. We don’t recommend ever bidding blindly on offers, but after reviewing photos and crunching numbers we assessed the risk to low to moderate. Once under contract, we conducted a walk-through and the initial assessment consisted of focusing on new doors, windows, some HVAC, and simply cosmetic work. We knew it was a failed flip right away and expected the worst later.

The Addingham project took longer than our original plan of a 6 week RENO. After approx. 9 weeks of fixing issues likely created by the seller and making all updates, we breathed new life into Addingham as a great house for the next family ready to move in.

Warning Signs of a Flipper Gone Wrong!

Partially completed laminate/hardwood flooring with uneven sub-floor. Watch out for big peaks and valleys in sub-floors, this will almost always destroy the life of any flooring material.

Broken HVAC, Summer in the South, and No Power During Diligence. While under contract, due diligence affords the buyer to assess the property for any major issues to address prior to close. The seller had all utilities off with no way of assessing water, electrical, or other mechanicals. Utilities are required to be on as defined by any contract.

However, in these situations, you must ask your…”Do I risk losing the deal/prolong the process over something simple like turning on the utilities.” Get them to turn the utilities, inspect the property then submit a breakdown of issues with a proposal to amend the agreed upon purchase price. 

 

Electrical wiring, monkey fists of electrical tape, no junction boxes. In these instances, hire a licensed and insured electrician. building code does not permit wiring/junction points to be outside of a junction box. Hire the electrician to save your asset from going up in smoke. 

The Appraisal.

No BRRRR is complete without a cash-out REFI. When using the BRRRR method, the refinance is critical in continuing the process for the next project. We made sure everything was wired tight with Addingham before initiating the process to escape our Fix/Flip Loan used for the acquisition of Addingham. 

Our market research indicated the surrounding area met all of the criteria we desire: stable housing, high demand, abundance of recent sales/rentals, mixture of distressed/updated properties, all with similar square footage.

The only negative on our appraisal came in the form of our square footage, about 100 sq. ft smaller than advertised at the purchase. Always do your measurements! We missed out on almost $15K which translated into almost $11,000 on the cash-out refinance! Ouch! 

Not every deal is a home-run, but luckily the rental market is strong to provide enough cash flow to pull out all invested funds within the first 2 years.

The cash-out refinance on this deal is being rolled into our next project. An off market SUBTO/Owner-financing deal with a major renovation. Check back in the spring for the southern colonial on Rehoboth!

Rim Rd Makeover

In any hot real estate market, finding a bargain is almost impossible…especially on the MLS. This diamond in the rough was distressed, run-down, and neglected for years. The seller had a headache and simply wanted to offload the headache and cut their losses. In addition to the need of a massive overhaul, this property came with a tenant on a month-to-month lease.

Reno Basics: New paint, New Flooring preferably LVP for resiliency, new fixtures, new appliances…fix it now, don’t wait for problems later!

This property brought challenges to include a difficult tenant, a tight budget, and a full renovation. Here we break down each one of those topics and more.

Buy

Acquired Rim Rd from the MLS with a bid slightly over asking price. 116K to close

Rehab

This distressed house needed updates and plenty of TLC. All in Reno (including sweat equity) cost ~$22K.

Refinance

Property acquired with a Fix/Flip, we chose a portfolio REFI with 2 other properties for our pivot to a 30-year loan. The hot market and inflation increased the amount of equity in multiple properties.

Rent

Comparative Market Analysis gave us our baseline of $1200/month. The same house was $900/month pre-reno. DSCR is roughly 1.33 (1200 rent/900 PTI)

Repeat

Once Refinance is complete, it’s time to find another property and start the cycle all over again! Rim road happened after our last successful BRRRR at Bluffview.

Unruly Tenants

Whether you have one or two, or especially 100 units in your portfolio, problematic tenants are almost inevitable. Being considerate of others while operating any business is a tight-rope balancing act, but is manageable. It’s extremely important to plan for worst-case scenarios and have a plan in place in managing such situations. Check out our article on planning. It’s even more important to understand when it’s acceptable to be understanding of the human plight. We approached this situation with full transparency and attempted to work a transition for the tenant. However, the tenant had other ideas even if they appeared to be in agreement from the beginning.

After closing on the purchase of the property, the tenant neglected to payout any rent and complained when we issued them a 40+ day termination of lease notification. Regardless, they moved a week prior to the notice date so we could start the renovation. Some key notes: study state/area laws on evictions, consult with an attorney, plan for loss of rents, anticipate less than ideal condition of the rental, and consider the use of a collection agency.

  • State/Local Laws

    States and jurisdictions will impose rules and requirements for notification to properly evict tenants. In NC, you cannot simply change locks and bar tenants from the property. NCCourts.gov is a great website to start.

  • Loss of Rents

    Anticipating for loss of rents is vital and a requirement for most new conventional loans in the first 3 - 6 months. The BRRRR strategy requires a vacancy period to finish the renovation, so a key goal is always convincing the old tenant to leave sooner rather than later.

  • Loss of Security Deposit

    Deposits are collected to cover a range of bills/items from failure to pay rent, damage done to the property beyond normal wear and tear, and other unpaid bills associated with the premise. Click to see a breakdown of NC Security Deposit Laws.

As with any frugal investor, budgets are always tight. However, with the dangerous combination of a highly-competitive market and lack of inventory, the renovation budget is vital to reoccurring success. Regardless of your investing philosophy such as the 1% rule or BRRRR method or even a bloated short term rental market, there is a need to remain true to the numbers 

A quick snapshot of numbers on this project placed the budget around $25K. The cash-out REFI @ 75% After Rehab Value (ARV) will leave approx. $5K-$7K of investment in the property with net annual income of $3600. All investments should be out in 18-24 months.

As with any one of our projects, the renovation is the most exciting part. Rim road needed the usual improvements: paint, flooring, cabinets, vanities, appliances, and finishes. For this project we replaced the front and back doors, windows, garage door opener, fencing, and some decking. We sub-contracted plumbing, painting, flooring, and granite to save overall costs of the project.

We always prioritize security and comfort with our projects. The old fence had a ton of issues due to age, poor placement, and poor construction. The decking rotted from years of coverage from the sun by trees and deadfall of mostly pine straw. All of which is commonplace in the sandhills of NC. The prior tenant destroyed the frame of the front door and the sliding back door barely slid open and shut. Both doors were an absolute must and top of the list for replacing. 

The overall timeline ran shy of 8 weeks with the biggest lag around sub-contractors painting, flooring, and granite counter tops. As with any renovation anticipate for hiccups and delays. 

Here is the

In true BRRRR fashion, we identified the ARV and CMA for rents before we acquired the property which made this house compelling. In volatile markets, we don’t recommend overbidding just to acquire the property, but run your numbers. This scenario we overbid slightly and won. Ideal scenario is “All In” is less than 75% ARV. “All in” = Purchase Price + Reno Costs. The 75% ARV holds true to current Cash-Out Loan products from lenders. This project lost 2 months in the beginning with removing an old tenant and about 8 weeks for the renovation. Once market ready it took less than 24 hours to find an ideal tenant at the desired price point. We enjoyed this project and the result is a great property near commercial businesses in a quiet neighborhood. 

Look out for our next project as we keep the BRRRR cycle rolling!

Bluffview BRRRR

BRRRR on Bluffview

Buy, Rehab, Rent, Refinance, Repeat…this project embodied that very concept to the fullest!

If every RENO project could be like Bluffview, then building out a portfolio and crushing goals would be a piece of cake! We had a 6-week RENO goal with this project. It started with a smooth purchase of a tenant-occupied property and ended with a cozy and beautiful single family home in a great neighborhood!

After - Front View

Ending the Lease and Kick-Starting the Reno. The tenants communicated early they planned to move out shortly after closing. We felt this was perfect and it allowed us to do a renovation before the first 6 months of owning the property. The tenants turned over a house in desperate need of updates, new flooring, cabinets, appliances, and a fresh coat of paint….everywhere! After handing over a full security deposit to the tenant for the smooth move out, we kicked off the project with demolition.

The best part of this project was simply whitewashing the fireplace, new LVP, and applying a fresh coat of paint on all of the trim. Bluffview already had a solid canvas and just needed a little extra TLC. During the initial walk through it was hard to look past the 10-15 year old carpet, drab painting, and old light fixtures. Ultimately, with each update this house really came alive and turned into a fun and cozy single family home for anyone to enjoy.

We set a timeline of 6 weeks and fortunately had a military family waiting for completion to move right in. We felt the need to make sure everything was completed to the fullest, but always with the same high quality as any other project. Our perspective is to complete any RENO to the fullest so in a worst case scenario it is ready to be placed on the market and receive the highest and best offer possible. In a rental market near a large military base or in a bustling city this holds true as well. So before you think of short changing on quality, consider the pool of tenants you market towards, the amount of rent needed to cover your Debt-Service Coverage (DSC) ratio, and minimizing future maintenance.

Rental Market.
COVID taught us many things. Stable income for tenants is a must. Researching applications and references are just as important.
DSC Ratio.
For business entities (LLC), commercial lenders focus on DSC and Debt-to-Income Ratios. Aiming for 1.25 is important, meaning you will cash flow after paying your Payment, Taxes, insurance (PTI).
 
Maintenance Plan.
Enter any project by checking everything and make all improvements to last at least 10 years of routine use. Limit the number of future service calls by fixing everything during the renovation. Your tenants will likely take better care and management is simpler.

-Remove Appliances, Cabinets, Vanities, and an annoying ceiling fan in the kitchen

-Paint…everything, and whitewash the fireplace

-Granite Countertops, Custom Backsplash

-Fix the Deck!

-Brighten Up the House

-Old Ceiling Fans in Kitchens just don’t work!

-Recessed Lighting is easy, economic, and looks great

-Floor Prep is a must! Uneven floors will always create greater problems

-Electrical has to make sense, too many 3-ways/4-ways can be a nuisance

-Security Cameras/Systems provide so much comfort to both a tenant and landlord, don’t forget to add as a must!

-$500 – Demo Expenses

-$3400 – Exterior Paint

-$2000 – Lvl 0 Granite

-$2500 – Stainless Steel Appliances

-$500 – Interior Paint

-$2000 – Cabinets/Vanities

-$1700 – Update Plumbing/Fixtures

-$2200 – Flooring

-$750 – Security Systems/Cameras

-$750 – Lighting

-$1000 – Misc Repairs

Check Out the Before and Afters

Take a peek at this Reno Project!

Jefferson Single Family: Purchase and Reno During COVID

Before
After

The COVID-19 pandemic brought many challenges for this project from the initial acquisition to dealing with existing tenants. The property required a timely renovation after nearly 20 years of neglect, but the major obstacle was the existing tenant of 4 years. Immediately after acquiring the property, we talked to future plans with the tenant in which they discussed future plans of moving with timeline set. Immediately, we were concerned with displacing the family during this time, but both parents maintained their jobs.

Even with a 45 day notice, the tenant decided to not pay their last month of rent and neglected to fix any issues with the house. As an initial experience for tenant turnover and dealing with a month of no payments, we still pushed through to renovation right on schedule. This project focused on balancing contractors to do 95% of the project. Our budget threshold was set at $25K to include a new roof, new floors, interior paint, and upgraded kitchens/bathrooms.

Before - Kitchen
After - Kitchen
Before - Living Room

One bridge loan and one tenant later, we sat prepared for another renovation project. After getting estimates from various contractors both previously used and new ones, we settled on new contractors. In late summer 2020, we are still facing the top of the real estate cycle in the Fayetteville, NC area. This is highly likely due to Fort Bragg military base, but either way prices remain high and contractors aren’t short on work. With a 5 week reno timeline, we initiated reno.

We focus on renovations similar to fix and flippers. We do this to insure we maximize the appraisal during refinancing. This approach affords us to find the best tenants at the highest market rates. Walkthroughs are a breeze and tenants are typically motivated to have a practically brand-new house to call their own. This project we carried the same approach: Luxury Vinyl Planks throughout, carpets in the bedrooms, light gray wall paint, updated vanities and cabinets, and new fixtures throughout. The property easily will last the next 10 to 15 years with minimal maintenance. 

After - Living Room
After - Bathroom

Overall, the project went smooth. The flooring company worked seamlessly with the General Contractor of the project and met the project timeline. The modern update totally revamped the look and feel of the house and gave it the contemporary upgrade the house deserved.

After - Bathroom

The project exceeded our expectations and we knew from the beginning it would be a smooth project. With a hard deadline set to have it rented by 1 November, we placed Jefferson on the market and under lease in less than 5 days at the top of the market for rental rate. After a professional cleanup and professional pest control, the Jefferson Dr project looks to be a viable addition to our portfolio for the foreseeable future.

Before - Bedroom
After - Bedroom

Candlewood Pre-Foreclosure

The Candlewood Project was an exciting adventure in which we took on a troubled and neglected house, and with time and tons of energy we turned into a pretty cool home to live in.  

Front Exterior: Starting with the exterior, we first identified the hazard of 5 rather large Oak trees residing nearly on top of the house…they had to go!  Next we new the roof was either the original or well overdue for a replacement…thanks to a great local Sandhills NC crew – 3 Bros Roofing – it was done in a day and looks great.  Next we had a deteriorated driveway, sidewalk and need for front and rear patios…bring on the concrete! 

Front Exterior

The next much needed item was just general improvements of doors, windows, and cedar board/trim replacements. Originally there were two bedrooms with exterior doors and now stairs/porch. We then had an exposed crawlspace with a random board covering the entrance. We closed off the doors, and put in one exterior door off the new hallway. We add the concrete patio and slab in front of the crawlspace to reduce water and debris from pooling near the house. We chose Hardy panel over replacement cedar due to the price difference and provide a change in the overall appearance. During the process we improved the light fixtures and added a security camera for the back yard. Currently, we have a plan to do exterior paint in the spring, but overall the exterior is sealed up and ready to go!

CandlewoodRearExt
Rear Exterior

Living Room: For the living room, we removed the carpet and replaced it with Luxury Vinyl Planks (LVP). The faux double front door was replaced with a single front door with an oval window cutout. After those major improvements, we updated light fixtures and applied fresh coats of paint to the fire place, built-ins, walls, ceiling, and trim.

Before and After
Living Room

Kitchen: Everything in the original kitchen needed a good update, whether its the appliances, the cabinets, flooring, or paint. Naturally, we were up to the task. Additionally we added an over-the-range microwave, moved the refrigerator in order to create some much need cabinet space. We added a backsplash to tie it altogether.

Before and After
Kitchen

First Floor Bathroom: The downstairs bathroom proved to be the biggest challenge of this project. Due to significant water damage we gutted the bathroom, replaced floor joists as needed, replaced CPVC plumbing with PEX tubing, moved the electric Hot Water Tank to the garage, replaced sub-floor, and gave the heart of the house a much needed face lift. Now, the once outdated and impractical bathroom/laundry room is ready for a small family.

Before and After
Downstairs Bathroom

Staircase and Loft Improvements: The original master suite loft concept seemed outdated and lacked significant privacy for any prospective tenant. We closed off the room, removed the carpet on the stairs, and put a fresh coat of paint on the staircase.

Before and After
Staircase

Living Room: The very first room in the house and it was perhaps one of the more dismal and depressing rooms. With the enhancement of the hallway to the rear exterior, the overall flow of the house through the living room makes for an exciting and practical living space for any family. We focused on new flooring, paint, fixtures, and necessary repairs. Not pictured is the built-in shelving that shares a wall with the kitchen. The living room has two accent walls with an actual wood fireplace and the built-in shelving.

Before and After
Living Room

Hallway Addition: This house required you to walk through either of the two first floor bedrooms in order to access the backyard from the living room. We moved the main water shut off to a convenient spot along the wall and reframed a hallway with a single exit to the back yard. We later closed off the original exterior doors and insured both bedrooms had closets built. The location where the hallway is now was once utilized by two adjacent closets for the first floor bedrooms.

Before and After
Hallway

Master Suite: The Master Suite has ample space for bedroom with a nook area. Additionally there is a walk-in closet and a full bathroom. For the bedroom area we closed off the loft and gave the room a much needed makeover.

Before and After
Upstairs Master Suite

Master Bathroom: The Walk-In Closet and Vanity received much needed improvements. The original drab wooden shelf/wire shelf combination in the walk-in made the closet feel dark and cold. One would argue that is the case for the entire house and the master bathroom was no exception. In fact, the master bathroom was by far the most miserable room in the house. It suffered from water damage issues and required a full makeover. Now the entire space feels lighter and more inviting.

Before and After
Upstairs Bathroom
Before and After
Upstairs Bathroom

This project was our first true test in planning, purchasing, and executing the remodel of a single-family home. We spent long hours working the project, reaching out to various contractors for bids/quotes, and insuring we made the most out of our limited budget. In the end we experienced our share of ups and down, whether it was the unforeseen issues or expenses or the fact our timeline was not what we originally planned.

We enjoyed the journey. We encourage others to do the same. We wanted to test ourselves and gain some experience. I would say we certainly accomplished just that. This project is a wrap minus a fresh exterior paint job in the spring time. Now it’s just waiting for someone to call it home!

Find the Money. Make The Offer.

There are varying opinions and schools of thought when it comes to funding any project. I am going to discuss the approach I am taking for the first one…Conventional Funding.  As of now, I have gathered information on various financing options, whether it is conventional, hard money, portfolio, it doesn’t matter. My goal is to identify my level of affordability before placing offers.  Based on cash on hand, I know I have the 25% down required for a $125K-150K purchase.  This information along lets me know exactly what market I should look into before finding a property.  I know my target range and it sits well in my business plan for marketing areas.  If this criteria wasn’t met then I would continue to save funds to reach this goal.

For lenders that serve conformed loans, which are in line with industry guidelines set by Fannie Mae and Freddie Mac, it’s important to understand friction points in the loan application process. These rules are strict due to the issues that arose during the sub-prime mortgage issues in 2008. This situation gets complicated when the property targeted is no longer a single-family house. So if you are like me and choose a duplex, 3-unit, or 4-unit property, the simplicity of a conventional loan for investment property comes with additional interest and inquiries from the bank.  They are likely to tack on penalties, restrictions, and insure you have more liquid assets.

At the minimum most lenders want assured that you have proof of funds for the following:

  • 25% down payment
  • Closing costs (not covered by seller)
  • 3-6 month cash reserves
  • Debt-to-income ratio below 43% for qualified buyer

Note:  I don’t bring up credit score, because you should focus to be in the mid to high 700’s. I highly recommend focusing on building your own personal credit before going any further.  Higher credit scores bring instant credibility with any lender and will make them work harder for you.  Just like someday your hard money will work harder for you. 

Debit to Income Ratio

“Don’t live beyond your means.  Don’t buy more than you can pay for.  Don’t expect to get rich quick.  And don’t confuse salesmen for friends or advisers.”

-Charley Reese

Your debt-to-income ratio should be affected predominantly by current mortgages and be mindful banks are required to adjust the ratio based on number of family members in the house. At the end of the day, the bank wants to make sure you can make the payments of the investment property and your critical bills without starving. It is good to know that the new mortgage is added in this valuation. If the income from current tenants in the new property is required, it will require additional paperwork provided by the seller to substantiate steady occupancy in order for underwriters to approve based on the new debt-to-income ratio. This valuation is much easier in larger multi-family houses because there are typically extensive income/expense statements associated with those properties.

Without throwing shade at specific lenders, I will say that I reached out to a couple big name mortgage lenders in hopes of receiving an investment loan. I received pre-approvals, but then I found a 3-unit which was no longer supported by the same investment property. After working with my good friend and Real Estate Broker, he and his wife (Real Estate Team) provided contact information for local mortgage lenders. I immediately reached out to one and noticed a significant shift in the personal approach to the conversation. The local lender explained the minutia that halted the big company, but found a way to get the pre-approval letter I needed to move forward with my offer.

The Offer

The offer is for a 3-unit property. Two tenants occupied and one vacancy with some tenant roll information to understand current net income and possible income with full occupancy. After walking the property, I have identified three key areas to raise appraisal value (equity) in the property. At least one area is a maintenance concern which justifies a reduced offer price of $10,000 below asking. Additionally, the property has sat on the market for nearly a year which for most is concerning, but for me isn’t based on potential improvements and increased cash flow. So the current offer is focused on the Seller knowing these items:

  • conventional loan
  • 25% down
  • Seller provides max 2% closing costs
  • $1,000 Escrow

The offer requires working with the seller/seller agent to insure the purchase agreement has the appropriate information and the right format. For instance, this property the seller “prefers” a commercial agreement over residential due to the level of detail in the document. However, due to the lender and loan type being used a residential agreement with additional provisions is the only way the offer can be submitted. Now let the negotiations begin!

Getting Started On The First Deal

Whether it’s a podcast, a book, an eager business-minded friend, or your own ambitions, the message seems abundantly clear – “Make the first deal, and don’t give in to the tough times.”

For most aspiring entrepreneurs, making the first deal is more than half the battle. I have found myself hoping for some luck in the form of a great deal to get me off and running, but luck isn’t reliable, dependable and lies outside of anyone’s “sphere of influence.”

Right now, I find myself saving in order to build up reserves and find more ways to leverage money to meet the demands of a 25% down payment and up to 20K in rehab costs. All of this with the BRRRR (Buy, Rehab, Rent, Refi, Repeat) strategy in mind, a means to leverage banks to Refi and push all of those funds back my way for property number 2.

So how do I plan to leverage my own money? Two ways, the first is with a loan on a Thrift Savings Plan (Military speak for 401K) that holds a 2.5% interest rate with a 5 year pay off period. This account has received a steady 6% input over the span of 10 years. The second is with a good ole’ fashion HELOC (Home Equity Line of Credit) on my primary residence. I have nearly 5 years of equity on a VA loan in a neighborhood that provided already up to 50K in appreciation based on the comps locally.

Now for possible deals. It is spring, near a major military installation, so there are more homes on the market than the winter months. The number of foreclosures continue to populate the MLS and my broker continues to encourage me with the comps on properties of interest. For my first deal I am torn between the slow cash flow route of a Single Family Home (SFH) with moderate repairs or a Duplex or a possible Triplex in a less popular area.

For the first deal I am concentrating on the following:

  • Cash Flow (Goal: $300 a month per unit)
  • Appreciation through Rehab/Land Value
  • All-in ARV < 75-85% for Cash Out Refi (After Rehab Value)

In the coming days, I plan to visit 3-5 local banks and compare small-business banking options, escrow services, and mortgage products. Be mindful, that I have a full-time job (not Real Estate related), so everything is orchestrated in my off-time. These engagements will hopefully contribute to my current plan, or educate myself on areas that need improvement in the current business plan. And naturally, a follow-on meeting with my CPA to discuss tax implications, breaks, etc.

I remain in line with my main goals by focusing on establishing systems and relationships with SMEs (Subject Matter Experts): Broker, CPA, Banker. One of the key tasks on my list is to find a solid Real Estate Attorney in order to better understand local laws for contracts, leases, etc.

With each passing week, I reexamine each one of these incremental steps taken. The original plan has seen subtle tweaks, but we are ever so closer to pulling the trigger on our first deal.

Note: This are simple micro steps needed to fulfill my macro goals. Each little task is a micro goal, but these micro goals are well nested with my desired macros.

“Fail to Plan, Plan to Fail”

In the military this quote holds true as planning is the bedrock of any military operation. We all know that planning is only the beginning, butexecuting the plan is the key! Too often people fall in love with their plan and can’t adapt or the other extreme occurs in which the plan is dismissed from the very beginning. Before taking any major action, having a solid plan is important, but don’t fall prey to “Analysis Paralysis” into a steady state of inactivity.

Patience is a virtue, at the early onset of this adventure I forced friendly reminders to myself that this is a marathon and not a sprint. The intention is not to seek “millionaire status,” but to become financially independent. In order to seek that independence from the “rat race” of life is to have a plan, a means, and goals to pursue. The plan…

Of all the important pieces of my coveted plan, I emphasized a lot on education and self-improvement. There is a laundry list of Real Estate Investing and self-help books, podcasts, Youtube videos, etc in which we will be discussed in future posts. In an age of information, subject matter experts and people with experience are readily available to get started on your quest. I did just that. And here is how I approached my plan.

Step 1: Write your life goal. What is it that you truly seek? Do you want to be financially independent within a certain number of years? Do you want to break away from your 9-5 work day to enjoy other things in life? Do you value wealth beyond currency and monetary value?

My Plan – My life goal is to achieve financial independence and the ability to leave more for my children. I want to focus energy on Real Estate investing because it is tangible and in my opinion one of the more exciting asset classes to invest in.

Step 2: Understand yourself better than anyone or anything else. My career in the military has emphasized this more than anything else whether it is through rigorous and arduous physical testing or battle of wits when emotionally and physically exhausted. I am not saying go on a “spirit quest” to know yourself better under extreme pressure, but simply highlighting the importance of knowing the “true you.” For example, are you introverted/extroverted, are you detail-oriented/abstract, etc. These tests are readily available on the internet, such as the Carl Jung/Isabel Briggs Myers’ test.

My PlanMy strengths reside in analytics, networking, discipline, and hard work approach to complex problems. I am mostly extroverted, externally stimulated, but razor focused when honed in on a task.

Step 3: Outline/Frame Your Strategy. Treat this is a brain storming session and fact-finding. Outlining or Framing your strategy in a way that makes sense to you initially, but be prepared to refine it for others to understand. This step is important as a backbone to your 1-minute “Elevator Pitch” or articulating the gist of your business. Further, it may highlight your own education shortfalls and weakness. I encourage to do an initial draft and seek out answers to your “information gaps” and then refine the outline. Start with a company statement and answer the “WHY” question for your business. Then write down your short/mid-term goals such as 2 and 5 year goals. You may want to write longer term goals, but may likely see your goals shift on an annual basis. Afterwards, focus on the tenets of your business: finances, management, acquisition, income streams, legal, etc.

My Plan – I followed this step by step approach over the span of 9 months (with a “work trip” in the middle). After I felt comfortable in my ability to convey my plan I sent it to my mentor for scrutiny. Since then I have reworked my plan several times to its present day status. I view this as a living document that will evolve as my business and reality involves. Like Bruce Lee once said, “Be formless. Shapeless. Like water.”

Step 4: Reflect and Educate. At this point information gaps will either be obvious or slowly illuminate. Whether it is lack of understanding of financing your projects, sourcing lead pools, interviewing contractors/property managers, or even seeking legal advice, these are all in support of laying a solid foundation of a longer adventure. Immerse yourself in education through reading, podcasts, videos, sitting with mentor(s), and network to fill those gaps. Remember to play to your strengths and seek others to assist with your weaknesses. You may not have enough time to fix your weaknesses, so focus a majority of your time on sharpening your strengths. So learn to leverage the help of others.

My Plan – I immersed myself in podcasts such as “Bigger Pockets” and “Passive Real Estate Income.” For building my financial acumen, I grew up listening and reading the advice of known entities such as Zig Zigler or Dave Ramsey. My educational philosophy is to remain open and well-rounded. If I can learn various techniques, understand, and exercise some or most then it will make me a better Real Estate Investor. And now for more cliches, it’s all about getting “more tools in your toolbox.”

The Bottom Line is that your plan is what you make of it and the output is only as good the inputs. Ultimately seize your fate, chase your goals, and grow in the process. Most people will say it comes down to making that first deal and simply taking action, but having a sound plan is vital to taking the right steps along this incredible journey.