Sometimes the size of what I’ve got makes me feel a little insecure. Ok I said it. And now that it’s out in the open I want to talk about this for a minute because I have a feeling that I am not the only one feeling this way.
The thing is that whenever I get in a group of real estate investors the question everyone always seems to ask is “How big is yours?” They just expect me to drop it out there for everyone to see and evaluate. Perhaps even more unsettling is they are going to judge it based on the size alone when they should realize size doesn’t actually matter.
This is a cheeky way of saying that the size of your real estate portfolio isn’t that important. And too many real estate investors get WAY too hung up on it.
As someone who mingles and networks with some of the smartest real estate investors in North America, I often feel self conscious with the number of properties we own. And when I met someone recently who’d only been investing for 4 years and owned over 50 properties I took her to coffee to learn about her business.
Turns out in her second year as a real estate investor, she rounded up enough partners and enough deals to purchase over 30 properties!!
I was impressed.
But, as I dug deeper I learned that year happened to be 2007 … the absolute peak of the housing market in the area she was buying in. I also learned that most of the properties she bought are now worth 80-85% of what she paid for them AND most of them are costing her and her partners money every month NOT generating positive cash flow.
She told me that there is one property in her portfolio with about $50,000 in equity that she is trying to sell because she needs that money to pay for keeping the other properties this year.
As I listened to her story I was suddenly very pleased with our portfolio, and with what we teach you, our valued Rev N You readers. I also realized very clearly that the size of your portfolio doesn’t matter at all. It’s the size of your cashflow!
I would much rather own 10 properties that generate between $500 – $1,000 per month positive cashflow than 50 properties that aren’t covering their costs!! I would much rather have $1,000,000 in equity with a small number of properties than have less than $100,000 in equity across 50 properties.
So … the next time somebody asks how big yours is, respond with “The size doesn’t matter, it’s what it’s doing for me!”
And what ours is doing for us is generating money that gives us the freedom to live our lives the way we want.
We are making sacrifices these days because we’re working hard to grow our portfolio. We believe strongly that now is the time to begin the aggressive pursuit of new investments so we’re doing that. It takes cash and it takes time to pursue the deals the way we are right now. And as a result we aren’t meeting our friends in Vegas in early April for a 4 day party, our African Safari plans are delayed for a year or two and our plan to buy a vacation home in Whistler is probably not going to happen this year. But we are able to take our nieces out for a fun afternoon when they get out of school early on Friday’s, we can immerse ourselves in the Olympics for 4 days without worrying about running out of vacation time, and most importantly, there is no guilt when we curl up for an afternoon nap for three days after the Olympics as we recover!
We have freedom… and while we haven’t achieved our big goals and big plans in life just yet we have a portfolio to be proud of. We have a portfolio that has freed us from the need to have 9 – 5 jobs and we are helping other people do the same thing!
One of our Real Estate Millionaire Students, Vanessa, has just purchased 5 units while taking the program and she wrote us to say the lessons on finding tenants and managing your properties were very timely as she used the lessons to help her fill the vacant units she had. Another student, Arlene, leaned on us for help when she was getting her first rental property financed and saved thousands thanks to our advice on financing!! We can help you too… and with our Real Estate Millionaire E-Program you learn everything you need to know to go from beginner to proud property owner making positive cash flow with an hour a week over the next 52 weeks!! And you’ve got us there to help you every step of the way.
Published on March 10th, 2010