Developing The Investor Mindset

“If you judge an elephant by his ability to climb a tree he will live his entire life thinking he is a failure” – Albert Einstein

“Everyone can be Super! And when everyone’s Super… no one will be.” – Syndrome from “The Incredibles”

We are all gifted unique abilities and perceptions, the problem is most will never discover theirs because of the current design for education. Standardized testing kills creativity in order to efficiently place people in a hierarchy. With the end goal of establishing who will do what when they “leave education” in pursuit of their occupation. But there are a few who beat the odds and pursue a different path, a path that leads to their vocation and purpose in life. A key to becoming one of those few is to never “leave” education. Never stop learning. This may be obvious to most but how often do you really engage in active learning? How often do you pick up a book or listen to a podcast, or rather how often do you read or listen to something that actually challenges your brain or is something that you know absolutely nothing about. We all think we never stop learning, but there is a difference in deepening those same grooves you have and creating new paths in your brain that didn’t exist. This is how you develop beyond automaton, doing what you have always done and getting slightly better at it. By pursuing challenging ideas and completely foreign concepts we will build an arsenal of creativity that will open doors we never knew we could open or even knew existed.

Developing an investors mindset goes way beyond just reading trade journals and industry news. You have to become an expert on everything! Yes everything! You must become omniscient. Ok so maybe not that level of knowledge but seriously you can’t ignore information outside your purview. To become an affluent investor you must become a collector of ideas and knowledge. Become obsessed with hobbies, business models, biographies of leaders and problem solvers, cultures, weird music, food, technology, politics, science, cars, construction, history, sports, art, and anything else that strikes your fancy. Don’t limit yourself to only knowing what everyone else knows, this gives you no advantage when you want to invest in an opportunity. It is both who you know AND what you know, and what you know will open more doors to the who that has the opportunity.

This past weekend my business partners and I took a trip to Terlingua, Texas down South right on the border of Mexico in the middle of Big Bend National Park. We stayed in a Yurt at the end of a very winding and difficult to traverse road completely off grid with solar power and rain water reservoir. We then drove to Marfa, Texas which was one of the most unique and bizarre towns I have ever seen. As we were walking downtown past art-deco style buildings that would look more at home in South Beach we wandered into an art gallery that only featured 3 works of art. But they were 3 building size original works by Andy Warhol. Right here in the dessert, hundreds of miles from the nearest Wal-mart but I was enjoying works by a world renown artist. Artsy doesn’t even begin to describe this fanciful oasis. Then our last stop was in the Davis Mountains at the McDonald Observatory where we attended a “Star Party” and had the opportunity to look at the night sky through 7 powerful telescopes and learn more about our solar system. During this trip it really began to solidify in my head the importance of seeking out opportunities even in my “leisure time” to continue to collect and build on my perceptions of the world, ideas for building a better me, and rounding out my knowledge of things I didn’t even know existed. This is what it means to develop the mind of an investor. Seeking understanding everywhere I go with the intent of becoming a better person, businessman, husband, father, son, brother.

This article has taken me 2 1/2 months to write. I started in October and this next section is being written in January. Still the same topic of investor mindset but forgive any non sequitur thoughts. Hoping this will create a fresh new line of thinking within the same topic.

I am finding it increasingly important to actively seek out others to engage with in life so I can both create value for them but also seek their differing opinions and ideas. Not just with business but life in general. Life hacking has become more and more popular and I am definitely more than a casual observer in ways to hack life to become more efficient, less stressed and have more joy. My moniker has always been, fun. If something isn’t fun, why do it. But now I see more purpose and value in seeking joy and bringing joy to other people’s lives. Sometimes that includes pure fun, but not at all costs or the type of fleeting, thrill seeking fun that leaves you empty and always looking for the next high. Fulfillment in life always starts with the small things, tucking your kids into bed, learning a new skill, cooking a good meal with a loved one, accomplishing a small household task that seemed overwhelming, taking family trips that are relaxing rather than squeezing out every possible exciting drop. There are millions of free ways to find fulfillment in life that also bring fulfillment to others. Once you have this as your basis, everything else falls into place.

When you align your life in this way, you are more open to possibilities and opportunities that you probably would have missed otherwise. Because now you’re focused on true value for your own life as well as your family’s and others around you. And this attracts the right type of people who want to be part of what you’re doing.

Another crucial part to this is having a mindset of both gratefulness and generosity. This may go without saying, but most people probably consider themselves to be grateful and generous, when in reality they hoard resources, time, money, attention, advice. They dole it out sparsely or only to those they like rather than sowing seeds far and wide where they can take root and grow to then produce more seeds to be spread even further. And yes when you are giving like this the seed will often go wasted, falling on infertile soil, but the seed that does land with the right person could grow so fervently that it surpasses any of the waste. So don’t plant sparingly. Ok I am done sounding like a King James Bible, but the truth works even in business.

Developing an investor mindset doesn’t happen overnight, nor will you ever finish, it is a life pursuit. This lifestyle is a rewiring of your brain to think in terms of investing rather than consuming. And this covers every area of life, not just business and finances. You can either consume your time on earth during your 28,721 rotations around the globe, or you can learn to invest your life into meaningful accomplishments that will carry on after your brief stint on this planet. I hope you choose to invest, so you and those around you can enjoy the dividends for centuries.

Passion Income, Not Passive Income

Let me set the record straight, there is no such thing as 100% totally, no work involved, passive income. This is a lie that we have all bought into at some point or another. Think that “great business opportunity” your aunt called you about to sell energy health food smoothie popsicles for dogs. And if you can just get 10 of your friends to sign up under you and you sign up under her then you all become rich from the residual passive income when people renew their online orders. Or maybe it was more legitimate, like your financial “advisor” who would take all your hard earned cash and invest it in a growth stock mutual fund that the radio personality told you would grow 18% compounded annually so that when you retire you would have a million bucks! Well guess what! I did that and for 10 years I saw an average of 8% returns, just enough to keep up with inflation and pay for my “advisors” fees to “manage” MY money. And yea you can say the markets dipped and/or crashed during that time, but they always bounce back, so you just have to keep your money invested for the longterm to get that average high return. Well the only average high returns anyone was getting was the “professional” money managers and the radio personality with all his referral fees for sending you to his local “expert”. The only thing expert about them is their sales ability to get you to dump more of your hard earned money into their company’s fund. Typically a mutual fund which eliminates the risk for you because your money is so diluted into vast array’s of markets and stocks that you have very low opportunities for massive growth. Ok I will get off my soap box before I say something that requires me to put the soap in my mouth. But my point is we have all been duped. Duped into thinking we can retire millionaires if we trust someone else to invest our money instead of taking the responsibility on ourselves to become an expert in something that could not only make us financially independent but also bring massive satisfaction to our lives now. These so called experts are just sales people, many of them don’t even have financial planning degrees or certifications. Of the 5 different “financial advisors” I have hired in my short 10 years of “retirement investing” only one of them was a certified financial planner. And depending on your age, you have probably felt the affect of a “correcting market” like in 2008 or again on Christmas Eve of 2018. I know many people who lost their life savings in an instant. And it takes decades to rebuild that. The bull climbs up the stairs, but the bear jumps out the window.

So what are we to do? Take back control of our money AND our time! We have all heard it said, if you love what you do you will never work another day in your life. This is only half true. I absolutely LOVE what I do, but there are days that are miserable long hard work days. But the difference between what I do and what most people do for a living is I have the power to tell my boss to shove it and choose not to come in the next day or the next. Then when I am rested and ready to go back to work I still have a job and my boss is in a much better mood. Ok so I am my own boss, but the point is I will quickly recover and be excited to go back to work. Because I have a lot more great days than bad, and I am passionate about what I’m accomplishing. I’m building something of value and impacting lives for the better, I’m focused on my legacy, not my 401k. The short answer is, I have found my calling. And it’s not real estate or biz dev (Business Development). It’s solving problems for myself and other people. It’s connecting and engaging with others to get excited about life. And this brings true lasting joy. I can’t deposit joy into the bank or trade it in for food and clothing. No, but with joy comes opportunities for developing businesses, buying real estate and creating value for others that creates monetary returns. Would you rather start a business or buy a product from someone who is passionate and on fire with excitement about their business or from someone who hates their life and sucks the life out of everyone around them?

Why I Chose Real Estate Investing

Real estate has been in my blood since I was a kid, my parents would take us through open houses on the weekends as something fun to do, even if they weren’t in the market to buy a house. I was fascinated by the architecture and combined use-fullness and beauty of houses and the endless ways to design and customize to fit anyone’s needs and taste. This process of turning a house into a home connected with my soul and gave me opportunity to express my creativity. When I learned how to solve problems for people during the very stressful process of buying and selling houses it became more clear to me what my calling in life would be. My passions aligned and and my purpose was clarified. But after 10 years seeing the inside perspective of real estate sales I began to realize all I was really accomplishing in my own life was a paycheck and some shiny rewards for hitting my goals. I knew I could do a lot more.

Investing in real estate has also been a fascination of mine since a young age. I would drive by pre-foreclosure properties with my dad and hear him talk about buying a fixer-upper to renovate and rent out. The difficulty was obtaining financing to both purchase and remodel these dilapidated properties. Because all we really knew about buying investment properties was putting 20% down then paying for the remodel out of pocket and covering the carrying costs until it was rented. This barrier of entry made it pretty hard for a working middle class family to invest in real estate. So we never could purchase a piece of property other than my parent’s primary residence. And that’s the end of the story, we all grew up and went to work in the coal mine and now we eat fish sticks on special occasions. . .

Or, I wrote my own end to this story, because I was raised to find solutions and think outside the box. What really happened is the year after I obtained my real estate license (I was 18) I also bought my first investment property. It was a tiny old house close to Texas Tech University in one of the highly desired neighborhoods for student rentals. But I bought it as a primary residence so I could have a place to live for the time being. This allowed me to only put the minimum down of 5%. But my tiny 2 bedroom house immediately began cash-flowing because I rented out the other bedroom to a roommate. After about a year I moved out and rented the whole house to 2 college students and became a landlord and property manager at 20. When those monthly payments started coming in and I had more money left over each month after my expenses, I thought I had hit the jackpot. This was the most incredible feeling to have an asset that was going up in value, the debt was being paid down by someone else, AND I was putting money in the bank. I was instantly hooked. The problem, it wasn’t enough extra money to live off for the rest of my life. I was going to need another property.

This scenario was all I needed to get hooked on passion income. It wasn’t passive by any means. I had to manage my property to make sure rent was coming in and repairs were handled, taxes were paid and insurance was in place to protect my asset. Sure I could have hired a property manager to handle the headaches, but I wanted to learn the process and I didn’t want to pay someone else most of my profit to do a job I knew I could handle. And through that process I learned more about the intricacies of investing rather than hiring another “expert” to manage what I knew I could learn to do better.

In future posts I will go into more detail about the new ways of finding and financing deals. But here I want to re-evaluate this concept of passive income. As long as we are on this earth we have a job to do. This was designed by our creator because He knew we would never be completely fulfilled without a purpose for living. Even before the fall of man, God gave Adam a job. He was to have dominion over the earth and name each animal. He worked in the garden, it wasn’t hard work until after sin entered, but it was still work. This tells me that God planned from the beginning for man to have a purpose beyond just sitting around and eating and talking to God. God want’s us to be joyful and fulfilled not just in Him but also in our work. And yes we are also called to go into every nation to share salvation with the nations. But some are called as goers and some are called as senders. And the senders are the ones called to create the resources for the goers. Even Jesus had “investors” who financed his ministry. His gospel patrons as they are called were three women named Mary (Magdalene), Joanna, and Susanna. Whether you are a believer or not, I am sure you can agree that we all have a responsibility to provide for ourselves and for others. The question is, why do something you hate and dread 5 days out of the week when you could be pursuing something that excites you and makes you look forward to Monday morning. My personal goal is no longer to reduce the number of hours I “work” in a week, but to increase the joy I have during those hours. And increase the impact my hours have so I can choose when I want to “work” and when I want to “play”.

If you live your life like this you will likely realize “retirement” would be pointless. Why stop doing something you love just because you are eligible for social security and 401k withdrawals? If you are counting down the days till your retirement you must be so miserable, but I am sure you feel helpless, you may think what else am I going to do and how would I replace the benefits I get with my current employment? You won’t. But really compare those “benefits” with the benefit of being happy, and having endless opportunity to build your passion and interests into a lifelong ATM machine. Personally I see myself as an 80 year old codger still making the rounds checking on my investments and whatever projects I have in the works. Even if I am being chauffeured around in a wheelchair by my great grandson. Because as soon as I stop working, building, creating and fulfilling my purpose, I’m gonna die.

What Should You Choose?

So how do you determine what passion to monetize? I mean, just because you love model trains or growing potatoes doesn’t mean you can’t make serious money from them. Start with what you are good at, I’m talking mad skills, your super power. The one thing that you do so easily that others are dumbfounded at how easy it is for you. Then start considering what you enjoy doing on a regular basis that never gets old or boring. Ok now look for where those two things cross paths. My super power is attention to details and efficiency. I become obsessed with minor details that most people overlook or blow off as unimportant. But when they see the finished product they are amazed at what I created and don’t seem to understand how I am so good at whatever it is. I enjoy interior design, inventing new ways to do things, solving impossible problems and helping others become successful. The intersection of these is remodeling properties, buying real estate that has nasty issues that no one else would touch, improving on systems to be more efficient and profitable, connecting people with the right person to help them, and starting new ventures just to learn how to do them for my own curiosity. This has led me to become a successful real estate broker, investor, property manager, software developer, lifestyle brand builder, and all around go-to guy for many local people. But this all started with a passion for independence, creativity, problem solving, and honestly some good old fashion people pleasing. I love for people to like me. So start considering what your passion and innate skills could do to open doors for you.