Five Simple Keys to Success I’ve Learned from 10,000 Hours of Investing
I was told the other day that after doing something for 10,000 hours, you are an expert in that field. That had me doing the math. How many hours have I put into my real estate investing career? If a normal person works 40 hours a week for 50 weeks out the year, that’s 2,000 hours. Multiply that by 5 years, and you have 10,000 hours.
I started investing in early 2012, but the catch is that for the past 4 years, I have put in 70-80 hour weeks, so I’m not certain on where I land in total hours. I am certain that I am at least over the 10,000-hour mark.
Reflecting back on the last 10,000 hours of work, I thought to myself, what did I really learn? What actions caused the success I have accomplished over those 10,000 hours? What have those 10,000 hours shown me that I didn’t know prior?
The more I thought about it, the more I realized how simple the answer was. It’s so simple, I thought, there is no need to spend 10,000 hours to realize these things. I realized I should share it with newer investors who may be wondering how to make REI work. For that objective, there is no better site than BiggerPockets. So I decided to write a post on the 5 simple things 10,000 hours of investing have taught me.
5 Simple Keys to Success I’ve Learned from 10,000 Hours of Investing
This may be the simplest and easiest action on my list, but it’s a big one. I have found all those in my network who answer their phone promptly, return emails quickly, and respond to messages reasonably always seem to have people raving about them. This can be from handymen, to attorneys, to investors — if people are never waiting on you for communication, then you are bound to stand out from the rest. If you are so busy you can’t respond to most items within 12 hours, it’s time to hire someone who can take that task off your plate.
Example: I have built many of my business relationships around this characteristic. I choose lenders who are small because when I call, I get to talk to the person who makes the decision on my loans. I have won deals by being the person who picks up the phone over the people who send it to voicemail. Our vacancies on rentals are always very low because we answer the phone or email. We don’t wait around to respond.
Ask for what you want/need.
Unfortunately, it took me a while to realize the power that this action carries. We are taught in school that we have to learn how to solve the problem, and asking someone else to do it for you or even just seeking out advice is considered bad or cheating. In the real world, asking can do amazing things. If you don’t know something, ask. If you don’t know something, ask for someone who does know. If you want something but don’t know how to get it, ask. If you want something but you don’t think it’s possible, ask anyway. Simply asking whatever was on my mind without fear of looking stupid has opened so many doors and informed me more than I could have been on my own.
Example: I once went to buy a $50 dryer off Craigslist. When I arrived to pick the dryer up, I asked the seller of the dryer if he knew anyone looking to sell property in the area. He said, “Yeah, me.” He said he had a duplex he had renovated and was ready to retire from the day to day managing of it. We drove to look at the property, and it was a really nice duplex. I went home, ran numbers on the property, and called the owner back — and again asked what he was going to do with the sales proceeds. He mentioned things like CDs and banks. I asked if I could send him some numbers on his returns to see if he would be interested in seller financing the property. Eventually, the seller agreed to a 5% interest, 30-year amortization loan for 90% of the purchase price. My point is, I went to buy a $50 dryer from someone, and a week later they loaned me close to $100k to buy their property. All of this happened because I asked.
Example 2: Recently, I was negotiating the loan terms on a 42-unit apartment building we are purchasing. The lender, with whom I have a long-relationship, only does 75% LTV loans on commercial loans. I asked for a 80% LTV, and they said, “No, we never, ever go to 80% LTV.” This purchase was for just over $2 million, so the difference in 75% to 80% LTV was just over $100k. I then asked, “If I put $100k into a 6-month CD at your bank, will you go to a 80% LTV on the loan?” This would allow the bank to increase their lending limits and make more money by lending out my $100k. In 6 months, I get my $100k back, and I’m left with the loan I wanted. The bank agreed to my structure with a 12-month CD. Until this loan, this bank had never done a 80% LTV. That changed because I was willing to ask.
When you feel friction, you’re on the brink of growth.
Over the years I have noticed this intangible friction in the business from time to time. The feeling that things just are not clicking. The wheel of your business just isn’t greased right, and you feel it through that friction. I have found this friction is change. Although it is uncomfortable to go through, it is the best indicator that if you stay focused, problem solve, and push through, that is when progress and growth happen. As humans, we don’t like change, but being aware of why you feel this friction and knowing something good is coming from it helps you persevere.
Example: When we were at roughly 10 units, we could feel the intangible friction of inefficiency and a need to change in our business. This is when we implemented property management software into our company, and for the first year, it was a learning process. The whole time learning how to implement this new software into our business felt like friction. Once we had it down, it allowed us the ability to scale and push to the next level. There are countless examples in our business of this feeling of friction being the first indicator to growth — if you can focus and persevere.
Show gratitude and appreciation.
We have all heard you should find your “why.” It is the reason why you push forward. Why you work so hard to achieve your goals. I agree that is important, but something that doesn’t get talked about enough that I think is equally if not more important than your “why” is your “who.” The “why” is looking forward where the “who” looks back. “Who” asks, who has helped you achieve your successes in business and in life?
If someone successful tells you they did it on their own, they either are lying about doing it on their own or lying about being successful — because it cant be done alone.
Reflecting back over your life to find those who have helped you grow along the way has two important purposes. First, it motivates you personally to do even better — for yourself and for those who have helped. This thought process breeds inner drive to make those people proud. The second reason is to show gratitude and appreciation. Take the time to tell people thank you and that the fact that they did XYZ for you helped so much, and you now realize it and will forever be grateful. These thanks need to be sincere. By giving them, great things continue to come from those relationships.
Understand the responsibility of money and wealth.
Money is a powerful thing and should be respected. In the business of real estate investing, the dollar amounts you’re working with can be very large even as a beginner. It is vital to understand the responsibilities you take on when entering this industry.
I added this point because over the years, I have heard a lot of beginners ask me about no money down and how to raise money from other people. I did most of my deals with my own money. I did this because I realized what it meant to borrow someone else’s money. When I borrow money from an individual, I know they are giving me dollars, but at some point in that person’s life, those dollars were traded for time. What I mean is if someone lends you $100k and back when they earned that $100k it took them 3 years to do so, it means you’re not borrowing $100k from this person; you’re borrowing 3 years of their life. When you hold money to this level of importance, you understand the responsibility it carries.
In 10,000 hours of business, these 5 simple lessons surface over and over. I see so many people far smarter than me sitting on the sidelines running numbers, setting up entities, building a website, creating spreadsheets, and the list goes on and on. There is a time and place for all of those things, but in the beginning, so may smart people overwhelm themselves into stagnation. If you simply follow these 5 points, success will find you.
Investors: How many hours are you into your investing journey? What are the most important lessons you’ve learned so far?