Hi everyone, and welcome to the Landlording Show. This is the show where you get information on making your investment properties as profitable and smooth-running as possible. I'm your host, Tim Harstead.
For those new listeners who don't know me, I run a property management company on the South Side of Chicago. We've encountered every conceivable scenario with rental properties.
Today's Unique Setting
In today's episode, you may notice I'm not in my usual recording location. I'm sitting in an Airbnb in Texas, talking about what my family has decided to do for this month of November. We're taking a 30-day vacation in New Braunfels, Texas, exploring central Texas and sightseeing.
This idea was inspired about 6 or 7 years ago when I read "4-Hour Work Week" by Tim Ferriss—a great book about setting up your business, which we'll discuss more in future episodes. One key takeaway is treating investment in real estate as a business, which enhances the profitability of your investments.
Tim Ferriss discusses grouping all his work together as much as possible to take long vacations and "live" in new towns. This concept has been a goal for my family, and we're experiencing it for the first time.
The Importance of Goal Setting
Today, we're discussing goal setting. If you don't have a destination in mind, you'll never reach it. Setting goals helps justify the hard work, especially when you see progress towards what you're aiming for.
It's also crucial not to overextend yourself. For example, if your goal is to earn a few extra dollars each month, managing 100 units may be unnecessary and stressful when a few would suffice. Let's break down the common reasons for investing in real estate and how they affect your approach to building your portfolio.
Investing for Retirement
One popular reason is using real estate as a retirement fund. Depending on your age, you have time to carefully build your portfolio, focusing on properties that require minimal maintenance and consistently yield income. Starting in a C class area might be necessary if funds are limited, but the goal should be to eventually acquire properties in A and B class areas for a steady, stress-free income.
If your goal is retirement readiness, consider paying off mortgages as quickly as possible. Contrary to popular advice, owning properties free and clear enhances your cash flow—essential for a financially secure retirement. Additionally, planning for major capital expenditures before retirement ensures you won't face unexpected financial burdens later.
Building Immediate Income
Lastly, if you're aiming to generate a significant income now, you might prioritize acquiring more properties over paying down debt, embracing the inherent stresses for the potential financial rewards.
Real estate investment isn't as passive as some might think. Even with a property manager, significant effort and oversight are required to ensure profitability and proper management.
Conclusion
In summary, understanding your real estate investment goals helps you strategize and pace your efforts, whether you're planning for retirement or building an immediate income stream. As we approach the end of the year, it's a good time to reflect on your goals for the next year—whether to acquire new properties or optimize the ones you already own.
That's it for today's episode. I hope you found this discussion helpful. Please subscribe to our channel, whether you're on Spotify, iTunes, or YouTube, and consider leaving us a five-star review if you enjoy our podcast.
Talk to you all in a few weeks. Have a great one!
