Have you ever had a problem with money management and your real estate investments? I would like to share some ideas with you, based on my experience.
The Art of Getting Money- From a Real Estate Investors Perspective
As we grow and learn about money management and real estate I would like to ask a few questions. Have you ever looked in your library and found a book you read many years ago? Did it have a profound significance to your current life situation? Let me share with you my recent experience in reading an old gem, The Art of Getting Money by P.T. Barnum. I had read the book at least a dozen years ago, but didn’t remember any of the content. As I opened the book I wondered, how can a book written in the 1800’s have any relevance today? Well, I was surprised to say the least…
P.T. Barnum outlines twenty rules for gaining and maintaining wealth. As I reflected on my life, the most difficult times came when I wasn’t following some of the rules. I have written these rules on a paper and will reflect on them when things are not headed the right direction. I will not list the rules here as I would encourage you to review this gem on your own. I’ve outlined two specific rules that were particularly poignant below.
P.T. Barnum discusses the problems that arise when using debt to increase your lifestyle. For real estate investors I would also say don’t over leverage your assets. I think of several properties were I leveraged too much. The properties were cash flowing and the market appreciating. Fast forward to today…rents have declined, expenses have increased and cash flow is gone…the market has corrected and the properties are underwater. Had I had stricter criteria for LTV (loan to value) I would currently have both cash flow and equity. Prior to making additional acquisitions I have set out strict criteria to avoid this in the future.
Additionally, I found when my cash flow was coming in and I had built significant equity, I was more inclined to increase my lifestyle. Proper money management with my real estate investment told me I should have kept more money in reserves, I did not. That is not to say I ran out and bought toys on credit, however I became a little bit loser with my personal finances. Prior to making additional acquisitions I have set out strict reserve criteria to avoid this in the future.
Entrepreneurs often find themselves dashing from one task to the next in an effort to put out fires. There have been many books written about “working on your business vs. working in your business”. Personally, the lack of systems has lead to long periods without marketing, inconsistent bookkeeping, and missed deadlines. I am committing to schedule time every week to put systems in place to take care of day to day operations. Ultimately once the systems are created, then I can delegate some of the responsibilities. In fact, it is lack of systems for most businesses that keep them small.
I recommend you read or re-read P.T. Barnum’s The Art of Getting Money. As always, read with intent to take at least one thing and implement it into your business/work/life.
Dana Lange invites you to learn to earn high and even INFINITE returns investing in commercial real estate with a group (on money you used to have sitting in pathetic CD's at 4% or less) when you become a Select Member with America's #1 Real Estate Network today! Join us for an upcoming educational presentation online to get information or to get started now.