There’s one thing at Memphis Invest that we believe stands between an investor and their success: their purpose.
Before you begin your journey as a real estate investor or as any kind of investor for that matter, you have to ask yourself why you’re investing in the first place.
Many people have a sensationalized view of investing in real estate. With so many quaint television shows portraying investing and flipping houses as a quick process where everything always turns out beautifully and makes a profit, so many people with no experience investing in anything have begun to see real estate as their ticket to getting rich.
Investing in real estate, thanks to media, has become the easy and fun way to not just make money, but to make a lot of money really fast, and that tends to be the image that people latch onto.
Investing in real estate is great. It’s a wonderful investment because it is a physical asset, hedges against inflation, and generates passive income. Would-be investors, however, have to guard themselves against a romanticized image of what it means to be an investor and, more importantly, be clear on why they are investing in the first place.
3 Reasons Your Purpose Matters in Real Estate Investment
Your purpose measures your success.
Whether you’re in business or dealing with investments, measures of success are always important. What is a success to you? If you don’t set up these measures and benchmarks, you can find yourself toiling endlessly, throwing money at a project or investment, finding yourself always unsatisfied with the results because you don’t know what the results are really supposed to be.
If you yourself aren’t setting the measure of success, this can also lead to unhealthy comparisons. You may find yourself looking to the models and methods of other investors, trying to emulate their successes without understanding that your investment journey and situation is utterly unique and must be treated as such! You can’t chase someone else’s success for yourself, whether it’s because a particular market was great for them or a certain strategy that’s different from yours paid off.
If you’re not defining your purpose and your measures of success, you will always be chasing what seems better. Ultimately, you won’t be happy with anything that you choose and you won’t be able to truly thrive in any market or strategy that you pick!
Purpose matters because it allows you to have a frame with which to set your goals and expectations. Maybe you’re investing to save for a college fund for your child or to save for your retirement. Whatever the reason, it needs to be personal and specific.
Your purpose guides course correction.
When you have a clearly defined purpose as a real estate investor, it helps you when you need to course correct. This is particularly helpful when you sit down for a portfolio analysis! During a portfolio analysis, you evaluate your investments and see which ones are not just performing up to your standards, but whether or not they fit into your overall vision and even if they mesh with you as an investor.
If you have a purpose defined, if you know your "why" and you understand what you’re working towards. Every decision you make, whether it’s adding a new investment property to your portfolio or removing an investment, has a purpose, too. You ultimately know when you need to shift directions in order to stay on track. There's great comfort in that. You can have security in knowing that you’re where you need to be or at least know how to get there.
Your purpose determines your portfolio strategy.
As a real estate investor, your purpose matters from the very beginning. It determines what kind of investment is right for you in the first place and what kind of strategy you should employ. What is your purpose? Are you prioritizing cash flow for a particular event or fund? Looking to scale over time to compound your earnings for an early retirement?
You have to think about why you want to invest in real estate beyond a desire to earn money. It has to go deeper than the desire that was sparked by watching too much HGTV. Ultimately, the investors that last in real estate are the ones who have a deep and developed understanding of why they’re investing. They know why they’re doing it and they believe in their cause. They’re in it to make money, yes, but they also know that this is the best path to do what they’re doing...and that’s why they chose it.
It’s not about romanticized notions or cultural popularity. It’s because it fits their purpose.
Talk with one of our advisers today to see if turnkey real estate investment is the best strategy for your vision!