Some of us wait for things to be perfectly ready before we get started. The problem is that we wait too long that we end up not pushing through. In these moments, it helps to be reminded of how taking action is necessary, no matter how awkward those first steps are. Successful people know this to be true. Successful people pick up the phone while unsuccessful people don’t. Distinguish what separates successful from unsuccessful people as we talk about the Hierarchy of Needs and the top three reasons why people struggle to get from where they are now to where they want to be.
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Successful Vs. Unsuccessful People And The Hierarchy Of Needs
Most people wait until they know everything about a subject before they get started. Therefore, oftentimes they never get started. I know when I started the radio show, I feel like I’m better now than I was a month ago, better a month ago than I was the month before, etc. You can never get three years of experience doing something until you have that very first day and you’re always nervous.
You could read it from a book, but it’s not the same.
Then people ask, “How do you find something to talk about every day on the radio?” I talk about what it is that we’re doing. We’re actually doing real estate. We talk about the deals. I want to talk about two things. One is I know for a lot of people the Turkey Day hangover. I had a great chance to be with my mom, my dad and two of my brothers and their spouses. I had a great time. I spend it down in Pearland. My younger brother, he cooked the whole thing all by himself. He likes to cook. That’s one of his deals. He did a great job. A lot of people got the Monday blues, but I was so excited. We’re going to have a big meeting. We’re working on a big project in one of our businesses. You’re excited. I’m excited. One of the things that I’m excited about doing is changing other people’s lives.
When you start talking to people and you see people that are putting their head down and grinding it out day in and day out, go into a job that they like but don’t love, that pays them well, it’s almost like they have the golden handcuffs on. They’re like, “This is going to be my life for the next twenty years.” Then when they realized that they’re five years away from that not having to be, if they want to continue, there’s a difference between wanting to get up and go do something and having to. We are consistently putting people on a path that’s allowing them to take action, allowing them to hold their hands and let them produce the results. We had that meeting over off at Kirby and explaining to somebody and I always loved that, “What do you all do?” You start walking people through it and they’re like, “What? Why do you do that?” I don’t think they get that we like making a difference in other people’s lives.
The guy, marketing expert, beautiful place. You could tell he’d been doing it for a long time and he knew exactly what he was doing. When we explained our model to him, he was very confused in the fact that, “That doesn’t seem like it’s enough for you guys. Why are you all doing that? It doesn’t seem like you are getting enough out of it.” He’s quantifying that with dollars. When you have a purpose, it’s a completely different ball game. You talked about being excited to be here. I’m pacing the halls here before anybody shows up. I don’t have a key to every office. I’m like, “Where is everybody?” I can’t wait to get started. It’s like that for me all weekend. My wife was looking for a new church in our area because we moved to Tomball. She posted on Facebook trying to find one. It all tied in well. It ended up being, “We found a church? They are still in high school. They haven’t grown big enough to get their own place yet.”
The guy is a neighbor of ours, five houses down. Their son was being bullied on the bus. Caleb, my son, a couple years older, stepped up. He took care of him. He has been helping him get to the bus and not have any problems and things like that. That’s the pastor’s son. We connected all that after the service. During the service, it was one of the best services I’ve ever seen. He was talking about having a purpose in life. It was the perfect message for where we are and what we’re doing. I tried to put myself in the shoes of somebody that doesn’t have a purpose. How they needed that message even more than me. For me, it was a confirmation message that I’m on the right track, that what I’m doing is the right thing and that we’re in the right spot. I can’t wait to be able to do more of it.
Let’s talk a little bit about how can somebody be five years away from being retired with single-family real estate. Walk me through that.
It’s all about condensing the time horizon in money. What we realized is that the conventional way of thinking is work for 40 years, put everything in an IRA or 401(k).
One of the things I love about 401(k) especially if you work for a big company or any size company and you have the employer-employee matching program, take advantage of it. Let’s say you’re making $100,000 a year and they say, “We’ll match up to 3% at 100%.” You put 3% which is $3,000 a year, they’re going to match that. You’ve immediately turned $3,000 of savings into $6,000 even if the stock market would have to drop 50% for you to break even on that deal. If you did that, then next year your 3% would be doubled the amount.
The key for me there is savings. You mentioned the word savings. Oftentimes, people try to figure out a way to save their way to retirement. Can you do that? Yes, but what you don’t realize is when you get to retirement, you’re going to be taking a major step down in lifestyle. You can survive, but there’s a difference between surviving and living.Most people wait until they know everything about a subject before they get started. Click To Tweet
I call it surviving versus thriving.
Can we show people a way in five years to do what conventional wisdom is teaching them to do in 40 years? Absolutely.
Where does somebody go to find that out?
The sad thing for me is because we want to be respectful of the people that are there on time. We start at 6:30 PM and we end at 7:30 PM. Then people invariably plan on being here at 6:30 PM and they go, “There was an accident on I-10.” I’m like, “There’s pretty much every day.” 5:00 PM or 6:00 PM traffic, there’s an accident somewhere on I-10. It’s going to take you longer than you expected. People then show up at 7:15 PM and they want us to do it all over. I’m like, “Come back noon on Thursday or come back next week.” We want to share the message but people say, “Half the battle in winning is showing up.” It’s not just showing up, it’s showing up on time. That’s an important factor because that discipline will affect other disciplines. Here’s what will happen. There will be a great deal. It will get emailed to you or an agent will call you, “I got this great deal.”
One of the things I learned is successful people answer their phone, unsuccessful people don’t. You don’t answer your phone because you have this attitude of, “I don’t have to show up on time. I don’t have to respond quickly.” Another thing that we’ve discovered is successful people make decisions quickly. Unsuccessful people make decisions slowly. Successful people rarely change their mind. Unsuccessful people, they’ll make a decision and they change it fast. They start studying what success leaves clues. What will happen is a deal will show up and you’re like, “I’ve got to think it over,” and somebody that’s an action taker buys the deal. They’re $20,000 out of pocket. They capture $50,000 in equity. They turn $20,000 into $50,000.
We had a deal. It was a great deal, I put it out there. We didn’t have the availability to show it until the week following. I had a lot of people interested in this deal right away. I was trying to get the people that were interested so we could plan ahead and schedule. Lo and behold, an action taker comes along. He says, “I see that there are seven to eight pictures there. You’ve covered every corner of the house.”
Different than a typical retail agent. One of the things that I hate about retail agents is they hide the flaws. It’s not like nobody’s going to show up and find those things. Wouldn’t it be nice if agents wanted to show the flaws so that you can make decisions based on the pictures? That’s one of the things that we do.
That saves time. This guy says, “I don’t need to walk the house. I want it now. I’ll put earnest now and I’ll close in 48 hours.” He did and then the whole following week, I’m answering phone calls from people like, “Can we see it?” “I’m sorry it’s already gone.” “How did that happen?”
Somebody stepped up and took action. Good deals go fast. That’s one of the things, if you ever see a house sitting on the market and it’s seven, eight, nine months. If it’s 90 days, it might be slightly overpriced or might be at a higher price point or something like that. I was looking at a particular ZIP Code and only 60 houses sold in that entire ZIP Code in the peak month, which is not that many.You can never get three years of experience doing something until you have that very first day. Click To Tweet
I want to go over our mission statement to help people create a life of abundance by shifting mindsets, implementing proven systems and facilitating a community of action takers. I was doing some reading on Maslow’s Hierarchy of Needs. They were talking about people having a transcendent purpose. They believe because in this society, we no longer have in our core, we’re no longer hunting for food and things like that. Most of our basic needs are met, food and shelter. The need for a purpose and the need for community are working their way up that chart. It’s not the same chart as it would have been for the primitive man. He wasn’t going out there trying to figure out where he belonged. That’s very important for people and where we are now in society and things like that. We don’t have to think about where our food is coming from and that sort of thing. We’re trying to find a place to belong and we’re trying to find our purpose. I think those are the two things that we deliver here at Right Path because it’s not the vehicle that we’re providing. It’s the vehicle that is allowing you to fulfill a purpose. That’s going to be different for every single person.
One of the things I get excited about is seeing people understand how simple this business is. I’m going to mention Moni. She’s going to be highlighted several times and she’ll be our case study. She’s one of these people that every time I see her, she walks up and hugs me and she says, “Thank you.” I’m like, “For what?” She goes, “Because you’ve changed the trajectory of my life.” She said, “I thought that I was going to be working for the next 22 years.” She’s great at what she does and she likes what she does. She said, “I wanted to at least have the freedom to choose whether or not I had to continue to work that hard for the next 22 years.” Sometimes you can get mentally exhausted thinking about what’s coming up. You’re not physically exhausted but just mention like, “I need a break.”
What she did is she came in. She had never bought a single-family house outside of her personal residence. She knew what that process was like, but she was like, “How do I do that over and over again?” I was like, “No, that’s not what you would do.” It’s that sort of, but it’s not. It’s not the fact that you understand buying a house. Your house is not going anywhere. No one’s going to steal your house. It’s not like investing in something that rises and falls. It’s not like investing in oil futures or gasoline or any kind of commodity or stocks that you don’t have any control over and don’t necessarily understand.
She’s financially very savvy because she’s a CPA. She does finances for Fortune 500 companies. She helps convert those numbers into English basically and she’s brilliant at it. She was like, “You showed me to do step one and I did that, step two and I did that, step three and I did that, step four and I did that.” She goes, “It was as simple as here’s how much money I have to invest. Let’s put it to work.” She goes, “I’ve already doubled the amount of money that I put into it.” Not only does she captured equity, but she’s also going to get paid five different ways. She’s going to get equity paid down, which means that every time a tenant makes a payment, it pays her interest, it pays her taxes, it pays her insurance, it pays down her principal. It increases her equity and then there’s money still left over.
Then she gets to depreciate that asset. Even though the government says you get to depreciate it, it’s actually an appreciating asset. This year, we know what the value of her property is. Next year we know it’s going to go up 5% to 7%. The reason why we know that is because it’s a property that she bought this way below the median home price in Houston. It’s a property below replacement cost in Houston. All she had to do is say, “I can put some of the money that I’ve got into this property. She didn’t want to pay cash because that reduces your rate of return. Sometimes people have a broken mindset and it’s easy. If I put it to you like this, “Would you rather make 12% on your money or would you rather make 20% on your money?” Everybody says twenty. However, some people don’t do the math. They’ll say, “I’d rather pay cash if I’ve got $150,000 and I’d rather buy $150,000 house for cash.” Now, they’ve got all their money in it but then they have no leverage.
If you buy that house for only $30,000 and you borrow the other $120,000 and we teach you how to do that. It’s not like buying your own primary residence where you’re putting 20% down. What’s great about a single-family house is a self-collateralizing asset. I had a guy I was talking to. He had been a buddy of mine for a bunch of years. He goes, “Do you know of anybody that I could borrow $25,000 or $50,000 from?” I’m like, “For what? It depends on what it’s for.” He goes, “I’ve got this business.” I was like, “Is there going to be any collateral?” He goes, “There’s not any collateral.” It’s this idea. First off, sometimes it’s harder to raise $25,000 than $250,000. The second thing is you can raise money from a pawn shop if you’ve got something in there to pawn. You bring an asset in there, they’ll lend you against the asset. You bring a house to a lender and that’s an asset that they’ll lend against. You bring an idea to somebody, you better be squeaky clean.
What you said brought my favorite real estate quote to mind. It’s by Franklin Roosevelt and he says, “Real estate cannot be lost or stolen or can it be carried away. Purchased with common sense and managed with reasonable care, it is about the safest investment in the world.”
Then that’s not changed. In fact, what we find is more millionaires have been created through real estate than any other source. What I still find fascinating is that when people do create wealth through other means, they go right to real estate. When I think about rockstars. They typically have houses all over the world. They immediately are putting money into real estate. Let’s face it, they can go rent a hotel anywhere. It’s not like they need it. Why do you need seven houses around the world? It’s the investment. They know that it’s going to rise in value. Single-family houses are rising faster than almost any other price points. When you’re buying below median home price, when you’re buying below replacement costs, they’re averaging 5% to 7% appreciation on an annual basis. If you bought that all in cash, it means you’re making 5% to 7% on your money. You put 20% down and borrow the other 80%.
Take that interest rate and multiply it by five people. It’s so crazy. It’s like 7%, 35%. Even if you hit the low end, 5%, 25%. Warren Buffett made an average of 19% throughout his career. Somebody asked me, “What happens when all those houses are gone?” I said, “Let me ask you this. What do you think is happening every year to the median home price? It goes up. What do you think happens every year to the cost of replacement? It goes up.”
Do you know that there are fewer houses that rent for $1,000 a month now than there were a few years ago? There will be even fewer next year than there are this year. Rental rates are going to go up. What’s interesting is people are like, “What if the property taxes go up? What if my insurance goes up?” Rental rates go up as well. I’m not a huge fan of Section 8, although I know another investor that has done extremely well with Section 8. What I don’t like about Section 8 properties is they don’t typically appreciate because there’s not a lot of retail activity. These are things that when you hear them their common sense, they’re very practical. That’s why we described it as practical real estate investing. If you want to invest for cashflow, one of the great and best real estate products out in the marketplace are real estate-type houses or structures, a duplex. Duplexes are great from a cashflow standpoint. I know of one investor who bought a duplex. He rents for $1,350 per side so it’s $2,700 a month and this investor was able to buy this duplex for $150,000.There is a difference between wanting to get up to do something and having to. Click To Tweet
PIT is nine something, $1,100 perhaps.
Let’s call it $1,200. I don’t know exactly. Here’s one of the things people get caught up with, “Tom, what’s the interest rate right now?” You could borrow money at 10%. If I’m investing money at 30%, I could pay 15% of my cost of money. If you could borrow $1 billion at 15% interest and invest it at 30% interest, would you borrow the $1 billion at 15%? I don’t know. When you ask it in certain ways, it is. Sometimes if you ask it one way, people give you a no. You ask it in a completely different way but it’s the exact same thing that you’re talking about. People give you a yes. Those are the kind of mindset shifts that we’re looking at making. It’s the reason why a lot of times people struggle getting from where they are now in order to where they want to be. We’re going to talk about the top three reasons why people struggle getting from where they are now to where they want to be. I guarantee you, unless you’re tuning in to us on a regular basis, you do not know what the top three reasons are.
A lot of times people are stuck with, “How do I find the deals? How do I fund the deals? How do I analyze them? How do I find a good general contractor?” The number one reason why people get stuck from where they are now to where they want to be is they have not clearly defined where it is they’re trying to get to. What they’ve decided is, “I want to go on vacation,” but they have not picked a specific destination. I was planning a vacation coming up. I don’t want to get into a lot of the details about it all but what I started doing is I started researching. I’m like, “Do I want to go someplace cold? Do I want to go someplace warm?” You start looking at what your different options are. That’s the tough thing is that people just say, “I want to be anywhere but here. I’m miserable where I am or I’m surviving but I’m not thriving.” They don’t clearly define, “I want to have $3,000 a month passively coming in the next five years or I want to have $6,000 a month,” and then put a plan in place. You have to say, “I’m going to eat that elephant,” but you got to define exactly what that elephant looks like.
Then piece by piece put the golden place like, “Quarter one, this is what I’m going to do. Quarter two, this is what I’m doing. Within this quarter. I’m going to break it up. This is what I’m doing in the month and this is what I’m going to do week by week.” We just put together a marketing plan on Houston House Buyers. It’s a postcard campaign. I started with who do we want to market to? I bought a list that I created and it has about 85,000 names on the list. That’s about $40,000 to mail it out. I don’t want to spend $40,000 in one week and then have all those leads. I decided do I want that to be a twelve-week campaign? Do I want that to be an eight-week campaign? What’s my budget for marketing? I decided that, broke it up and divided the list into those chunks.
I started with the goal in mind. How many houses do I want to buy? I went from our marketing. We were buying houses already from our online marketing. From our direct mail marketing, how many houses do I want to buy? I want to buy four houses a month from direct mail. That means I need to spend $20,000 a month. I need to spend $5,000 a week. It means that’s 10,000 postcards. I’ve got an eight-week campaign. I started with the goal in mind. What do I want to accomplish? Most people don’t start with that. We’ve seen people come into the weekend event and they’ll say, “I want to do ten deals next year, ten flips. I want to make $300,000 doing ten flips.” We’re like, “That’s $30,000 per flip. What price range flip do you want to do?” They tell us $170,000 and I start scratching my head because although you’ve set a specific goal, you need some help because everybody knows the 70% minus repair rule. On paper, all of that looks great. I’m going to flip. I can find $170,000 houses when that’s asset ARV. I can find those houses, I can flip those houses. If I do that ten times and make $30,000 per house, then I’ll make $300,000 at the end of the year.
However, you talked to somebody that’s experienced and they go, “That’s not going to work.” Talk to somebody who’s done over 500 houses in the last five years and they’ll see some flaws in that. That’s me because, through Houston House Buyers and Quality Property Solutions, I’ve done over 500 houses in the last couple of years. Borrow my experience, because there are only two ways to learn. You can learn through your own experience. You can learn from the experience of others. You can learn from a book which is learning from the experience of others. I’ll make a statement and I hear people in my mind, “What about this? What about that?” Yes, like when we talk about the four ways to make money in real estate and that it’s buy and hold, it’s buy, fix and flip, it’s wholesaling and it’s being the lender being the bank. My dad’s been a land developer for years and years. That’s buy, fix and flip play.
Every single thing you can think of falls into one of those four different categories as it relates to real estate. If you’re not clearly defining your goal and then matching the result-producing activities to that goal, that’s the number one reason why we see people aren’t where they want to be a year from now, two years from now or three years from now. What if or they’ve given up on the dream of being able to retire. They think it’s a twenty-year goal not knowing because they’re wrapped up in the conventional wisdom, which says go to school, get good grades, so that you can get into a good college, so you can get a degree, so you can get a good job, so you can work 40 years roughly give or take.
I think a lot of it too is when people sit back and realized that that plan isn’t working, they’re like, “I didn’t make the right choices. It’s over.”
Who do you turn to? Because who you’re going to normally turn to is your friends. When you look at your top five friends, we hang out with the people that we’re the most like. We’re the average of the five people that in terms of income, in terms of how we dress, what we drive or where we live. We’re the average of the five people that we hang out with the most. We’re going to turn to our neighbors.
They’re on the same boat. We’re on the same sinking ship together. What they don’t realize is it’s not too late. It’s not over. For conventional wisdom, sure, that route is done but there are other ways.Surviving is different than living. Click To Tweet
A lot of people think, “All I got to do is just work a little harder.”
I’ll pick up a part-time job driving Uber after I worked ten hours a day.
I know that there are people out there now that are working as hard as an Elon Musk or they’re working as hard as Sir Richard Branson. They’re working as hard as any of these guys that are earning way more money. Bob McNair passed away. I’ve been reading a little bit about where did he make his money because he’s self-made. He didn’t come from a family of a lot of money. You read his biography and there was a lot of struggle there. He was born in Florida and then raised mainly in North Carolina and moved to Houston with his wife. They said, “You’re an overnight success after twenty years of hard work.” He started his first business, he started with a business partner in auto leasing. It didn’t go well and then he started his own and that didn’t go well. It wasn’t until he started Cogen that he did well. That took off really well, then he sold out to Enron. Apparently, they didn’t pay him in Enron stock or if they did, he cashed out of that at the right time.
I don’t know the rest of that story. If you look at a guy like that, there are some things that, again, success leaves clues. He said, “You can’t go wrong doing what’s right.” That’s one of the things that his dad always said. Then his mom said, “Don’t ever do something that you wouldn’t want to see yourself on the front page of the newspaper doing.” He seemed like one of those good quality character guys. I know other guys that work just as hard as a Bob McNair. People come to him and say, “Bob, McNair, you always have such a great attitude. Every time I see you, you’re always upbeat. You’ve got this incredible smile. You’re always the kind of person that you want to be around.” He goes, “I want my word to be my bond. I want people to say about me is that I always did the right thing for the right reasons.” He goes, “I’ve never met a successful person that had a bad attitude.”
A lot of people think, “That guy’s got a reason to have a good attitude.” He does now. He didn’t when he started. What you got to realize is it’s the attitude that got him there. There’s a saying, “It’s attitude not aptitude to determine your altitude.” Do you have to work hard? Sure. Do you have to develop some skills and talents along the way? Sure, but there are people that do that with a bad attitude that are still just doing that.
Here’s one of the things that I recognize is that I can’t control the weather. I know a lot of people are like, “I can’t believe it’s so cold outside.” That turns your attitude sour. It will ruin their day and you can’t control that. What you can control is your response to the weather, which is your attitude. When you can control your response to something, I can’t control what happens to me on a daily basis. I can only control how we respond to those things. What I recognized when I studied successful people is that most successful people have a great attitude. It’s the great attitude that leads to success. It’s not the great attitude as a result of the success. I’m not saying that you can’t have bad things happen to you. Tell them, “I chose to have a great attitude now and you won’t believe how bad my day went that day.” It’s okay. There’s another day tomorrow.
You can start over. Jim Rohn is famous for saying that humans are the only species on the planet that can decide to change their life. Just in a simple second or instinct, you can change the trajectory of your life by making a simple decision. We’re the only species that have the ability to do that. It’s a blessing.
Here’s what I can tell you. First, decide where it is that you want to get to. Number two, develop a plan. Most people never decide where they’re trying to get to the second day. Most people spend more time planning their next vacation than they do planning their life. How sad is that? First, decide on the destination. Where do you want to get to a year from now, two years from now, three years from now, four years from now or five years from now? Decide that first. What I see is sometimes people will say, “I want to make $500,000 a year passively within five years.” Is that doable? I would say yes with this caveat, “Do you have the skill set and are you willing to put in the work?” Most people are like, “You don’t understand the hustle I’m willing to do.” If somebody wants to take the first step to put a plan in place or to setting those goals and then putting the plan in place, where would you send them first?
I would first send him to our website. There are a lot of good information on there. There are a couple of videos that we’d love you to watch to understand what we do and what we’re talking about.
Go to Why Real Estate? on the upper left-hand corner and watch a five-minute video. The $150,000 example.It's attitude, not aptitude, that determines your altitude. Click To Tweet
Mind you this, that’s a retail deal. We don’t typically do retail deals. We’re doing even better than that. If that makes sense to you. Check it out even further. Go to the events tab. Come to one of our free events and let’s talk a little bit about what your plan is and where you’re trying to go. What we find is often people, even if they do have a goal, they don’t necessarily know how to get there. They’re not quite sure what the best route is. A lot of times people may not quite understand where they are. You are going on vacation and you know that you’ve got five days. You can go pretty much anywhere, but Australia wasn’t on your list.
I considered it but I know it’s seventeen hours to get there, 36 hours round trip.
What most people need to also realize is, “What’s your budget for your trip?” You’re not going to hang out in Saint-Tropez if you’re looking to spend $3,000 on a five-day vacation. Knowing where you are and knowing where you want to be and finding a guide to give you a plan to get there, you need to break that down into small bite-size pieces.
Go to RightPathRealEstate.com and watch the Why Real Estate? Also register for our next event and let us know that you’re coming so we make sure that we have a seat available for you. We’ve got materials. We’re going to give you some free gifts. Thanks for joining us.