Real Estate Rule 1: Don't add steps

Hey YouTube, it's Christian. I'm here with Cody and we are starting a new series. We're going to go over the rules and guidelines we have towards investing in real estate. This is going to take most of the rest of the year. We're going to launch these on Mondays, but we're going to start today with rule number 1. The first step is don't add steps. Something Cody and I have learned, me really painfully, Cody figured this out a little bit younger, but as you go, we have a tendency to add steps and qualifications. To get to the next step. I think we start in kindergarten and we learn, hey, we need to do this to get to first grade, and then second, and then middle school, high school, go to college or don't go to college, get your dream job. Every time you do something, people have a tendency to add qualifications. You don't necessarily need to do that. Don't skip steps, but definitely don't add them.

When you're looking to go get into the real estate space, Simplicity is key. And really building a business, if you keep it simple, your odds of success are higher. A lot of businesses don't do well. A lot of businesses either break even or lose money. And that's not a very sustainable business model.

No, it's not.

And so when we're going out buying real estate or building a business, our number one question is how do we buy it? And our second question is how do we never lose it? If we're doing just a business, what do people need and how do we provide it to them? Those are the basics of a business and then on the backend of that, how do you monetize? And if you follow those rules, then you're not adding extra steps, you're not going around, well, I need to file my LLC and then I need to do a product offering and then I need to go talk with my attorney and my tax guy or gal. It's just simple. You know, what do people need? Can I provide it to them? And then how do I make money? If you can answer those questions, now you have a business and then you can work on the backend stuff. Later, but most people want to add all those steps from the front end. They never monetize, the business loses money, and then they quit. And back to the real estate piece, you know, how do you buy it? Well, you write an offer. How do you never lose it? Well, you make sure it cash flows and you have management in place. It's that simple. And because of that simplicity, it's allowed us to go scale. And when you're going out trying to do it yourself, when you're trying to go buy your first piece of real estate or your 100th property, your 100th rental unit. You know, regardless of what it is, as long as you keep it simple, you're going to go a lot quicker than the people around you, and it's going to give you more confidence to keep going and repeating that action which led to success in the first place.

So how do we actually eliminate unnecessary steps? Well, the fastest point from A to B is a straight line. So the first thing you have to do is identify what is point A? Where are you starting at today? The next piece is identify point B. Where are you trying to go? Now, on that straight line, there are going to be things you have to do to get from A to B. The easiest way to do is actually map it out. Write down, this is where I'm at today. This is my starting point. Here is A. This is what I want to do and why I want to do it. It's important to add your why to that. And that's point B. Now write down the steps that you feel that you need to take to get there. Write down everything you think of. Then take a second look and see if any of those can be eliminated. For example, if you want to be a real estate investor, the easiest way is to go buy a piece of real estate, right? That you've hit your goal now. You've invested in something. What are the actual steps to get from point A to point B? If you write them all out and it goes, well, I want to study for a while, I'm going to watch some podcasts, I'm going to become a broker, I'm going to become a property manager for someone else for a little bit, I'll get a job in the field, I'll get pre-qualified, I'll go— if you're starting to write all these steps out, you want to go back and say, do I need to do this step to get to where I want to go?

But Christian, everyone says, well, do I need to be a real estate agent to buy real estate?

No! Real estate agents help people buy real estate. You don't have to buy real estate to be an agent, therefore you don't need to be an agent to go buy real estate.

And you don't need to be a property manager. You don't have to be a business owner. People own businesses and businesses own real estate and people own real estate individually. Well, there's a common denominator there. Are you a person? If you can check that box, voilà, you don't need to do anything else. You just need to find a piece of real estate. Then it comes down to deal, debt, equity. Do you have a deal? Can you get the debt? In my case, seller financing, yes, I could get the debt. There's no qualifications for that. And then if there is a down payment, how do you get the equity? See, everything has its own steps, and it's very concise, very simple. You don't have to go get all these job titles to go get it. You don't have to add the steps of being an agent, being a broker. You know, some places those are not the same thing. You don't have to be a loan officer, and you don't have to be a property manager. You have to be someone who wants to be an investor, and then you have to do this crazy step called investing, and you have to buy a piece of real estate.

Now, Kiyosaki references a grid. The reference is called the cash flow quadrant, where you're either an employee or self-employed on this side, or you're a business owner or investor on this side. If you're operating over here, you do have steps. You actually need that title to get to the next space. So you need to go to college to get the job. You need to start an entry-level job to get a higher-level job. There's time and there's career. When you're operating on this side, a business owner or investor, the goal is efficiency. You don't need to qualify yourself to yourself. Yes, go out and get the education. Absolutely learn. But the practice is going to be more important than the information. Apply. Don't just gather information, focus on application. How are you going to go out and execute?

And as you grow, you're going to get new problems. When you're getting started, your problem is, "I don't know how to buy a piece of real estate." Well, decide you're going to go buy a piece of real estate. If you're not an agent, you don't know how to help other people, go get someone who can help you. Have someone in your space, go find a broker who will find you a deal, and go buy it. And when you buy it, now you have a new problem. Well, I don't know how to manage it. That's the right type of problem to have compared to the person who doesn't have any real estate. You're going to get new problems, and as you solve those problems, you're going to make more money. That's the natural progression for this game. But again, each step of the way— I don't have a manager. What's your step? Look up management companies that are local to you. Call them up, qualify them. Boom, you found your management company. Then you have to look at the books so that you can either refinance or that you can just choose to pay off the debt. Does it cash flow? Well, to do that, you need to figure out how to analyze real estate. How do you analyze? You write out income less expenses equals cash flow. You're hoping that's a positive number. If it's not, you're not going to buy the real estate. Every cycle, every little acquisition or facet of the business has simple steps. You just have to know it's usually 2 to 3 steps and then it's done.

You're not going to do something if it's really complicated. If you add a bunch of steps for yourself, There's enough steps already involved in finding the deal, doing the analysis, building the right team, getting financing, and actually closing the darn thing. There's a lot of steps already involved. There's no reason to add them. If you make it complicated, you're not going to accomplish anything. It's going to become overwhelming. You're going to get slowed down. This happened to me where I got a job in real estate working for CoStar, LoopNet, Apartments.com. I was like, "Oh, I'm going to be around all these people. I'm going to learn all this knowledge." Did the base knowledge help? Yes. Did it cost me 5 years when I could have done it all in like 6 months? Also yes.

Yes.

You don't need to add a bunch of steps. Yes, learn, but don't stay in that learning space forever. Go out, practice, apply. If you're doing something brand new for the first time, go get a mentor. Don't get a new job. Don't read another book. When you're ready to practice, you have some base knowledge, find someone who's been there before, follow them, have them go alongside you to help you eliminate mistakes. And lastly, know that mistakes are okay. Just don't make them twice. When we bought a bunch of real estate for the first time, I didn't know accounting, but our options were get a whole bunch of revenue and then figure out how to account for it, or don't get any revenue and then we don't have an accounting problem. I would rather have the revenue. Now I have a mentor who is guiding us through tax season and everything is working smoothly. It's a lot of work on the back end, but it's the right problem with the right mentor to guide us through it. And that's exactly where you want to be.

And smooth is a little bit relative there.

Okay, that's fair.

But that said, you know, you can add steps, just understand that it's gonna add time. Christian didn't have to take 5 years to go buy a duplex. He did. And today he has 77 doors. You can still scale, but once you take steps out of the equation, you understand that super simple And people are overcomplicating this game with all these different terms. Astro-flipping, burr. I mean, you got to do all these different techniques to get rich. It's not that complicated. If you keep adding income in excess of your expenses, you will get wealthy. You don't have to memorize all these fancy terms. How do you buy it? How do you never lose it? And if you can answer those two questions, you will get wealthy over a period of time.

So this has been question one. Or sorry, rule 1: don't add steps. We're going to cover this every Monday throughout pretty much the rest of the year. We have a bunch of these and we'll keep adding more. So watch here, write these down, learn them. Most importantly, don't add steps. So you got to go apply these.

Like, comment, subscribe if you haven't already. And as always, we won't add steps. Don't do it yourself. We'll see you guys next time.