You Need To Know Where You Are Now… (in order to get where you’re going)

In order to make progress in any part of life, you need to know where you are now before you’ll ever have clarity on how to get to where you want to go.

If you want to get to…let’s say…Hollywood–pretty much anyone with a cell phone can help you but only if they know where you are right now. Otherwise, the directions they give you will be useless because they have no reference point to begin from. Essentially, it would be a shot in the dark. However, if you can identify your location, they plug it into their little handheld computer and within seconds, provide you with multiple options for directions regardless of your form of transportation. In fact, they can usually narrow your arrival time down to almost the minute.

Shouldn’t this same concept apply to life? 

If we want to go somewhere, achieve a specific goal, shouldn’t we know where we are in this moment so that we can devise a plan or path to get us to our destination?

Here’s what I mean…

Suppose you want to run a half marathon. What are the chances you could go out today and do that and be successful?  I am going to guess for the majority of us, completing a half marathon isn’t really feasible. Many of us wouldn’t make it to the 5 km mark, let alone running for 21-ish km. How does we get from where we are now to the completion of a half marathon? Logic would say to figure out how long we can run right now and then to increase steadily until the final distance is possible.

That training plan might include finding a coach to ensure this is done safely. Injuring ourselves is obviously not going to help us get to our goal. We might need to learn more about short runs, longer runs, discussion on meals, in-run refueling, proper equipment and keeping hydrated. With a well thought out plan, barring any medical conditions, it is conceivable that within a specified period of time we would reach our goal of running a half marathon. (and for those of you who run the full marathon, well that’s just insanity and we are NOT going there…LOL).

Let’s apply this to building a real estate investing portfolio.  I know it feels overwhelming to choose where to start.  So–one step at a time, and let’s break this down.

Financially, where are you?

Let’s look at your assets. What do you bring to the table that will help you buy into any real estate investing deal? Do you have a job? That’s a great place to start, because it will help you get a mortgage.  Now, if you work for yourself a mortgage can be more challenging depending how much you declare on your taxes.  This is a Catch-22–the more you declare, the more you get taxed…but the less you declare the more difficult it is to get a mortgage. Tip:  discuss your personal situation with a go getter mortgage agent that can walk you through this.

 How much are you actually worth?

Banks will want to know how much money you can bring to the table. So it is time to take stock. Let’s look at money in bank accounts, money in the stock market, money in second mortgages or loaned out in any form. Consider the value of your home and any other real estate you might own.  You will need to add in the value of your car(s), if you own one.  As for more expensive jewelry, boats, and lucrative toys, add those.  Anything that could be sold for a notable amount let’s say $2500 or more. Add up their total value.

Now we need to look at the other side of the coin, your liabilities. Calculate out all your mortgages, your lines of credit both secured and unsecured. You will need to add in your car loans, and your credit card debit along with any other debt that you might be carrying such as payday loans, etc.

Now that you have collected all your information it is time to take stock.  In order to determine your net worth, add up all your assets and subtract the liabilities. Ideally, that number is a positive one. (If not, that’s okay, we will work on improving that).

This is not an exercise you do once and forget about. This is an exercise that you do at least twice a year. It is how you gauge your performance.  If each time you do it, the bottom-line number goes up, you are heading in the right direction. If the number starts going down, it is a warning sign that maybe some adjustments need to be made. Time to study where those are and how to adjust to bring that number back up.

Desired lifestyle – where are you with that?

Okay, so we have taken stock of the financial stuff, but the fact of the matter is money doesn’t bring us happiness.  It is what we can do with money that brings us happiness.

Now this will be harder to quantify but it’s a necessary exercise too.  Let’s take stock of all the things you currently do that bring you happiness.  I know this sounds wishy washy, but humour me and do it anyways.

Let me get you started. How many weeks of vacation do you take?  What is the caliber of that vacation?  How much time do you get to spend with your family each week?  How much time with friends?  How much time do you spend doing fun activities you enjoy like skiing, boating, surfing, running, whatever?  How many weekend trips do you take?  How many concerts?  How many sporting events, cultural events like plays, the opera or ballet, do you attend? How often (on average) do you go out for dinner?  What caliber of restaurants?  What kind of car do you drive?  What house are you in?  What vacation property(s) do you have?  These may be things that bring you joy.  How much time do you spend on enjoyable projects, work-related and otherwise? How often do you shop in your favourite stores? The list of potential items is limited only by your creativity and level of desire.

Sometimes a well-designed life is about the things we don’t like and can avoid. So, let’s start recording that. How much time do you spend cleaning? Driving? Running errands? Going to work? How often are you sale shopping as opposed to buying what you want whenever you want it? How much time is spent maintaining your personal property, or cars? How often are your cars breaking down?  How often are you choosing the full meal you want as opposed to the one you can afford? How often do you avoid the convenient/preferred option, due to price, such as driving when you could fly?  Or taking coach when there are premium seats available? Driving home when you could book a room? Economy rooms when there are luxury suites? You get where I am going with this. Spend some time thinking about what you don’t like and record it.

Look back in five years…

I encourage you to look back at this list five years from now and be impressed with the improvement in your lifestyle. However, just like with the financial piece, you need to keep updating this to record how far you have come. I find it a great motivator to keep going as you see the progress of moving into your designed life.

I think you will find that as your lifestyle improves so will your belief in what you think is possible. We set new goals as the others are achieved.  This is not a bad thing. This is a good thing. It means you have made progress; your thinking has grown.  Of course, you want the next best thing. It’s about constant and never-ending improvement and growth. If we don’t get rewarded for that growth, why would we ever do it in the first place? The reward doesn’t have to be material, convenience or comfort, but if it is so be it, why be ashamed of that? The truth is the more you have the more you can give. Every time you buy something, you create a job for someone else, likely multiple jobs. With more money comes more ability to help others. That is a proud place to be and not a place of shame that the well-off sometimes get labelled with. My attitude is as long as you are still finding happiness, not hurting others, and improving lives, desire all you can.

Now that you know where you are…

Learn more about the “Five Steps to your First Buy” in my e-book (just drop your email on the home page and the e-book will land in your inbox. Let me know how it helps you move forward to your real estate investment portfolio.