How many rental properties do you need to retire rich?
I hope you are doing well.
Before I dive into today’s blog post, I would like to thank fellow Canadian Real Estate Investor and Blogger Chris Davies. I was chatting with Chris this week, and he gave me some great tips as to how I can improve my blog. One of the blogs that he recommended to me that I am going to be leveraging in order to improve my blog is SEOmoz. The SEOmoz blog has nothing to do with real estate investing, however, everything to do with Search Engine Optimization — which is something that I am going to be learning more about and integrating with First Rental Property. Thanks again Chris!
Now for today’s blog post…
In Julie and Dave’s recent Rev N You Newsletter, they talked about figuring out your ‘why’ when you are buying rental property.
Over the past couple of years, they have met a number of real estate investors who have purchased 30 or more properties in a very short period of time.
Despite these large portfolios that these investors have accumulated in a very short period of time, they are not satisfied. They are not satisfied because they never took the time to figure out WHY they were investing in the first place.
When I read this in Julie and Dave’s Newsletter, I knew exactly what they were talking about, because I see this happening as well with real estate investors that I know, or hear about.
It has been my observation that some real estate investors become obsessed with buying as many properties that they can. Some investors ‘explode’ onto the real estate investing scene and buy a lot of properties REALLY fast. Before the dust has settled, some find that they are in a situation in which they despise….very unhappy, and holding a large portfolio of rental properties.
For instance, they now have a lot of additional stress with the management of these properties and with dealing with all of their tenants.
Why it pays to be self aware…
Most Real Estate Investors just like most of the general population are not overly self aware. Due to this lack of self awareness, people do things without really thinking why they are doing it.
Fortunately, I have always had a high degree of self awareness. This has helped to guide me through my real estate investing career. If and when I begin to question what I am doing, I have to stop and ask myself the reason why I am investing in real estate.
As a new real estate investor, being self aware is crucially important. Generally speaking, the more self aware you are, the less stress you will cause yourself down the road.
Here is an example of what I mean…
Some new real estate estate investors think investing is all about money, and all about how many properties you can buy and how fast.
Fortunately, I came to realize early in my real estate investing career that it is not all about that.
This past year, I had to turn down an individual who wanted to joint venture with me. He was a guy with access to a large amount of capital and with experience in real estate.
When he first asked to joint venture with me, I struggled slightly with the decision making process, as all I saw were ‘dollar signs’, as I did not want to turn down this guy’s money.
Being the extremely self aware individual that I am, it did not take me long to figure out that I had to listen to my gut and not joint venture with this guy.
He was someone that did not have the same core values as myself. He viewed life and business much differently than I did. His time horizon for investing did not match up with mine. Due to all these factors, my decision to turn him down was very easy.
Having only been investing in real estate for a little over 5 years now, I know well enough never to venture with someone who does not share the same core values that I do. This in my mind is a recipe for disaster.
Unfortunately, there are so many investors who do not realize this and jump into partnerships with anyone, just because that other person has money to invest. They get blinded by the dollar signs, and more often than not, are left cleaning up a mess and/or are completely miserable.
What I have learned by observing others…
I have been fortunate to learn a lot by watching what other investors do.
What I have learned is that in this point in my real estate investing career, I would only joint venture with family members (people that I am related to) or with people who have core values that match up closely with mine. (this could be close friends, friends or acquaintances — however, there has to be an alignment of core values)
Due to this decision on my part, it may take me longer to build my real estate portfolio, however, I will be much happier and will not be adding any unnecessary stress to my life by partnering with people just because they have money to invest.
So how many rental properties do you need to retire rich?
There is no right or wrong answer to this question.
This all comes down to your own personal goals.
As you can see from my example, I am choosing to grow my portfolio more organically…
It is perfectly okay to grow your portfolio in this manner.
If you are a new real estate investor, you may only need one rental property to meet your real estate investing goals.
Let’s say for example, you chose to purchase 3 properties. Depending on your individual circumstance, there is no reason why you cannot do this on you own. For some it may take a number of years to acquire 3 properties by yourself. Whereas with others, it may only take a few months in order to achieve this.
At the end of the day it is important to remember:
- There is no ‘secret’ number of properties required to retire rich.
- It is completely fine to grow your portfolio organically (by yourself)
- If you do joint venture with someone, make sure that you are not doing it just for the money, and that your partner and yourself are well suited for one another.
PS: To keep up to date with my blog, enter your email address on the LEFT hand side of the blog. To receive The First Rental Property Newsletter, enter your e-mail address on the RIGHT hand side of the blog. In The First Rental Property Newsletter, experienced real estate investors will be sharing how they purchased their first rental property. They will also share with you some ‘tips’ and ‘tricks’ as to how to buy rental properties.