Your Real Estate Investing Goal Is Lame; Let’s Make It Better

Defining your real estate investing goal is likely the most important thing you will do to ensure success. 

That may sound dramatic, but I assure you it isn’t.

A well defined real estate investing goal will help you formulate your strategy, allow you to measure progress, and remind you what you’re working toward when things inevitably get tough.

Sadly, most people already think they understand why they’re wanting to invest in real estate. The reality is they haven’t actually done the work to properly define their goal. 

When I ask people what their real estate goal is they usually respond with why they are wanting to invest in real estate. But they can’t actually articulate the nuances of what they are hoping to accomplish.

I know that all sounds a bit vague so let’s dive into the pitfalls people seem to fall into when thinking about their real estate investing goal. Then I’ll detail how you can set yourself up with a goal that is actionable.

How Most People Think About Their Real Estate Investing Goal

Even when I talk with folks and tell them they NEED to define their goal very few actually end up doing it. 

And I get it. It’s not sexy. 

Like most things, defining a real estate investing goal takes some time and effort. It may even take a few iterations (more on that below).

So what happens when I talk with folks and press them for a goal? Or what do they say when they’re telling me why they want to invest in real estate?

I generally get two types of answers.

The Passive Income Goal

A lot of people simply tell me that they “want to build passive income”. They know real estate is one of the best ways to do that and they are excited to get started investing.

This really isn’t a goal. It’s a desire.

And it’s actually super easy to move from this desire and onto the next step. I call this next phase the quasi-goal. 

The Outcome Driven Real Estate Investing Goal

Most people can pretty quickly tell you WHY they wish to build passive income with real estate.

Some of the top responses I get are:

“I want to be in a position where I can be work-optional”

“I want to retire early”

It’s not uncommon to be burned out from your job. It’s also not uncommon to feel trapped in your occupation, especially if you’re a high-earner or supporting a family or lifestyle that depends on that income.

That feeling of being miserable at work manifests into feeling like you have to do something. The answer to that “something” quickly becomes real estate investing.

And sitting around planning a solid goal does not at all feel like actually DOING something. It feels like a waste of time.

So 90% of people stop here, figuring their desire to get out of the grind is the actual goal. But they couldn’t be further from the truth.

They’ve only done a small fraction of the work to actually define their real estate investing goal. In fact, all they’ve done is conclude that they need to take action and real estate seems like the right way to go.

While this quasi-goal is an important part of the equation, it’s just that… one part. It’s the desired outcome or destination, if you will. 

And while it’s fantastic to know what you want to accomplish, you also need to know what it’s going to take to make it a reality.

The Right Way to Define Your Real Estate Investing Goal

A strong, actionable real estate investing goal has three components:

1. Money
2. Time
3. Desired Outcome or Destination

If we look at this like an equation we get something like this:

Monetary Component + Timing Component = Desired Outcome/Destination

The outcome here is always what we’re trying to accomplish. Framed another way, it’s our destination.

This is the part people refer to when they say they want to retire early or get to a point where they are work-optional.

Let’s take a shot at this.

An Example Real Estate Investing Goal

Instead of just “retiring early” as our goal, let’s add a time component and say we want to retire in the next 10 years.

But what does it take to retire? How much passive income do we need to be generating each month to achieve retirement? 

If you don’t know the answer to those questions, you have some work to do! Luckily, I cover exactly how to drill down on that in an upcoming post.

For now let’s say you’ve determined that amount to be $10,000 per month.

So our new goal sounds something like this… 

“My goal is to create $10,000 in net cash flow so that I can retire within 10 years.”

Now THAT is an actionable goal!

How I Approached My Real Estate Investing Goal

Generic examples are one thing, but real life tends to be a completely different beast.

In 2017 my family and I relocated from the San Francisco Bay Area to Metro Detroit. The idea was to decrease our cost of living so my wife could be full-time with our son. 

But after about 18-months we realized we weren’t super happy there. 

We started brainstorming ideas on how to be happier. My wife didn’t enjoy the winters. She also missed family and friends. She’d grown up in Southern California… can you blame her?

Our solution was to start taking month-long vacations to California each year to break up the winter and visit friends and family.

That worked for a bit.

But I wasn’t feeling Michigan either. I grew up in a very small town surrounded by nature, and it was difficult being in my home state and feeling so far from home.

I’d also spent nearly 15 years in California. Michigan weather was just less tolerable since I’d grown accustomed to a California climate.

We debated getting a vacation home so I could spend time in the woods and away from the cookie cutter suburb. But our trips to California were an annual reminder of what we were missing. 

Ultimately we knew the only long-term solution was going to be moving back to California.

But we couldn’t afford it. Not without my wife getting a job. And that’s the whole reason we moved to Michigan in the first place!

So there we were.

We had our desire for passive income because we wanted to move to California. And I knew real estate was the only logical path.

But I still didn’t have an actionable goal. At this point our kids were 1 and 3 years old. I didn’t want to uproot them when they were teenagers.

I wouldn’t have it in me.

So I knew I had to act quickly. 

We decided that a reasonable timeframe for us to move to California was sometime in the next three to five years.

That didn’t mean reasonable as in achievable. It was still unknown whether or not we could make it happen. It means reasonable in terms of fitting with our boys’ age and still making sense to uproot them across the country.

So we had determined our desired outcome (moving back to California) and we knew the timeframe in which we wanted that to happen (3-5 years).

Now it was time to get to work finding a real estate investing strategy that made sense for us. But at least we now had the foundation for a solid goal… or almost.

Real Estate Goals Are Complex

When you break down a goal to its three main components it makes it look obvious and easy. 

I wish!

The reality is goals are very personal and complex. There are a lot of moving parts and things to consider. 

We usually have a very good idea of our desired outcome. But understanding how much time it will take to get there and how much income we need to create are far less obvious.

And then, once we do feel confident in those two inputs we may have a new realization. It’s likely that the vehicle, or strategy, we use to reach our destination is highly dependent on what we decide are reasonable monetary and time components.

All this to say that it is common to go through several iterations of your real estate goal before finalizing it. 

I know because I’ve been there.

The important thing is to start broad and only then begin to drill down. That’s exactly what I want you to do now.

Action Steps to Defining Your Real Estate Goal

Think about how you’ve been considering your real estate goal. What would you have said it was before reading this post?

Would you have responded like most people I talk to, simply focused on the desired outcome and failing to define the inputs?

Probably. And there’s nothing wrong with that. It’s completely normal!

But we need to be better.

How are you thinking about your investing goal now that you’ve read this post? Hopefully a bit differently!

Here are the two things I want you to consider now:

1. What is your desired outcome?
2. What is your time frame component to achieve that outcome?

If you have a partner or spouse, talk these over together. It’s going to be extremely important to be on the same page.

Notice I left out the monetary component.

Do NOT worry about that yet!

The monetary component is the hardest part of the equation, requiring the most thought and effort. I will tackle that in the next section. In fact, the monetary input of our goal has the most potential to impact our real estate investing strategy.

It could also very well impact our time component.

So again, let’s start with the broad stuff and work our way down. Then it’s highly likely we’ll have to revisit some things and iterate a bit.

Overall, you should be feeling more in control of your future and your real estate investing goals. 

You got this!