We use to have an amazing real estate lawyer. Unfortunately he passed away from cancer a couple years ago but there’s so much advice he gave us that I’ll always cherish. One of which was:
‘’There are 2 things that can sink a business.
1. Lack of income
2. Scaling too quickly”
You’re probably wondering how scaling too quickly can sink a business. Shouldn’t it be the opposite? Shouldn’t revenue be soaring? In hindsight yes, but truthfully, most entrepreneurs lose control of their business when growth is too rapid. They don’t have time to implement the right systems, or they hire the wrong people, or they overleverage themselves and make costly mistakes. Typically, they burn out.
Personally, I find it’s best to aim for slow growth. Taking the time to test out the systems, ironing out the
kinks, living through a couple market cycles to fully understand how to build your business in a way that it can withstand the highs and lows. The ultimate goal is to build a business that can run without the owner being involved in every step. That’s the dream, but it takes time and patience.
This is true for every type of business, but if we zero the focus on real estate investments, because it’s probably why you’re here reading this. I see a lot of people go from starting with buying 1 duplex and going straight to wanting to develop a 10-unit construction. They buy a piece of land and jump all in, but then they see what it really entails: a few years of waiting, thousands if not hundreds of thousands of dollars in engineering and architectural fees, reports, and city applications out the wazoo. Fast forward a few years later, there's still no building on the land but there is a "For Sale" sign now. And oh, that duplex they bought is also For Sale now.
That’s basically like ditching the training wheels before you’ve learned to keep your balance and falling flat on your face. They might get back on that bike a few years later but they’ll keep the training wheels on for a lot longer that time.Time and patience is all it really takes so you can learn to properly keep your balance not just when the road is nice and straight but also when you get the tight curves, steep hills, and last-minute potholes. You know what we call those types of investors? Experienced investors. The ones who gained all the necessary experience throughout the last decade of market cycles, with all the types of properties and management situations you can imagine. They have the capital and the team required to hold a development project through all its phases before it even hits the ground, while managing other properties and other projects smoothly.
The moral of the story is not to rush through your goals. Real estate investing takes time! It’s not a get rich quick scheme, contrary to popular belief. It is in the sense where it can take less years than if you were to stay at a 9-5 and only try to climb the corporate ladder. I think there’s less risk to invest in real estate than to only rely on a job for income. But that can be an entirely different subject to talk about.