Real Estate Investing for Passive Income: Why Most Investors Get It Wrong! 🏠 #investing #realestate #investingguide

So many real estate investors jump into buying properties or investing passively in real estate without fully understanding their long-term financial goals, which might leave you rowing in the wrong direction. So we brought in Jordan Morehead today. He's a licensed real estate broker. He owns Mobile Home Park and over 35 other residential properties. He is the host of the Austin Real Estate Investing Podcast. And we wanted to bring Jordan in to talk about how your investment thesis really needs to hinge on your long-term financial goals. So Jordan, you know, walk us through the process here for anyone who is trying to figure out, you know, where to go with their real estate investments. Absolutely. I love that. And I loved your intro too, because when I started investing in real estate, my only goal was I wanted to start investing in real estate. I didn't really have a why behind it. And that's where an investment thesis comes in for me. So I really want to have, why am I doing this? What am I trying to achieve? And that helps you to really narrow down, what am I investing in? Why am I investing in it? Does this make sense for my investment thesis? And I wish I would have known this in the beginning, because I just started buying investments. And for me, how I was taught to look at things by just, you know, different websites, listening to podcasts, was just looking singularly at the investment. And is this a good investment or not? And I've never considered, is this helping me reach my long-term goals? You know, so if I have long-term goals to, let's say, have $10,000 a month in cashflow, super popular long-term goal that I hear about all the time. Does this property get me closer to that goal or not? Or is it just a good investment on paper? Does it look good on the spreadsheet? And you might be saying, well, obviously it's going to get you closer to that goal, because if you're buying a good investment, it's going to cashflow, right? But depending on what stage of your investing career you're in, it might look different than something else. So if I can get, let's say it's a 20% cash on cash return, but I have to put all this money into it, and yeah, I'm going to burn it and get money out, but I only cashflow 50 bucks a month, after I burn it out, which I've done a lot of that. And that's why I'm saying that I've done a lot of properties where we cashflow 50 bucks a month or so. And it's a great cash on cash return, but it really didn't get me any closer to my goal. And if I would have done it differently and looked at it and said, hey, you know, this property may not hit my needs right now. What else could I do with it? Or what else could I do? Maybe I could flip that property, take that money, invest it into a bigger property or a commercial property that actually cashflows and gets me closer to my $10,000 a month goal. Or rather than spending time looking for properties or single family properties that don't cashflow well, I really just niche down and looking for exactly what I'm trying to get. So you can use it to plan long-term and say, hey, I'm going to use these, I'm going to build up equity for a few years, and I'm going to transfer this equity to something that cashflows more. Or you can say, hey, that just doesn't fit my needs at all. I'm going to not waste my time doing it. I'm going to move on to something else. But without an investment thesis or a general reason of why you're investing, everything's going to look great. And that's the cool thing about real estate investing. There's so many awesome ways to do it. That's also the hard thing about real estate investing. There's so many choices. And when you don't know what you're trying to do, where you're trying to go, everything looks awesome. Yeah, no, it's so true. I mean, there's an unlimited number of ways to invest in real estate, both on the active side and on the passive side. One of the things that we spend a lot of time talking about is all of the many different ways to invest passively and all the things that we do in our co-investing club, because half of our members have never even heard of some of the stuff we're doing. I mean, we're doing JV private partnerships, and we're also investing in debt and private notes. And then we're doing syndications and real estate funds and all kinds of stuff. And sometimes a combination of several of them at once. And the same thing goes on the active side. And one thing that you brought up that I thought is worth just highlighting is that it's not so much about right versus wrong investments or right versus wrong actions or steps to take, because the right action really depends on where you are in your own process. So I'll give you a quick example. I started out doing BRRRR investments, buy, renovate, rent, refinance, repeat. And I was way over leveraging. And I didn't have the skill yet when I first started in my twenties to be able to do that safely. A lot of people, when they first get into that strategy, they're like, oh, this is great. I'm going to pull all of my money back out of this rental property. I'm not going to have any money tied up in it, and it's going to be great. And then they realize that they've over leveraged that property and they've got negative cash flow, or maybe they're upside down on the property because they don't have the skill level yet to do that. It doesn't mean that the BRRRR strategy is an inherently bad strategy. It just means that you didn't have the skill level to do it right. So yeah, no, I love taking that big picture approach and really honing in on what are my personal financial goals long-term? How will any given investment either serve, get me closer to those goals or will be a distraction from them? Because real estate in particular can take up a lot of your time and resources outside of money. It takes time to become an expert or it takes time to develop the skill. You need to do it right if you're actively investing as opposed to passively investing like we do. So yeah, that all makes sense and it all comes down to context and your larger personalized goals. So Jordan, in 30 seconds or less, how do you help people and how can people connect with you if they want to take you up on that help? So how we help people, I have a team of realtors here in Austin and we just help people get started investing in real estate. We help a lot with house hacking and again, trying to help people figure out where they're trying to go and how they can get there. So try to help clarify their goals. I've told so many people, hey, you probably shouldn't actively invest in real estate. It sounds like you should go passively invest with someone. So I think you got to talk to different professionals, understand that most people have a reason for telling you what they're but just take it all into account and find the right way for you because it might be passive, it might be active, it could be both. Yeah, absolutely. Well, Jordan, we really appreciate you coming on today and guys, if you enjoy these short focused episodes, please rate and review the show. It makes a world of difference to us and on that note, we will catch you next time. Want the cashflow appreciation and tax benefits of real estate without becoming a landlord? You've heard REITs and real estate crowdfunding, but you probably don't know much about five other ways to invest passively in real estate. So we put together a free video course for you to show you how to consistently earn 15% plus returns from five lesser known hands-off ways to invest in real estate. And even more importantly, we'll keep risk front and center in that whole discussion because really what's the point of investing for high returns if you also take on high risk, right? So visit sparkwindow.com slash free to take our free course. Each video is snackable at 10 to 15 minutes long and the entire course takes less time than watching a movie. Looking forward to chatting with you from within the course.