The best place to get started in investing is modeling the behaviors of those that have achieved prior success into cash flow assets. In today’s episode, Steven takes us through the mindset you need in order to achieve investment success and the formula is easier than you think.
The best place to get started in investing is modeling the behaviors of those that have achieved prior success into cash flow assets. In today’s episode, Steven takes us through the mindset you need in order to achieve investment success and the formula is easier than you think.
Key Takeaways
Steven Pesavento 00:05
This is the Investor Mindset podcast and I'm Steven Pesavento. For as long as I can remember, I've been obsessed with understanding how we can think better, how we can be better, and how we can do better. And each episode, we explore lessons on motivation and mindset for the most successful real estate investors and entrepreneurs in the nation.
Steven Pesavento 00:28
So, how do you get started? Well, you got to model what successful people are doing. And this is what they're doing. Like what I'm describing, is exactly that. And so there's a formula. And that formula is simple. First, you're going to take your earned income from your career. And you're going to invest that earned income into assets. And then you're going to continue to repeat that over and over again, until you're financially free. So super simple idea, you make money, you work your butt off, you work your ass off to make money, and then you park it in some property. And that property starts making you money and eventually get to a point where you're making more money off of that property. So you can go do all the things that you've been dreaming about doing, instead of spending all that money up front, you wait a little bit, it's that old marshmallow test, you always hear kids, you know, they're testing kids with. But if you can wait, if you can delay that gratification for a little bit, it starts paying for itself. And so that's that's the secret to this whole thing. That's the whole investor mindset is this idea that I'm going to earn money in my business, or in my profession, and I'm going to park that money into cash flowing assets that are going to grow, and change the way that me and my family operate. So then you don't have to do this, you don't have to deal with shitty buyers or terrible sellers, you can tell them to pound sand because you're making more money elsewhere. But you keep keep doing it if you love what you do. And so the big thing that I in order to decide which is the right path, what you want to do is you want to ask yourself this question, right?
Steven Pesavento 02:11
And the truth is I do high performance coaching with about eight men a month. I do work with women, but most of the people that are attracted to me based on what I talk about are guys, right? And so when I'm working with people, one of the biggest problems that I see in all these high performers, people making 234 100,000, people with $10 million in net worth is they don't know, they're not clear on their purpose. They don't have the answer to these questions in their life. They might have them in some areas, but not in others. When it comes to investing, you want to ask yourself the question, what do I want? And why do I want it? Super simple. But a lot of people are not operating from that on a regular basis. So when it comes to investing, you want to ask yourself, well, what do I want? And why do I want it? What do I want? Well, I want to create freedom and flexibility. I want to be able to spend more time with my family, I want to be able to have my income covered 100% by these investments? Well, great. If you have that as your answer, versus Well, I want to fly in private jets, I don't want to be super rich, then you're gonna have to go down a different path in order to get there. If my goal is simply just to spend time with my family, I can live below my means I can probably hit financial freedom at a much lower level. There's nothing better about this versus being the person who's rich driving flashy things. Not there's no judgment on whatever that path is, but the path to get there is going to be different. And so you want to get clear on what you want and why you want it. Because it's going to help decide what path you're going to want to go down. And so an example that I often talk about with real estate operators, people who are looking to step into the same business that I'm in, they're looking to go and buy commercial buildings and operate them.
Steven Pesavento 04:01
I'll share the following example I'm gonna share with you guys because the same kind of idea, you could step into my shoes and start running our business. And there'd be an advantage and a reason why people would go and do that. Or you can stay focused in where your area of expertise is make as much money you can there and start having the same outcome. So a perfect example of answering these questions is if your if your answer is that you want to be that person who's responsible for putting the deals together for finding deals for knowing about the specific things that are happening within the specific neighborhoods that you're investing in, you want to take your time and expertise and you want to be the person who's in control, then you're probably going to want to be an active operator, you're going to be the want to be the person who's either going and buying buildings as big as we're buying at Vaughn Finch. Or you're gonna be the person who's going to go buy those single family houses those duplexes and build your own portfolio. No right or wrong answer, but if you want to be in control, if you want to take your own time, you're going to want to go down that path. Now, conversely, if you're somebody who wants to be responsible specifically for writing a check, you want to focus all of your effort and energy and making money in your business, or in your career, your professional, whatever it is that you're the best at. You think to yourself, hey, I'm the best at selling houses, I'm the best at getting these listings, I'm going to focus there to make two to $300,000 a year on our part, you know, two thirds of it into real estate, I'm live on the other third, and I'm going to pay limited taxes. And I'm just going to slowly grow until I've hit that number. Well, great. Well, that's a path that you can go down as well. And so which one's better for you? Like I said, there's no right or wrong? Like, they're all great. But the question you want to answer for yourself is, do you have more time than money? Like if you're somebody who's sitting on a lot of money right now, and you're like, hey, I kind of like I'm sick of what I'm doing. I want to get out of here. I don't buy into like, whatever world I'm living in, and you got the money, well, then you probably could be in a position a day to retire? How many people I'm not going to ask you for raise of hands, because most people are personal about money issues, which I think that's one of the biggest changes you can make between having like the rich, wealthy mindset versus, or the middle class mindset, like I grew up with, is that rich people and wealthy people, they talk about money, they talk about it all the time. They're very comfortable with it, they're going to ask how much did that cost? Where'd you make the money? What was the return, their kids are going to learn about this. And the shift there that happens is that they're comfortable with it.
Steven Pesavento 06:44
So they're learning where these mistakes are happening, versus a lot of us learn to kind of hide these things. But if you've got more money than you do time, if you got a million bucks in your retirement account right now, you could liquidate that put that into a real estate investment, make 10% cash flow and have you know, 10% cash flow on a million bucks a year. What is that $100,000 $120,000, that's 100. So you can have 100 grand per year coming in passively, you're paying no taxes on it, because it's coming from real estate. And you could just kick back, maybe 100,000 is not enough, maybe need a little bit more, maybe you want to be a little more aggressive. The point being, you might already be in a position where you could be financially free if you wanted to just take the action to get there. Alternatively, if you're somebody who has more money than time, then you're going to want to be in that position. But if you've got more time than money, then you either need to focus in your career to make as much money as you can, or you need to hustle to be that active operator in that position.
Steven Pesavento 07:52
So which path is going to be right? Well, it doesn't. I'm not the one who's gonna decide that. For me, personally, I do both. I invest passively. In every single deal we do. But I'm the operator, I'm the person who's going out finding the deals, putting these things together. And it works great, because I love that part of the business. And I found an area where I can really be an expert. And so if you guys are interested in learning more about passive investing, understanding how to go and look for these kinds of opportunities, or understanding how to help your clients look for these opportunities, I recommend grab this resource. It's like a 52 page ebook. It's straight value, we don't have anything to sell you. Except at the back end. If you're like, hey, this is obviously a fit. I want to get involved with you guys. There'll be steps that you can take, but you can grab that right there at that link. Vaughn Finch comm slash playbook. But the big thing that I want you to take away is it's about shifting the way you're thinking, right? Understanding, Hey, how can I partner with other people are experts at what they do, I be an expert in my area. And I create leverage, right? That's the big thing that the wealthiest people do is they're not doing their taxes. They're not trying to figure out the legal documents, they're not running their investments, unless that's their area of expertise, or the thing they really enjoy. They're hiring out and partnering with the best people the same argument you'd make to your clients.
Steven Pesavento 09:22
When you say, I want, you should choose me, I'm going to be the best person to represent you, I'm going to be better than that person who's going to represent you for 1% or for $500 or for whatever it is, you're going to sell yourself as I am the best person position because of what I know on the market better than your uncle or that person who doesn't really trade real estate. It's the same argument. And so, but everything comes back to this. What do you want? Why do you want it? If you start there, it makes it easy to look at an investment that I send or an investment that you see on the MLS and know Hey, is this a fit Like, I will not buy a single family house unless I'm going to live in it. And it's going to pay me that for me to live there. Because I make way more money and the commercial properties that I do. So I know my what, and I know my why I don't want to deal with managing day to day, I'm not that guy to be operations, I'm going to buy big enough properties that I can hire smart people, and they're going to do their job. And then I'm gonna hire other smart people on my team to make sure those people are doing their job so that I'm not doing that. So that's my why that's my what, but you might be a person who's thinking of themselves the same way I did back in 2016. When I got started, Hey, I just want to prove to myself that I can be an investor, that I can go buy these properties that I can do this, I want to know the nuts and bolts, so I'm going to go buy five houses, 15 houses, 75 houses like we did. And then in that process, I learned well, I actually don't want to do that stuff. I want to focus in a different area. And so it changes but you got to start first with understanding this. And it's going to make a big, big difference.
Steven Pesavento 11:04
Thank you for listening to the investor mindset podcast. If you like what you heard, make sure to rate review, subscribe and share with a friend. Head over to the investor mindset.com to join the insider Club, where we share tools and strategies from the top investors and entrepreneurs and how to take it to the next level.