Dealing with Shiny Object Syndrome as a Real Estate Investor

Mike DeHaan: [0:01] Welcome to the collecting keys Friday focus. What is going on, guys, on today's collecting keys Friday focus? If this is your first time here, my name is Mike DeHaan, and I'm the host of the collecting keys podcast. And on these Friday episodes, we do a deep dive into a question from our community, or, you know, just something that we've been thinking about this week. We are back to kind of our traditional Friday focus, where I'm going to do a deep dive into a question that we have received from actually, it's gonna be like a hybrid combo response to two questions that I've gotten from two members in our Instant Investor Mastermind group. So one of the questions is from member Jim Martin from down in Chattanooga, who has been crushing it down there, by the way. He has been doing some insane deals, and like major renovations like I've never seen before. But his question was about how do you deal with shiny object syndrome as a real estate investor, basically figuring out what exactly you wanna focus on. And then I have another question from member Otto Kinn, who is based out of North Dakota. And you might have seen some wins come through from him in our weekly newsletter that we send out, because he has been printing money with some of the deals he's doing up there.

Mike DeHaan: [1:14] It's really awesome to see. But his question was, how do you balance the act of focusing on the business to generate massive income while also wanting to generate wealth? Because when you are you know, you guys generate wealth by buying assets. Because when you are starting out, they're kinda like contradictory to each other, and I have a great response to that too. And I'm gonna do these together as a kind of a hybrid episode for both of these questions, because they are honestly kind of related in terms of my response to them. So the shiny object syndrome in real estate is a major situation that a lot of people have to deal with, where they basically try to figure out, you know, how exactly do they wanna make their money in real estate, how do they wanna invest in real estate, are they gonna do single family, are they gonna do commercial, are they gonna be a wholesaler, are they gonna be a realtor? You know, how exactly to decide, especially when, you know, you start getting involved and you want direct to seller, you get different opportunities that come through all the time. And it can be very distracting trying to decide exactly what you wanna do. So first off, what I always suggest is off the bat, you focus on making massive income over passive income. And the thing that makes that so challenging for people is most people get into this business because they want to have passive cash flow and reach financial freedom.

Mike DeHaan: [2:34] That seems like it's more achievable for most people than making, like, big money, than making, you know, hundreds of thousands or millions of dollars that people are drawn to. When the kind of challenge comes with the fact that honestly, it's the opposite. Making big money is honestly easier than making passive money, especially with current interest rates, especially with the competitiveness of so many funds and sophisticated investors that are out there trying to buy properties for yield at tighter and tighter rates than you're willing to buy, it's just a hard time to do it. So, really need to focus on making real money first, so then you can be parking that money into passive income at a little bit more of an aggressive rate than you probably can beforehand. So in terms of what that looks like, this is where the shiny object syndrome comes in, you really need to pick a singular focus. Doesn't really matter what that is, you know, that can be as a broker, can be as a wholesaler, you can be someone that does like flips and wholetailing, you know, you can do like a general contracting business that's very real estate focused. Right? All those are good options. I just really suggest that you pick one, and you become the best at it. And what you need to do is you need to pick the one that's going to allow you to make the most money as quickly as possible.

Mike DeHaan: [3:45] Right? So for most people, I typically recommend wholesaling. It requires the least amount of expertise. It is easy to start as a one man operation without a ton of tools and materials and things like that. And you can start making like massive money within a couple of months. Like, you know, from when I started doing wholesaling, to when I made my first million bucks, was just over a year and a half, and I didn't know anything about it before that. That was literally from zero to cool, I've made big money now. Right? And then in the middle of that, I started making money, you know, within four or five months. So it can scale very, very quickly. And then just the most important thing is that you pick something that you're going to be able to scale quickly, and isn't going to take a ton of capital to get started. So, you know, on that note, I always really suggest that people don't get into anything that is going to require large renovations. Like some of these people will do like luxury flips and those sort of things, and don't necessarily get into, you know, buying just a ton of rental properties right off the bat. Because really what that's gonna do is it's gonna eat all your capital, your returns will be fine, but you will eventually run out of money, unless you're somebody that has an extremely high paying w two, which if you're really seeking passive cash flow, it's probably not you. Okay?

Mike DeHaan: [4:54] So pick a singular focus, become the best at it, and focus on that is the first thing that I always suggest. And really make sure that it's not something that's too complicated, or that requires a high skill set that you do not have, because learning that will take a ton of your time and capital. So when it comes down to choosing that versus the building wealth piece, right, why should I focus on the massive income versus the acquiring all these assets to build wealth? You know, it's very easy for people to get FOMO as they start out, you know, fear of missing out on wanting to build wealth. Because so many people, like that's just constantly ingrained from their past, right? You have all these old guys that you know that say like, oh, I wish I would have kept everything that I've owned. You know, it's like, oh, I'm going to hold on to these properties forever. Hear that through BiggerPockets, hear that through these other forms of media. But seriously, it's something that you shouldn't worry about, because if you develop the skills to make real money, like make big money now, you're have plenty of opportunities to generate wealth later. And if you combine that with skills where you learn how to make big money, you also know how to add value and find opportunity, you're you're gonna be able to generate wealth not only faster in the future, but at much massive, like much sort of like larger bites, like larger chunks, just because you're going to have the skill set as well as the capital.

Mike DeHaan: [6:08] Right? And that's such an important thing that people tend to miss, is they wanna do stuff kind of like the, I don't know, simple way at the start, but then their ceiling is relatively low, and they do it because they're worried about making future wealth for future them in ten, twenty, thirty years. It's like, well, realistically, if you focus on the skill set first, and learning how to make money first, you can achieve that ten, twenty year wealth in like three years. But it's gonna take a little bit of discipline right now to not be like looking so far ahead. You know, I think that people get kinda tied into that because there's you know, most people that are getting into real estate, they still have this four zero one k sort of financial education and thought process of like, investing, I need to be putting money aside, I need to be success long term. And while I do believe that's true to some point, really, you should just focus on making as much money you can at the start, until, I would honestly say you have one to two years worth of your living expenses just in straight cash. Because that way you are completely protected for a short period of time into the future. You don't have to worry about, you know, having this long term nest egg for the near term, once you have that that nest egg of cash. And then from there, you can start just investing every single bit of money that you make beyond that. Like if you think about it, if you have two years worth of cash, you can, you know, live off of that frugally, may take a little bit of paycheck and business, whatever it is, but you can go into basically a 90% investment rate at that point.

Mike DeHaan: [7:34] Right? You can invest all of the extra money that you're making, because I'm assuming that if you're able to get the one to two years worth of cash, you probably learned how to make a good chunk of money. Right? You probably have good spending habits, so you're not gonna be doing anything silly. You know, going and buying that Ferrari after your first deal. But you can just suddenly really escalate your wealth growth, because you can invest all of the future money that you make at that point. And from there, just like your velocity of wealth generation can be so much higher, to the point that it will absolutely eclipse what would have happened if you had been investing tiny bits of money, and not focusing on making large money from the very start. And it's counterintuitive to a lot of people think, right? It's really kind of the the definition of, if you've heard Al Shamosi or some of these other people say, think it was Al Shamosi at first, the best investment you can make is in the S and Me 500. Right? So investing in yourself. This is what he means. Okay? He's not talking about like exclusively investing in coaches, exclusively investing in education, which does help. What he's saying is to, you know, invest in your own security, and then from there, learn how to make money, like put money into resources, so you can learn how to do that.

Mike DeHaan: [8:44] And then from there, you can go into the passive investments, because the upside's gonna be significantly higher than if you had just started investing, you know, your 300, 500, $1,000 a month, or going in, you know, stretching your self directed IRA to buy like one single family home, whatever you're doing. Like, sure that will help you in the long term, but it's not gonna make it so that you can have a big life, and you can live, you know, however you want, and make make real big money. So, anyway, all that to be said, I recommend if you wanna take this seriously, you focus on making massive income first, you pick a singular way that you wanna do it, and you become the absolute best at it that you can be. You don't have to be the best in the world, you just have to be the best that you can possibly be at it, and that you don't mix and match different verticals trying to chase opportunity all the time. And then what you need to do is focus on long term investing, after you've gotten that one to two years worth of living expenses, in cash, in the bank, readily available that you can live off of, and then you're not as stressed take a paycheck while you were looking for investments.

Mike DeHaan: [9:45] And then from there, you can invest all the rest of the money that you make above that, and then you will find that your wealth generation and your ability to get passive cash flow increases a ton in the very short term, which as a result will increase over the long term as well. So anyways, guys, that's my take on that whole sort of thought process. Wealth generation, making money, shiny object syndrome, they're all things that we have to struggle with as entrepreneurs, and as people that are seeking having financially different lives than the average person. But it's just important that you, you know, think about it the right way, and understand the power of having skills, as well as how much easier it is to make wealth, to generate wealth, and to make passive income once you already have like the active income piece kind of figured out for yourself. So I'd love to hear what you think about this. It's definitely an atypical opinion that you don't hear a ton. But, know, I always love to chat and sort of hear what other people's views are on these sort topics, because I know it's not the most popular opinion that I have. So if you wanna hit me up about it, you can hit me up on Instagram at mike underscore invest. I would appreciate chatting with any all of you. And if you found this interesting at all, please share this with your friends, so that you can maybe challenge their beliefs over what it really takes and what it should look like to generate passive income and wealth for yourself.

Mike DeHaan: [11:03] So anyways, appreciate you all, and we'll talk to you all next week. Thanks for listening to this collecting keys Friday focus. Be sure to subscribe wherever you listen to your podcasts.