The Entrepreneur Daily is a series of blog posts that I write when I am working on my side business. My goal is to write a post every day when I am in “entrepreneur mode” and actively working on my business, talking about what I’m grateful for and what I’m working on. In a perfect world, that would be every single day, but in my reality, I work on my business in spurts. I’ve accepted this as my reality for now and hope to improve going forward. This is my entrepreneur journal, to document where I am today.
What I’m Grateful For
Today I’m grateful for people who share their experiences. I’m surrounded by these people all the time and I access them through blogs, books, and the internet in general. I’m grateful to have found many like-minded individuals on Twitter who share their trials and tribulations. People who discuss their investing thoughts and successes with dividend stock investing. Others who talk about the ups and downs of buying rental properties.
I’m grateful for these people because I am learning from them. I’m creating my own get out of debt and investing plans based on the experiences that others have shared. I don’t have to reinvent the wheel, I just have to learn about how someone else did it.
That doesn’t mean that I’m blindly following what everyone else does. They don’t have my unique circumstances to deal with. They don’t have four young daughters, two hyper and needy dogs, two do-nothing cats, a house that needs repairs but is holding up okay, a mountain of debt, and a desire to improve. Well, maybe that person is out there, but I haven’t found them yet. The point is that I take what I can from people and apply the principles learned to my situation…and I’m grateful for those people.
Weekly Recap – Education
This week has been mostly about education for my entrepreneurial journey. But every time I think or say that word, “education,” I cringe. You see, to me when someone says that they need more education on a topic, they are basically saying that they are delaying taking action.
We are great at the education steps in life. There is no pressure and very little accountability. Sure college seems tough, but compared to the working world, college is a breeze. Who wouldn’t want to live in that bubble of limited accountability for a while longer? It’s easy to coast and hide behind education.
You hear it all the time…”You need to get a good education.” But what does that even mean? Did high school or college really prepare you for the working world? I would bet that unless you learned a specific skill, like becoming a doctor or an electrician, that you probably don’t even work in the field that you studied in school.
That’s the large scale stuff. What about the small scale, on the entrepreneur side? That’s where many people want to be, to become their own boss, run their own business, and be free to chase their passion. It sounds great and it is possible to get there, but how many of us get stuck in the education phase?
If I just read this one more book.
I’ll read a new book every week.
If I can just find the right mentor to show me the way.
Education is safety and security. It’s the childhood stuffed animal that you clutched for years, well after you really needed it.
Action is risk, potential failure, and forward motion. Action takes balls…no stuffed animals allowed.
I get stuck in the education phase all the time. Now, however, I recognize it for what it is…a delaying tactic, a way to avoid failure, a reason to not take action as an entrepreneur. Whenever I am stuck there, I ask myself why. What is preventing me from taking action? What else do I need to learn before taking action again?
Take real estate investing, for example. There is so much information that I could stay in the education phase forever. I have been learning about real estate investing for about 2 years now. I have also taken big action and worked to startup my own company as a side gig. But here I am, back in education mode.
Now, my real estate investing journey has slipped back into education phase because I am waiting. Waiting on my personal finances to work out in my favor, where I have less debt, more monthly cash flow, and an increased ability to invest in real estate. I’m waiting on my savings account to grow. But I have realized this delay and know why I’m stuck on education. I’m taking the time to get more proficient in my chosen field.
I’m not saying all education is bad or that no one needs education, but as an entrepreneur, we should realize that education can hold us back from taking action…the necessary action that will lead us to the freedom we desire.
What I Learned This Week
So with all the education going on, let me describe some of what I learned. My head always swirls with thoughts and ideas when I read and this week was no different.
My primary goal with real estate investing is to figure out how to find the money for investing. Much of it will come from me, but how much can I leverage other people’s money? That’s the primary question I’m trying to answer.
Here are several options for investing that I have come up with:
Option 1 – Down payment + conventional loan
Save up enough money for a down payment on a rental property (about 20-25% of the purchase price) and use a conventional loan from a bank. This would take advantage of the low interest rates and get me started. The downside is the time it would take to save up the down payment, probably a year or more.
Option 2 – Part down payment + P2P loan + conventional loan
Save up a portion of the down payment and leverage the other portion of the down payment with peer-to-peer (P2P) lending. That would be an unsecured loan from Lending Club or Prosper, for example. Then continue with a conventional loan from a bank. This would shorten my timeline for saving.
Option 3 – Part down payment + private money + conventional loan
Save a portion of the down payment and leverage the other portion with private money. The private money could be from family or friends, someone who is looking to invest and wants a consistent return on investment. Then the remaining cost would be funded with a conventional bank loan.
Option 4 – Part down payment + private money
Save a portion of the down payment and leverage the remaining cost with a private money loan, no conventional bank funding. The benefit here is staying away from banks and providing great investment options for my private money partners.
I want to put some money down of my own in order to have equity in the property at purchase time. It doesn’t need to be all my money, but I’m not going to do a no money down deal…maybe down the road, but not at the start.
I can do up to four conventional loans on rental properties before I hit a wall. They don’t allow more than five loans per person (four rental properties and my primary residence), from what I have heard. That means I will need to transition fully to private money (option 4) by the time I get to rental property number five. That gives me time to build my network of private lenders.
More detail to come on the blog, but that is the current plan from a big picture perspective.
Are you stuck in the education phase? How do you get out of it and moving towards the action phase?
You can join me on Twitter where we can interact and you can see my amazing takes on things like weather…
Gotta love weather forecasts…
Forecast…”partly cloudy, 15% chance of rain.”
Actual…insane, monsoon type rain blowing through.
— Brian (@PBJBusiness) September 1, 2016