“I don’t have enough money; if only I had more money, I’d be making more progress.” This is a common sentiment among many real estate investors—that lack of access to money is what’s holding them back. But is that really true?
In this episode, Jeff explains that lack of access to money is NOT what is holding most real estate investors back. Instead, it’s lack of a clear vision, plan and preparation for what they will do with money when it shows up. Money is just an ingredient in a recipe for doing a real estate project, and like any missing ingredient, it can be acquired if needed.
When you talk to real estate investors about what is holding them back from being where they want to be in their investing endeavors, you will hear three different answers. And one of the most common answers is lack of access to money. shocker, right? Yeah, I know you’re surprised to hear that. But here’s the thing. lack of access to money is not actually your problem. And I did a little experiment, a fun little test to prove this point. And today’s episode, I’m excited to share the story with you that little test but more importantly, tell you how to not get stuck feeling like you’re lacking money. Let’s cue up the theme. So we’ll jump right into it.
Welcome to Racking Up Rentals, a show about how regular people those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans nor are we posting We Buy Houses signs are just looking for “motivated sellers” to make lowball offers to. You see, we are people-oriented dealmakers, we sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media. This show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.
Thanks for joining me for yet another episode of Racking Up Rentals. Show notes for this episode can be found at www.thoughtfulre.com/e83. Please do us a big favor by hitting the subscribe button super quick in your podcast app. It helps other thoughtful real estate entrepreneurs searching for a show like this to find it. Thanks so much for that onward with today’s episode.
And as I mentioned in the intro, we often think that lack of access to money is our problem. And that if we just had more money, we would be more successful. But I want to tell you the punchline of my point here right away. And I’ll tell you a quick story about it. I believe in my experience, and what I found with others is that lack of access to money is not our problem, it’s that we don’t have a clear enough vision or plan or preparation for what we would do with it, if it actually showed up. So a while ago, I thought about making a little post into a Facebook group. And I’ve since now done this a couple different times just to see if I get different results in different groups. And I really have not gotten different results. And in my post, I said $500,000 shows up in your bank account today. And you’ve got 48 hours to put it to work, or it is going to disappear if you don’t do something productive with it. What do you do with the money?
So here’s the thought process behind the question. First of all, while many people interpreted the question as like just some sort of silly meme type of internet fun question, the question was actually more serious than most people realize. And it was basically asking you the question, you were telling me that your number one roadblock is access to money. And so I am removing that roadblock for you right now. Problem solved. Magic, one wave, you no longer have that problem. Now, what do you do? And the answers to this question have been very interesting. And I would say, anecdotally, without scientifically adding up every single response and putting in a spreadsheet or something like that, I will tell you that anecdotally, about 10% of the people who responded to the posts had a clear and specific answer. Like they might have said something like, I would take it, I would put 10% down on a $5 million commercial building. I had pursued deals that were at a seven cap or above with seller financing, etc., etc. that they had a very specific answer whether they already knew the answer, or they thought of the answer when they saw the post either way, they came up with what I consider to be a credible and specific answer. Another 20% or so had maybe kind of a loose idea. Somebody said Well, I would buy to fourplexes, for instance, and then I would follow up and I’d say great. So how do you use the $500,000 to do that? Do you make it a down payment in your market? Does that buy to with cash? How do you use it and why? So 10% had a very clear answer. 20% had kind of a loose idea. I would see 30% had a very basic, basic answer like they would say Something like buy real estate, or buy cryptocurrency or something like that with no specifics whatsoever. So I don’t even barely count these and the rest, the rest the remaining 40% were all basically just joking type of responses, or another non real estate investing types of answers, you know, I would go to Las Vegas and put it all on black or I would buy, you know, a lot of Bitcoin or something like that. So the bottom line is that when people answered this question, only 10% of them had what I consider to be a good answer, a specific answer, like they had thought it through, like maybe they had thought it through before this question ever came up. So if we are removing the number one thing that is blocking most people, they would still be blocked, they would still be stuck. Even if that thing was magically removed, because they don’t have enough vision, a plan or preparation for what they would like to do with it yet, they’re still blaming their, you know, state their current lack of progress on access to money, even though giving them money won’t make it better, because they don’t have a good enough plan.
So here’s the thing, money is an ingredient to a recipe. Money is an ingredient to a recipe that takes a lot of different ingredients, right? So think about this. If you are going to do a real estate project, you need a lot of ingredients money might be one of those ingredients. But in most cases, money isn’t even the ingredient you need. It’s the ingredient that allows you to get the ingredients you need, right? If you’re going to do a real estate project, you need land to work on. You need lumber to build with, you need nails, you need screws, you need roofing materials, you need contractors, you need the experts, engineers and architects and things like that. Money is just an ingredient to the greater recipe. And it is an ingredient whether you feel like it or not. That is in great, great supply in the world.
Now, maybe you don’t have that ingredient that you need in that moment. But it is elsewhere. Would you agree that there is more than enough money that is needed in the world, it might not be in your bank account right now. But it is somewhere. The problem isn’t that enough money does not exist on the planet. The problem is that you don’t have access to that one ingredient at that moment. So let me just give you a simple analogy. Because I think that this helps make it clearer. When you want to bake some cookies, you need several ingredients, right? You’re going to need sugar, and flour and water, and maybe eggs and maybe cinnamon or chocolate chips or whatever it might be. So let’s just think about the ingredients. That is sugar. If your goal is to bake some cookies, and you get into the process, and you discover you don’t have enough sugar, what do you do? What do you do, you find somebody who has sugar, and you trade them what you do have for what you need? So in this case, you might go to a store that has sugar and you trade them what you do have $5 for the sugar that you need, we would call that buying the sugar. But what you’re really doing is you’re trading what you do have in exchange for what you need to have. You would never sit around saying, Man, I want to bake a lot of stuff, but I’m just stuck. Why are you stuck? I don’t have any sugar. So I’m stuck. You would go get the sugar because sugar is just an ingredient that can be acquired. So here is me. Now I’m given you five pounds of sugar. What are you going to do with these five pounds of sugar? If I asked you that question, and your answer is I’m going to bake stuff. That’s not a good enough answer. You need to have a more specific vision for where you’re trying to go with this project. Sugar is easy to get if you have a clear idea of what you need it for and what you can trade for it. In the case of cookies. Maybe instead of going to the store, you go to your next-door neighbor and you say hey, next door neighbor. I need a cup of sugar. How about I’ll trade you I will bring you a dozen cookies when I’m done baking with this sugar that you give me. What do you think is that a fair trade?
So lack of access to money is not our problem. Our problem is that we don’t have a clear enough decision for what we would do with it, a plan for it, preparation for it. I would like to think that everybody listening to this podcast right now, if $500,000 showed up today, that you would be able to put it to work productively within those 48 hours, because you would already be thinking about it, you would already know where you’re trying to go, you’d already know what ingredients you’re working together, you would already know what you could do with it. Even if it was as simple as saying, I’ve got this line of credit, I’m going to pay this down, so that I can keep the money effectively, but not lose liquidity by paying off a long-term loan, even if you had that type of an answer, that’d be a really, really great answer to have, it would show that you are planning and preparing for what you would do with the money when it shows up.
One final point, it’s very important to also that when we start feeling like we’re lacking something, that we don’t turn that into a belief, you know, if you are saying, I don’t have enough money, and in the back of your mind, the other voice is saying, and by the way, you never really will. Because you’re not that experienced with this, you’re not the kind of person that people give or lend that kind of money to, then that belief becomes a self-fulfilling prophecy. But that’s why I really like thinking about money as just an ingredient to a greater recipe. Because when you think about money, like it’s a cup of sugar, that is just useful in the greater context of building something else. You don’t give it so much emotional power over you, you know, you don’t put sugar on a pesto pedestal and say, Oh, boy, I don’t know, I don’t think anybody would ever give me their sugar, because their sugars really precious to them. Or no one would give me those nails over there. I need I need these nails to build this house. But no one’s going to give me their nails, we would never say that because that sounds ridiculous. Yet, money, which is just another ingredient in the picture is just that cup of sugar does get so much of our emotional energy, and we start to put it on a pedestal. And that creates these belief systems and sometimes that we’re not deserving of that ingredient. And that is I can tell you from personal experience, a slippery slope, and the one that we need to do our very, very best to avoid.
So if there is a narrative going on in your head right now, whether it’s a conscious one, whether it’s a subconscious one that saying, I don’t have the money I need and that’s not why I am at the place I want to be at. Just know that that’s not the case. You might have to go out and get that ingredient that you need. But it’s not that you can’t get it. It’s that you don’t have a clear enough idea right now of what you would do with it. And a plan and you’re not fully prepared for if it showed up in your life and you’re not prepared to figure out what you have that you could trade for what you need.
Well, that is it for today’s episode of Racking Up Rentals. Thanks again for listening. Show notes, as I mentioned are at www.thoughtfulre.com/e83. Please do us a big favor by hitting that subscribe button in the podcast app and take just a second to rate and review the show.
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Thanks for listening to Racking Up Rentals where we build long term wealth by being win-win dealmakers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.