Here are some common principles for investors mindset:
- There is good debt, and there is bad debt. Good debt pays you, such as having a mortgage on a property with positive monthly cash flow. Bad debt on items such as expensive cars, lavish vacations, fancy dining, and other luxury items will keep you working your “job” longer to pay for them.
- Keeping up with the neighbors will keep you poor and working in your job longer. The old saying is, why do you want to keep buying depreciating assets that force you to stay longer in a job you don’t like to buy stuff to impress people you don’t even know.
- Being poor is a state of mind where being broke can be a temporary situation.
- When you have the knowledge and ability to buy cash-flowing property, you do not need your own money or credit.
- When you do not know to buy a cash-flowing property, you need to use your own money.
- Do not fear mistakes, and yes, you will make mistakes. The goal is to make small mistakes and learn from them. Mistakes are part of the process, and each small mistake gets you closer to success.
- Add experts to your team that will save you time and makes you money—realtors, mortgage brokers, renovators, bankers, appraisers, attorneys, accountants, etc. A great advantage to you is most of these professionals only get paid when you use them.
- Whether you think you can or you think you cannot, either way, you are correct.
Earned income is the most active income class where you get paid for ‘doing the business. Examples of earned income strategies are rehabbing/flipping properties or mobile homes, wholesale, foreclosure and short sales, lease options (hybrid)—a job or career paid by ‘doing’ or actively participating in the business.
Passive income is the next level where you have positive cash flow coming in month after month. Examples of passive income strategies are income properties, commercial properties, lease options (hybrid), short-term & vacation rentals, mobile home parks, and self-storage.
Portfolio income is the end game. Your money is making money for you. Examples of portfolio income are lending on mortgages, dividends, hard money loans, royalties, and stock market investing.
Mentor Tip: The goal is typically to replace your earned income with passive and, ultimately, portfolio incomes. The faster you achieve that, the sooner you’ll enjoy more time, more money, and lifestyle benefits. Enjoy the journey!