Latest / Cash Flow for Life / Chapter 8: The Importance of Goals and Planning
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- 00;00;00;00 - 00;00;30;12 Chapter eight The Importance of Goals and Planning. Everyone has dreams. We tend to dream about how we would like things to be in a perfect world. We dream of riches, importance, power, happiness and health. We often discount the probability of these things happening simply because they are dreams. Saying something like, I hope they call me for that dream job is an example of this. 00;00;30;15 - 00;00;54;07 Having a dream of the perfect job is nice, but we often feel we have very little chance of getting it. Or we might think. I hope I'm lucky enough to get a visit from the Publisher's Clearinghouse people. This is a dream of winning a huge prize such as the lottery. Of course, these games of chance depend on luck and are very much outside of our control. 00;00;54;09 - 00;01;29;26 Dreams and luck are fun, but we seldom see the good results we desire. Goals, on the other hand, are planned outcomes based on logic and real work. While a goal may seem similar to a dream, the outcome is much more predictable and can actually be more of a sure thing if the goal is realistic and attainable. The timeline for attaining the goal is realistic, and you consider it mandatory, and follow the plan to achieve the desired result. 00;01;29;28 - 00;02;00;06 Comparing dreams with goals is like comparing a rock garden with a vegetable garden. Dreams are like a rock garden. While it can look pretty and require little work. It provides little in return. Goals are more like the vegetable garden. They require planning, care, investment and work. But they provide the come you expect and desire. Pretend for a moment that you're attending a high level corporate management meeting of a computer hardware company. 00;02;00;09 - 00;02;29;20 Imagine that the management team is setting production and revenue goals for the coming year. If this company has a history of profitability and meeting or exceeding its goals, there will be some very important things happening at this meeting. One. There will be serious discussion of current conditions that may influence the setting of goals themselves. Carl from sales will present data about the changing sales patterns for different lines. 00;02;29;22 - 00;02;54;01 If demand has softened for some lines, there will be scaling back production of those and possibly ramping up production of others. Two. The participants will evaluate the production facilities ability to turn out product in order to keep from setting unachievable goals. Beverly from the assembly line will be called into the meeting to comment on the ability to meet production goals. 00;02;54;06 - 00;03;26;00 Three. Careful consideration of the market, including what the company can sell its products for and what it will cost to produce them, will result in revenue predictions on which the company can rely on going forward. The discussion will involve Carl from sales, Angela from purchasing, and Bill from Human Resources for. Major processes will be planned with specific time goals to make sure everyone gets his or her part done on time. 00;03;26;02 - 00;03;50;23 Five. Incentives and bonuses may be put into place for key managers and production employees to reward them for meeting their quotas or goals. Six. All of this will be carefully recorded in the minutes of the meeting. Then marketing and production plans will be prepared for distribution so that everyone is on the same page to ensure the company's goals are achieved. 00;03;50;26 - 00;04;19;15 Madeleine. The CEO will appoint a team to prepare the reports and master plan. Then the team will have another meeting to go over these to make sure that all the first meeting goals have been addressed. The last item is critical to your process. Though smaller in scope than this large corporations business, you must write down your goals. Planning what you need to do and devoting the necessary time to do it. 00;04;19;17 - 00;04;44;22 And recording all of this is critical. We consider it our job to give you the knowledge and tools necessary for you to do this planning and goal setting. We'll help you set realistic goals that will be achieved, and will remind you to reward yourself when they are. Goal types by time frame. We'll be working with two types of goals short term and long term for our planning purposes. 00;04;44;25 - 00;05;11;26 We'll consider short term goals as those that can be attained in one year or less. We'll break those down even more into daily, weekly, and monthly goals. Consider all short term goals as components of your long term goals. Create your short term goals, making them sort of a to do list. The daily goals must be attained each day, and the weekly and monthly goals must be completed on schedule. 00;05;11;28 - 00;05;33;19 All these goals build on each other. Breaking long term goals down into this way will provide a constant stream of achievements, keeping you motivated to continue to go to the next level. And of course, you'll always have progress moving forward this way. Long term goals for us are from 1 to 10 years out and made up of short term interim goals. 00;05;33;22 - 00;05;54;00 It's very possible you won't completely attain one or more of your long term goals, if for no other reason that you may have changed plans along the way or reoriented for different, more important goals. An example might be a ten year goal to own 20 rental homes. You may get halfway there and decide that you don't want to own 20 rental homes. 00;05;54;01 - 00;06;22;01 You want to move to a permanent purchases. You'll probably end up with more units, but it's a different plan and a different goal than the original one. Four Elements of goals. For a goal to be attainable and valuable to your plans, it must be constructed of quality elements. Realistic, especially when setting your short term goals. Be sure to be realistic in your ability to achieve them. 00;06;22;03 - 00;06;53;25 Setting unrealistic goals will result in failure to attain them and discouragement of you in the process. This risks your long term goals. While you may want to set a goal to play professional baseball, if you don't have the ability and time to practice hours every day, it's very likely that it's an impossible goal. However, in the same time frame, setting a goal to play on a citywide softball team would be much better because you know you can make that happen in the time frame that you set. 00;06;53;27 - 00;07;12;19 Don't set goals that are too easy, though. Set them as high as reasonably possible. Then get down to work and attain them. The sense of accomplishment as you check each one off your list will spur you on to the next until you ultimately accomplish all of your goals. 00;07;12;21 - 00;07;35;15 Complementary. Your goals should complement each other and work together to help you achieve your planned result. Setting a goal to buy five properties your first year, and also setting a goal in the same year to take three months off to travel could be a problem. Make sure that you aren't setting conflicting goals because one or more of them will probably not be attainable. 00;07;35;17 - 00;08;00;17 Measurable. In order to know if goals have been achieved. They must be measurable. Setting a goal to be rich in five years is much too subjective. Too vague. Setting a goal to have a net worth of $1 million in five years is something that can be directly measured, and a much better goal. Flexible goals aren't set in stone. 00;08;00;22 - 00;08;29;24 They can and will change over time. Goals will evolve as your real estate investment business evolves and as your personal life changes. Our previous example is switching from single family residential homes to an apartment project is a great example. Perhaps you had a goal of purchasing three homes in a certain price range during your first year. You may scale back the number of homes, but by higher priced homes, because the areas and rental income number justify it. 00;08;29;26 - 00;08;57;25 Never hesitate to change a goal for a better result. But be careful not to change one just because you're having trouble achieving it, or you're distracted by the next shiny object. Be honest with yourself about why you are changing goals. To get our full Smart Goal planner. Be sure to visit the audiobook resource page at ww.com/cash flow for life audiobook. 00;08;57;28 - 00;09;22;20 That's dot com slash cash flow for life audiobook. This is where you're going to find all your extra and great resources provided in this book, including a Smart goals worksheet. Successful goal setting. Hey Michael, that first deal went so well and the cash flow is great. Let's buy five more because the rent demand is out there. I'm with you, Scott. 00;09;22;22 - 00;09;47;29 But let's sit down and look at our available time and resources to be sure we aren't trying to move too fast for our abilities. Let's set the right goals. It's not rocket science. In fact, for simple steps will ensure your success in setting and attaining your goals. Here they are. One. Write down your goals. Two. Review goals often for progress. 00;09;48;02 - 00;10;02;02 Three. Develop plans to be constantly moving towards and attaining them for. Follow through and implement your plan. Take action. Make it happen. 00;10;02;05 - 00;10;28;23 Three stage action plan. Your schedule will be up to you. However, to get you started, we prepared a three stage action plan that can realistically be achieved in five years or less. Change numbers or items to fit your personal situation, but take the time to do this right because it's your plan for successful real estate investing business. Here's the plan. 00;10;28;26 - 00;10;57;24 Stage one study the market. Study the market and study the market some more. Practice, practice and practice some more. The next chapter will give you much more detail about ways to focus on your local real estate market. Starting from the big picture view and zeroing in on specific details of properties. Go to seminars, live events, attend classes, join investment clubs and watch real estate TV shows. 00;10;57;26 - 00;11;22;06 Read real estate materials, print and online. Subscribe to local real estate sites and blogs to get regular market updates and commentary. You can't be surrounded by real estate enough. If you haven't already. Go to. Com we've got blogs, we've got resources. We've got everything to fully immerse you in real estate. If you're not already. Start learning to be handy around the house. 00;11;22;08 - 00;11;45;18 Once you're a successful real estate investor with many properties, you can hire people if you want. However, early on you'll probably want to save some money, cut some costs, and increase your ROI to get into those properties and do the repairs yourself. This will provide you the best cash flow. Take some classes if you wanted some of the big box stores like a Lowe's or a Home Depot University. 00;11;45;21 - 00;12;06;17 Now remember, this isn't a long term plan for most people. Eventually, you want your time back and you don't want to do repairs forever. But when you're starting out, it's often the most effective for our investors to do some repairs themselves. If you've begun to build your team, then you're already meeting real estate professionals, mortgage brokers, insurance agents, and construction people. 00;12;06;20 - 00;12;38;13 Keep doing that even if you've made some choices on those seats. Networking will bring you opportunities, so keep meeting people. Sample goals for stage one cash flow $100 a month. Minimum time to achieve 12 months. Reward upon achievement $100 of luxury by a nice bottle of wine. Take a boat trip. Have a nice dinner. Whatever you can. Get where you are for $100. 00;12;38;16 - 00;13;04;05 Get yourself $100 of luxury. You can change the numbers and timelines of this stage one goal to suit you, but just make sure that your goals are smart and they're realistic and measurable. Stage two you're continuing your education process and learning all the time. Build on your experiences. Record your experiences so that you can refer to them for future decisions and activities. 00;13;04;08 - 00;13;31;09 Do new things such as refinancing, renovating or researching different types of homes in the area. Love the numbers, not the house. Though you're trying new things to learn more. Make sure that everything you do remains profitable. Scott. It was a great idea to renovate that kitchen between tenants because the new renters are paying $50 more in rent, and they say they love the kitchen. 00;13;31;12 - 00;13;54;10 The best news, Michael, is that we did most of it ourselves, and it didn't cost that much at all. Remember to record all the good and bad moments and decisions, especially those moments. Put a circle or a box around those in your journal. Your journal will become one of the most valuable tools as you grow your business. 00;13;54;12 - 00;14;26;01 Sample goals for stage two cash flow $1,000 a month. Time to achieve 1 to 3 years. Reward upon achievement $1,000 of luxury. Reward yourself by buying yourself something worth $1,000. You've earned it. You can see the goals, building process and its movement through time. These are sample goals. And remember you can and should tailor them to your plans, your abilities, and your needs. 00;14;26;04 - 00;14;54;23 Just make sure they meet the four elements of good goal setting that we talked about earlier. Stage three keep expanding your business. Buy more properties while always loving the numbers. Keep building on what you've learned in the first two stages. Continue your educational pursuits by reading more, attending seminars, classes, and workshops. Maybe this is a time for you to get a formal mentor or coach in real estate investing. 00;14;54;28 - 00;15;17;13 We know our clients absolutely love this. Always be current in your market knowledge. Increase your knowledge of real estate investment calculations and market valuation techniques. Stay up to date. Take classes on rental property management and how to be a landlord if that interests you. Learn about landlord tenant laws in your area. Well, this may come naturally to you. 00;15;17;15 - 00;15;38;08 Go ahead and write down these goals. They'll help you feel much more confident about the work that you're doing. You've been constantly upgrading your knowledge and experience, and you have multiple properties, all producing great cash flow for you and your family, so you can feel confident if you're still investing just part time, as most people are at this stage. 00;15;38;11 - 00;16;07;16 Consider it taking all the way and becoming a full time rental property investor. At the end of this stage, at about five years, have a meeting with yourself. Invite your business partner, life partner or whoever is involved if you want. Go over all your goals and planning and see if you've accomplished everything you've set out to do. Many fine that they have actually exceeded their expectations and have blown right by their goals. 00;16;07;18 - 00;16;40;04 Use this review to plan into the future and for more expansion. Use this methodology to plan the next five years right now. Sample goals for stage three cash flow $5,000 a month. Minimum time to achieve 3 to 5 years. Reward yourself upon achievement by yourself. Something of $5,000 worth of luxury. Get yourself something nice. You've earned it. Now, rewarding yourself is very important. 00;16;40;07 - 00;16;55;08 It takes a lot of work to get through each of these stages, and you want to take the time and spend a little money on yourself and your family at each stage. Remember, you worked hard. You've earned it. You deserve it. Now have some fun. That's what it's all about.