Napoleon Hill in his book, Think and Grow Rich, mentioned the concept of Masterminds as one of his 13 key principles for success. In the book, Hill defines the mastermind as a “coordination of knowledge and effort, in a spirit of harmony, between two or more people, for the attainment of a definite purpose.” Stephen Covey describes his interdependence as thinking win-win and synergizing! I too have found masterminds to be incredibly beneficial. As a matter of fact, I got started seriously investing in real estate as a member of a mastermind. There was great synergy as well as encouragement in our group. We would help each other with due diligence and deal flow as well as education. There was a natural hierarchy as the more seasoned investors shared their knowledge and experience with the “newbies”.
Initially, it was a slow start as I was cautious and not wanting to make a mistake or waste any of my hard-earned money. Once I found my rhythm with the type of investments that worked for me, things started going fairly well. However, that was short lived as requests for more rehab money and less-than-expected rent checks left my bank account a little leaner than I had hoped (remember, hope is not a strategy!). With my first rental houses, I was truly a “passive” investor. I literally didn’t do anything, not even questioning my expenses . . . and unfortunately, not accounting for them either. My filing cabinet was a pool table and my accountant was my bank statement. I simply trusted the returns that I had been told that I was getting and assuming the expenses were necessary. To be honest, I think a lot of passive investors think like that. I started asking my investor friends how they were tracking and organizing their investments and, shockingly, most weren’t doing anything more than I was! Well, maybe they kept their documents in a file cabinet, but not much else. My “savvy” investor friends were using spreadsheets. But even with those, there was no uniformity to their spreadsheet designs and they still had to store documents and important files in a separate location, perhaps their own pool table!
As I mentioned, I didn’t realize all of the challenges that awaited me. I guess I didn’t think of my investments as a business. But now I know all too well that if I’m going to be successful, I must treat my investments as a business and not just a hobby! I’m not sure if you’ve heard it, but lately I’ve been hearing a commercial for Netsuites software. The primary challenge from the commercial is, “if you don’t know your numbers, you don’t know your business”! As I travel around from REIAs and masterminds, I am amazed at how many investors DON’T know their numbers. What about you? Do you know your numbers . . . right now, for all of your investments and for your entire portfolio?? If you’re not sure take our quiz and find out!