Mike Swenson - Top Real Estate Investing Tips For 2024
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The REL Freedom Show turns 200! That's right, this is our 200th episode. With it being the beginning of 2024, we wanted to share with you some of our top tips to help you achieve real estate investing success in 2024. Whether you're looking to get your first deal, or looking to scale larger, these tips will help you align for growth, help you with your decision making process, navigate changing interest rates, and get you on the right path.
In this episode, you will be able to:
- Master the art of real estate success in 2024 by following these key tips.
- Learn how to set and achieve your real estate goals effectively.
- Enhance your decision-making skills in the real estate industry.
- Unlock the power of partnerships and collaborations in real estate.
- Foster your mindset and personal growth for real estate success.
The key moments in this episode are:
00:00:00 - Finding Alignment
00:05:49 - Decisive Goal Setting
00:10:43 - Action Over Analysis
00:11:57 - Overcoming Inaction
00:01:22 - Reflecting on Milestones
00:12:45 - Getting Started in Real Estate
00:14:46 - Importance of Collaboration
00:16:29 - Impact of Interest Rates
00:20:21 - Importance of Due Diligence
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What we're looking for is alignment, and this is something that I've learned a lot about this past year. I've done mindset, coaching around it and really studied a lot of work around alignment. You're looking for something, thinking about this idea of I want a target that I'm going to be excited to run towards, something that's going to really energize me. I think sometimes people feel like to get what I want, I have to give something up. And what if you could have your cake and eat it, too?
Welcome to the REL Freedom show, where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson. Let's get some REL Freedom together.
Hello, everybody, and welcome to another episode of the REL Freedom show. This is a very special show because it is actually our 200th episode. And so it has been a long journey. We're coming on just over three and a half years of doing this show. We were doing it weekly.
Starting a few months back. We decided to move to two times a week because we wanted to communicate more information, interview more people, tell more great stories. And so here we are now, January of 2024, and we are celebrating 200 episodes. And so I thought it would be special. I did this at 100, thinking about 200, trying to offer some value here, some reflection back.
It coincides really well with this being early on in 2024, and we get a chance to share top five tips for finding real estate success in 2024. And so that's what we're going to be covering today. Hopefully, you guys find some value out of this. But I've interviewed a lot of people. I've had a lot of conversations.
I've worked with agents, investor agents, people outside of real estate that want to invest in real estate, talked to a lot of people. And so sharing some tips here for you guys to be able to get started and make 2024 the year that you see a lot of progress towards your real estate and hopefully your financial freedom goals. With that being said, number one, the first thing that we want to talk about is figuring out what you want. I know this may seem easy, or it may seem really confusing because you don't know what you want, but when somebody comes to me and says that they want to invest in real estate or they want to do XYZ, whatever it might be, I go back to, what are you trying to accomplish? What is the thing that you're trying to get out of?
This is it. I want passive income. I want active income. I want equity. I want something for the future.
I want to have the ability to make my own schedule, be my own boss in the future. For those of you that are working at w two, it really goes back to what do you want to get out of this? And what I encourage people to do is two things. Number one, spend some time and sit with it. We don't have to, I know in this action taking environment, got to have a plan.
I've got to decide, and I've got to commit and move forward. It's okay to kind of stir in this for a little bit. So whether it's you take some time, maybe it's an hour or two, you think about it, you come back to it a week later, you come back to it two weeks later, you spend another time away trying to figure out what do you want to accomplish and realizing and being okay with that's going to change over time. I think people don't move forward because they don't know what they want. And we'll get into that a little bit deeper here in the future.
But really think about what am I trying to get out of this, both from a financial perspective and from a time perspective? And ultimately, what is that going to accomplish in my life? What we're looking for is alignment. And this is something that I've learned a lot about this past year. I've done mindset, coaching around it and really studied a lot of work around alignment.
You're looking for something, thinking about this idea of I want a target that I'm going to be excited to run towards, something that's going to really energize me. I think sometimes people feel like to get what I want, I have to give something up. And what if you could have your cake and eat it, too? And so that's what I'm really trying to focus on is how can I go find that target that's going to be really fun and really exciting to run towards versus feeling like it's a slog and I have to go through this tough situation or these tough set of circumstances to get out the other side. You're going to be a lot more excited about something that excites you, feeling like you're moving towards something that feels really hard.
And so I encourage people to take a look at three areas of their life. So I kind of call this a self assessment. Think about it like a triangle. And I've talked about this before on past episodes, but think about these three areas. Time, money, and expertise.
What do I have to give? And what am I looking for in potentially partnering or finding other people? Now, I don't mean like necessarily a formal partnership. It could just be finding resources, finding learnings, finding trainings to help me grow in these other areas. But what time do I have available right now and what type of time am I looking to have available in the future?
Money? What do I have right now? What am I looking to gain in the future? Is it consistent income, passive income, more active income, equity, whatever that might be, and then expertise? Where do I stand right now and where am I looking to go?
So kind of take that self assessment because that's going to help align up with some of the other decisions that you're going to make in the future here. So number one, figure out what I want and be okay with the fact that it's not set in stone. This is a moldable plan. It's going to change over time. And so it's okay to not have all the answers right away.
00:05:45
And so that's something that I'm learning. So that's number one. Number two, I want to spend a little bit of time talking about how we make decisions because this has been a crucial thing for me, especially last year in 2023. I've really changed how I go about making decisions. So commonly what happens is we think I have to make a decision of what I want to do in the future.
So what am I going to do? I'm going to come up with a plan of how I'm going to do that. So in real estate, it's really easy to talk about number of transactions or volume of transactions. So let's just say as an example, I'm an agent, I want to do twelve closings. Okay, so my end goal by the end of the year is twelve closings.
So what am I going to do? I got to back it down, right, one closing a month. And here's what I have to do to get my one closing a month. And then once I see that plan, right, I've got my one closing a month to hit my goal of twelve closings per year. Now I'm going to decide to commit.
Here's the actions I have to take. Now I'm going to decide to take those actions. And what I found in the past is for some people, that may work, for others, the challenge is what if the actions you have to take aren't exciting to you? They don't light you up. Kind of going back to my first piece talking about alignment, and so for some people, it dies.
Right there, because I might have to, let's just say as a real estate agent, maybe it's make 20 live contacts a day. That's a very common thing that people in real estate talk about. If I got to go make 20 live contacts a day, well, as an introvert, that's pretty exhausting to think I have to go talk to 20 different people every single day. And so what I might realize is that plan may not work for me. Yes, it can work for some people, but for me, the idea of trying to talk to 20 new people every single day, I get to January 2 and I'm done, right?
That's part of why I work with investors, because I like to go deeper with relationships instead of going wider. But for me, that doesn't work. And so I could have this great plan, but if it's not inspired and aligned with where I want to go and what lights me up and what excites me, it's going to feel like pulling teeth all year long. And so I might get there at the end of the year, but I might be unhappy, non energized, and my family and those around me might not want to be around me because I'm doing things that don't align with what I want to do and where I want to go. And so that tends to be an issue for some people with this idea of, I've got to make the plan, put the target, the plan in place, and then decide to commit instead.
What I've been focusing on and challenging myself with is this idea of, I'm going to decide on something that I want, I'm going to commit to get the thing that I want, and then I'm going to figure out how to do that. It's a lot more murky. And like I said, this took a while for me to kind of come around to this model. But what if I said I wanted to have $10,000 a month in passive income? How am I going to do it?
00:08:48
I don't know, but I'm going to keep going until I try, right? I'm going to keep going until I achieve that result. And so it might be I make this decision or I make that decision, but it's all moving me closer to something that really excites me. And what tends to happen is you're not going to sell yourself short. You're coming up with a goal that's big enough, that's really going to drive you.
And do I really care if my goal is $10,000 a month in let's just say passive income. If it takes me five years or eight years or ten years, am I going to care as much about how long it takes me, or is the goal really the $10,000, the thing that I'm pursuing? I'm just going to continue to pursue that until it happens. And when it happens, I'll be super excited about it. So if it's five years or if it's eight years or ten years, that's okay.
And so what it leads me to do is I've made some decisions that I typically haven't made in the past, and it's been great. I've opened up some new doors, some new opportunities, some challenged the way that I think about things. And so this idea of decide to do something, commit to doing that thing that I want, and then coming up with a plan is totally different. And I was talking with another agent the other day about this, and they said in project management, it's this idea of kind of more of a software testing mentality, right. So we're going to do some things.
We're going to test it out, see what works, what doesn't, and realign it. Right. We're going to do something else, test it, see what works, go back, fix it, test, see what works, instead of this idea of here's my end goal, here's the finish line, I'm going to run straight to it come hell or high water, regardless of whether it fits with where I want to go. And so that decision making piece has been a big challenge for me, but a big growth area for me for this past year. So challenge you guys to think about that.
Number one, identifying what is it that you want, taking a self assessment of kind of my skills, my abilities, the time that I have, what I'm looking to get out of it and then figure out, okay, I'm going to decide and I'm going to commit to that. How am I going to do it? I don't yet know how, but I'm going to figure that out, but I'm still going to get to whatever that end goal is instead of kind of this prove it mentality of I'll come up with the plan first and then decide. That tends to shortchange people. So that's number two, thinking about how you make decisions and really challenging you to think through what is it that I want.
And let's go commit to something that aligns with what I want versus seeing the plan first. Let's figure out what that plan might be extremely challenging if this is your first time hearing that, to believe that it makes sense over time, I've really warmed up to that. So I am telling you, that's a challenge for me. That's been a lot of 2023 is kind of changing and challenging the beliefs that I have about how I approach work. And so I've seen a lot of growth in that area.
So if you're listening to this and you're like, Mike, what the heck are you talking about? We can have a side conversation. Reach out to me. Let's talk about that. All right, number three, it kind of goes back to that third piece that I was talking about, figuring out how.
And so what I'm hearing from people and seeing from people is they spend so much time, this paralysis by analysis, I don't know what I want to do. So I'm going to choose to not do anything. Instead, if we've identified kind of my self assessment, we've looked at where do I want to go now? We got to take little actions to get there. And so what I'm seeing is I'd rather take an action that in the end doesn't work out and you adjust, right?
Like kind of that software testing mentality, the version 1.0, the version 2.0, we're slowly getting better and better and better than to not take any action at all. There's a lot of people on a lot of the Facebook groups, the message boards that understand real estate investing in theory, they're not practicing it. And so it's, how do I get out and get my hands a little bit dirty here and figure things out? And so manufacture that first win or manufacture that next win for you, how do I get started? If I've done nothing in real estate, how do I go get that first win?
Even if it's a mini win, right? Something small, how do I go get started? And what I would also encourage people to do along with this is maybe there's a partner out there, somebody else that can help you, somebody that's more experienced in real estate. Maybe it's somebody that has more money that can walk alongside you. As you've taken that self assessment of time, money and expertise, is there somebody out there that's kind of the yin to your yang?
Right? If you've got in those three areas a certain skill set, finding the person that kind of fits what you're looking for, what your need is, and be a match. Now, this doesn't mean you have to be lifetime business partners. It could just be on one project or it could just be something small. But figuring out how do I scratch and claw and manufacture my next win to see some more success?
I think about the example of a rocket ship taking off, right? I've heard something around the first 1% of the flight, the rocket ship burns 80% of the fuel. The first 1.2% of the flight, it burns something like 97% of the fuel. And the first 1.6% of the flight, it burns like 99 and a half percent of the fuel, whatever that might be. Right.
This is an example. But the idea here is it takes so much work to get launched and to get off the ground after that, once you get outside the earth's atmosphere, it's just these little mini corrections, right, that I'm making along the way. I've burnt all the fuel to get going, and so that's where I want to encourage people to find a way to get started, find a way to get to your next win and doing it with somebody else that can help you and walk alongside with you and share in the experience and you can help course correct each other seems to be a lot more fun. I tend to operate with the saying, if you want to go fast, go alone. If you want to go far, go together.
And so that's been a mini mantra for me over the past ten or 15 years. And so I tend to naturally look for other people to work with me versus seeing this path of, I want to do things all by myself, and I want to be the only one to get credit. I'd rather be a part of a team. I'd rather have other people share in success with me than to go do it all on my own. And so for you, if you're trying to manufacture your next win in real estate or your first win in real estate, maybe there's somebody next to you that you can link arms with and try to go do it together, sharing the experience together.
The other thing that I'll say is it comes to finding a partner, too, who you align with really matters. And so find somebody that might be way further down the road with you. If you do know the path that you maybe want to go, whether it's for the sake of argument, investing in mobile home parks or something like that, right? Go find somebody that's done that and has done it at a high level and be a part of their program, whether it's a mentoring thing, whether it's a shadowing thing, whether it's a curriculum thing, go learn from somebody that knows what they're doing a little bit more than you, and that's well worth the price of education in a lot of ways. Now, you still have to vet those people out, but there's a lot of value in don't make the same mistakes that others have made.
Try to go forth and learn from their experiences so that you don't have to make the same mistakes. So number three, kind of figure out how to get started, how to manufacture that next win for you, however that might look, and kind of three b, be open to some sort of partnership. Be open to working with somebody or lining with somebody else to help you that yin to your yang. Number four, tip. I'm just going to mention interest rates.
There's a lot of talk about interest rates out there. It certainly changed the way the landscape of real estate because of interest rates. And so one of the things that we talk about when I was working on a residential real estate team is a 1% change in interest rates changes your buying power by 10%. So if I was purchasing on a residential side, a $500,000 property, if the interest rates went up by 1%, that means that my same mortgage payment probably now only gets me a $450,000 house, right? So from 500,000 to 450, my payment stays the same because of that 1% interest rate increase.
Now, what we've seen in the market over the last six to nine months is two, three, 4% interest rate increases, which has thrown everything out of whack. So as we're analyzing deals, there's so many people that are sitting on the sidelines waiting for interest rates to come down. And so I get it. As you're assessing deals, there's a challenge there with interest rates versus purchase price. But what do you think is going to happen when the interest rates go down significantly?
Those purchase prices are probably going to go up significantly. And so you might be waiting, sitting on the sideline, waiting for that perfect time to pounce when everybody else is doing the exact same thing. So when the rates get to that certain point, everybody's going to pounce. And now you're back into this extreme competition for properties, multiple offer situations. And so right now, what I would challenge people with is try to find something where the numbers make sense.
They might not make as much sense as they did a year ago or two years ago, but if you can get them to make sense right now, as interest rates go down, you can refinance if you need to. So I'm not going to say purchase a property or do an analysis based on the intent to refinance down the road. You still got to take care of yourself right now, but just know everybody else has run out of the fire. I heard this analogy a couple of years back and loved it in real estate. If everybody else is running out of the fire, the house is on fire, everybody's running out.
You kind of have to think a little counterintuitively here of maybe I should be running into the fire at that point. If everybody's running out, how do I run in? And so you're not going to do so stupidly or haphazardly. It's going to be calculated. But there's this idea of interest rates are high, everybody's sitting on the sidelines.
Well, what if I could find a way to make that work? And that's also why you're seeing seller financing subject to deals and all this kind of stuff become more and more popular, because people are trying to find a way to combat those interest rates. So I just wanted to talk about interest rates as it relates to real estate to help you guys understand, there may be a time for you to jump in. There may be an opportunity for you to get in on a property now before rates go down too much and prices might jump quite a bit. So you have to be calculated.
You still got to feel good about your numbers, but you got to get a sense of everybody else is sitting on the sidelines right now. We don't all want to jump in at the same time and have competition. So everybody says they wished that they would have bought during the market crash. The hard thing is that's looking in the rear view mirror, right? You're looking in the windshield, so you don't have the gift of knowing how to perfectly time the market behind you in the rear view mirror.
So you got to kind of get a sense of when is that right time for me to be able to jump in and take that calculated risk. So, number four, that's kind of the interest rate piece, my guidelines around combating interest rates. And then number five, what I really want to encourage people is to do your own research. This kind of goes along with number four, with the interest rates. National headlines tend to take up all the rage around short term properties, interest rates, multifamily real estate politics.
We're heading into another election cycle here in the fall, and so the different political parties are going to be doing what they can to get your vote. And so this year in particular is going to be a little bit more calculated on the political side, too. So do your own research as you're exploring kind of your path in real estate, what actions you want to take this year. And just because the national headlines may say something, be sharp enough to do your own due diligence, to come to your own conclusions. That's where, once again, having business partners might be able to help you out.
You can bounce ideas off each other, you can bounce thoughts, bounce opportunities off each other, versus just reading a national headline, taking it for face value, and choosing, once again, to have another year where we sit on the sidelines. Because I really want to see you guys get in, roll up your sleeves, learn some lessons this year, and get better in real estate. And so doing your due diligence, having that counterintuitive thought process and how you approach these national headlines is really important. So there you have it for our 200th episode, five of my tips for growing and scaling in real estate, and a lot of them didn't really even talk about real estate. It's mindset, it's risk taking, it's analysis.
And so real estate happens to be the tool that we're using to make those decisions. But the mindset is really important. How you approach decision making, how you approach due diligence, those are the transferable skills that hopefully you bring from other industries, from other experiences that you have. And so, real estate is a lot of fun. There's a lot of cool stuff that can be had.
There's a lot of wealth to be made, a lot of fun things. And so let's hope that 2024 is the year that you get dirty in real estate. You make that next step towards your future, whatever that future might be for you. If you have any questions, if you ever want to reach out, go to our website, freedom through realestate.com. Check us out.
Out. We're so excited for 200 episodes, excited to see what the future holds this year for you guys. Don't be a stranger. We want to build relationships with our audience. Reach out to us and see how we can help you guys.
And let's make 2024 awesome.
