Afford Anything - Invest Anywhere: Should I Bother Investing in Long-Distance Real Estate?

Episode Date: July 1, 2022

#389: Should you bother investing in real estate … especially from a distance? Is the hassle worth it? What’s the upside? Do you really want this? Or should you just stick with index funds? Isn’t it scary to invest out-of-state? How do you know if you’re ready? In today’s episode of Afford Anything Presents: Invest Anywhere, my co-host Suni Rao and I tackle these common questions. For more information, visit the show notes at https://affordanything.com/episode389 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else. And that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention, to any limited resource that you need to manage. And that opens up two questions. First, what matters most? Second, how do you align your decision-making around that which matters most? Answering these two questions is a lifetime practice.

And that's what this podcast is here to explore. explore and facilitate. My name is Paula Pant. I'm the host of the Afford Anything podcast, and today's episode, my co-host of the special Afford Anything Presents Invest Anywhere series, my co-host, Sonny Rao joins me. What's up, Sunny? Hey, Paula, how are you doing? I am great. For some context, especially for anyone who's new to this, we are normally a weekly podcast. We We typically air episodes every Wednesday, but once a month on the first Friday of the month, we air a first Friday bonus episode. And this first Friday bonus episode is a special presentation that we refer to as

invest anywhere. It's all about how to invest in real estate long distance. So if you live in a high cost of living area and you're thinking about investing out of state thousands of miles away, these first Friday bonus episodes are for you. We want to make real estate investing approachable for everyone, not just the hedge funds on Wall Street. We want to make sure that no matter where you live, you have the opportunity to invest so that together we can move wealth back into the hands of ordinary people. We're here to level the playing field by teaching you how to invest in real

estate at a distance. And today, Paul and I are going to talk you through answering the million dollar question. Should I even do this? Or is this right for me? And that's one of the questions that I hear so many people in this community ask. Hey, I keep hearing about real estate investing. How do I know if I should even go into it? Or can I really handle investing a thousand miles away? Right.

There's so many things that can pop up and I'm not there. Can I do this? Yeah. And is it worth it? Should I bother? I mean, for all of the work, is the pay? pay off worth it in the end or should I just stick with VTSAX? And those are great, great questions. In order to answer those questions, we really need to zoom out a bit. We've talked about the benefits

of real estate investing. We have talked about different things to analyze when you think about real estate investing. But we're going to take another approach today. A lot of what we have covered to date and a lot of what real estate investing analysis revolves around is analyzing the environment outside of you. It's an external analysis. It's analytics, it's statistics, it's formulas, it's definitions. It's knowing what's happening on the outside. But at the end of the day, your success and your fulfillment when investing in real estate, let's be honest, nothing to do with what's a good deal? Which city is best? How do I rehab? Are those rats? Legitimate questions I have asked myself. Sometimes they are rats. But there's a way around

every single external challenge you might face. What's harder to overcome is the internal analysis. This is the piece that doesn't get enough attention. when people talk about real estate investing because they're harder to dive into. They're more nebulous. They're more contextual. And the deep dive require can bring up some pretty daunting questions. There are two sets of analyses, really, that we need to perform, external and internal. Absolutely.

Finding true success as an investor, which is yes, getting the cash flow. It's getting the appreciation. It's getting the tax benefits. It's getting all the things that we have discussed. But true success is achieving all of these in a way that is both sustainable and uniquely beneficial to your situation, which again does not come down to logistics. It doesn't come down to find the right contractors. There are plenty of people who can wield a wrench.

The deciding factor is the internal component. What does that mean the internal component? The internal component is solidly assessing your goals, your mindset, your resources. It's solidly assessing all of the things that will drive the actions that you take and the decisions that you make. It will determine whether you will be able to take that dream vacation or put your kids through college or honestly burn out on real estate investing within 15 months and cash in your chips. And we want to make sure that that doesn't happen to you because it's all about the tradeoffs. It's about you optimizing your life. In order to be successful, no matter what, you need to have the right mindset going in.

So let's go back to the root question, the question that anchors this episode, which is, should I even do this? Should I bother? Is it right for me? And there are two sets of analyses that people need to perform. One is external. The other is internal. that external analysis often concerns formulas and search strategies. It concerns many of the things that we've talked about in previous episodes of this first Friday Invest Anywhere series.

And that we will continue to talk about after this. Exactly. But if we turn our attention to the internal analysis component, given that that internal analysis is so nebulous, Is there a methodical way to go about doing it? There always is. We will talk through a few approaches to provide different frameworks because everyone's mind operates a little bit differently, right? The first approach that we will take will be to step back, step way back,

take into account the fact that even though there are so many questions that come up, so many of these questions can fit into two separate categories. One is resources, and the other is mindset. The first of these that we will cover is the resources bucket. Resources are what you already have, what you can draw on to start, to operate, to grow your business. And there are three major types of resources that influence real estate investing. The first is cash. The second is time.

and the third is relationships. It's very rare that you will have any three of these at any given point, because if you have money and relationships, you'll be able to go your business to a point where time is suddenly really hard to come by. Alternatively, if you have time and you have money, building relationships become so much easier because you'll be able to keep investing and growing to where you will naturally come in contact with others

who are doing the same thing as you or are in tangential businesses. So with that in mind, let's start talking about the first resource, the one that everyone seems to always be hung up on, I mean, fairly, rightfully so. Cash. People get hung up on this because while it's possible to successfully invest, if you have the other two resources, which are time and relationships, it is obviously easier if you have cash readily available. But that's not the only way. Oh, yeah. If you're like, what cartoon character is it? Is it Donald Duck is the one who swim? No, it's Scrooge McDuck. He's the one. Scrooge McDuck just

swimming through like a vault full of cash. And you know what's hilarious is you don't usually like these pop culture analogies. You're like, TV? I don't know her. But yeah, I think a lot of people imagine that you have to be like swimming through a vault of cash in order to get into this. And as we go through the other resources, we will definitely touch on high level how you can get started if you are stronger in the other resources of time and relationships. But first, let's talk about how to evaluate your cash position. It's important to understand not only if you have a lot of, you have a lot of, you have a lot of enough cash to get into an investment, but also do you have enough adequate reserves? And depending on

your goals, how quickly you can replenish your holdings to be able to rinse and repeat? In determining whether or not you have enough cash, like what are some of the questions that you would ask yourself? The first, I think, is pretty self-explanatory. How much money do you currently have in your discretionary savings? Highlight the term discretionary. Investing should be built and sound financial principles. It's not a get-out-a-jail-free card if you are struggling other areas of your finances. We firmly believe that you want to be coming from a very strong financial position if you want to start investing in real estate.

Another question, how much of your income are you able to save on a monthly basis? That will help you determine your ability to stay in the game long-term, reinvest. come up with cash if there is an extra CAP-X or large expenditure emergency. So it's important to know that just so you can have that in your mind going in. Another question, will your savings rate allow you to purchase a home in your desired area? That lends to the question, should I invest where I live? Should I invest in another location? because we have a lot of people who are priced out of the areas in which they live,

the highly densely populated big cities. Plus a lot of homes in those cities just aren't good rentals in terms of their price-to-rent ratios. Absolutely. Another question, do you have good credit in a low amount of debt relative to your income? That allows you to be bankable, allows you to get better terms as you think about using leverage to purchase an income property. And then what are your sources of cash? Where is the cash coming from? Is it just from a job? Is it from a self-directed IRA? Where is it coming from so that

you know what you can draw on when you want to draw on it? And for those who have goals that require building a source of residual income that goes beyond buying maybe one or two properties over the course for a decade. There's also a second order of questions involving cash. You really have to look at how quickly cash reply can be replenished, which means you have to start thinking through returns, thinking through the returns of your investment, which again, that is what leads a lot of people to investing in real estate at a distance, because they see that if they buy that duplex in Seattle, every dollar that they put in, it's harder to earn the same amount of dollars that you would if you were to buy a duplex in the Midwest. Yep.

Exactly. And that goes to replenishing that cash supply. So that you can rinse and repeat and get more properties. And just to zoom back out for a second, the reason that we're talking about cash is because cash is a resource. And resources are, you know, the two classifications of your internal analysis. are what are your personal resources? It's one question. And then what's your personal mindset is the second question?

So cash is one example of your personal resources. There's one other important question that people should probably think about if they want to build that portfolio. And that is, are there other ways to access cash that I'm not thinking about just yet? Cash that you could access but that you don't. don't currently have. Yes. That's really helpful in building the long-term strategy and the plan. And by that, I mean, if you make sound investment decisions on the front end, you buy with equity in the deal, you're able to force appreciation. You target the right area that is growing, that is improving, that is hopefully continuing to appreciate, although you don't buy just

for market appreciation. Reminder. As time goes on and equity builds up, there are ways to access some of that equity through lines of credit on investment properties, for example, that you can then utilize to purchase more. So it's not always just. just about specifically the cash that you have coming in. It's about strategically thinking about the resources you can use to gain cash. And when it comes to tapping your other resources so that you can gain cash, I mean, that kind of opens up to the question, all right, how do you tap into your other resources? How do you tap into your time and your relationships in order to access cash that you don't quite have yet? The second resource is time, which frankly could also be

thought of this energy. Yep. And different real estate strategies take different levels of time and energy. And it's really, really important to accurately assess this. I cannot emphasize this enough. It's important to accurately assess how much of your time and energy you can devote to your portfolio, whether your goal is to keep investing and grow the portfolio or even just to keep it status quo after one or two properties.

Because depending on your goals and your chosen strategy, some months can be so slow. Maybe you spend two hours out of the month doing work to maintain your portfolio. Other months, it can be really hectic if there are multiple repairs that come up. You need to be prepared for both eventualities because it will happen. And it's important to keep these demand fluctuations at the top of your mind as you think through, how much time and energy do you have to devote to extra projects? Do you have the flexibility during the day to turn your attention to other tasks as they arise? Or do you need to carve out specific chunks of time in order to focus on other things? This is the question that can really

lead some people to getting stressed because if flexibility is difficult and a call comes in that needs your attention ASAP, but you are under pressure at your job. You're under pressure with the demands of your children. You're under pressure with whatever demands you have in your life. It can really create kind of a mental burden to not let any balls drop and keep them all in the air at the same time. So do you have the flexibility to be able to do that and or mentally juggle the fact that you might need to have some tradeoffs while you can complete your juggling maneuver. And lastly, and this is really important, can you get higher returns if you devote your time

to other endeavors? And this is important because at the end of the day, you want to optimize your life. Real estate investing is great. Is it in your best interest to buy a heavily distressed property and be mentally engaged in that? if you can get higher returns growing your own business or climbing the corporate ladder or working towards that next bonus that can then be invested. What is the better use of your time? And choosing the strategy that works best for you just because more of your active energy may be

useful in getting that next bonus. That doesn't necessarily mean that you don't have to invest in real estate. You just might want something that you just might want a strategy that has less traction. on the path to your returns. Right. So for example, if you're gunning after that next bonus or wanting to climb the corporate ladder, then maybe instead of buying distressed properties and then managing a major renovation, you might instead decide to buy properties that are move in ready, for example. Exactly.

Move in ready. Maybe an A minus B plus neighborhood so that your likelihood of getting up. higher quality tenant and therefore make the renting out and collecting rent process easier. Way easier in that A minus neighborhood. A minus B plus, yeah. It really is. So you can toggle your investment strategy. You should toggle your investment strategy based on your time constraints. If you have more time available to you and maybe less cash, the last resource that we talk, about, maybe spending the time searching for the diamonds in the rough by driving for dollars or investing in those distressed properties might be worth the investment for you.

Or digitally driving for dollars if you're at a distance, right? So that would be like a direct mail campaign, for example. Exactly. And if you have the dual resources of time and money, being very patient to find the right deal, letting some of that time go by, especially in hypercompetitive markets like we have today, will be really beneficial. Whereas if you have less time, you might be okay with a slightly lower return because you have the cash to reinvest. In another situation, if you have the dual resources of time and relationships, but maybe you're a little bit lower on the cash spectrum, investing the time to learn, and in people to help their businesses is an invaluable way to earn relationship capital. And everything in this business comes down to relationships.

So that can go a really long way in developing your business long term, especially if you decide to save up your money in the meantime. So that when you have the capital, then you have the knowledge and you have the people to support you along the way. And that really naturally leads into a discussion around that third resource, right? So the three resources, as we do an inventory of what are our personal resources as part of that internal analysis, the three resources are time, money, and relationships. How can the various relationships in your life help you with real estate investing? So let's say that, for example, let's say that someone is listening to this right now,

And they live on the East Coast or the West Coast in some expensive, high cost of living coastal city. They're thinking about potentially investing in the Midwest. They have some scattering of people that they might know, like maybe their college roommate's brother lives there. How can those types of relationships help? The answer to that is to quote the great Joe Sel Seahyai. Ask who, not how. Nice. Joe is going to love what you did there.

When it's time to assess the relationships that you have, it is really important to just do a brain dump, data dump. It's not going through it and going, okay, person A is in X location knows this. We're going to put them on the list. Do a data dump. Break out the spreadsheet. Have a column. put down literally everybody you know. And then start thinking about what they do, what they're good at, who they know,

start writing down those notes. These relationships can help you in a variety of ways that you don't always know how they're going to help you at first. It could be private money. It could also be people who have experience in the trades or know someone who has a brother that's a really great electrician and just like a really good. person too. It could be someone who knows Smyrna, Georgia. I have no idea why I just mentioned Smyrna, Georgia, first thing that came to mind, but can give you insights into different local areas,

what it's like to live there, what kind of people are moving there, that go beyond just the internet search. And it can be people with real estate investing knowledge. Someone will know someone who knows someone. So just doing that data dump and talking to people about what you're naturally interested in is one really pivotal way to start building those relationships. And of course, if you can add value along the way, you really, really want to do that. As you go through this, if you realize that, hey, I actually have a lot of contacts that can help me and vice versa. And my time in cash is limited or tied up. Partnerships could be a good way to get into investing and earn some seed capital. It is very important to evaluate these partnerships

thoroughly and diligently. But it is 100% possible to be the person who brings the people together to make a deal happen, combining someone to find the deal, someone to fund the deal, someone to operate the deal, learning along the way, and then potentially getting a cut for being the person to organize and bring these opportunities to all these different people who didn't have the connection to make these opportunities happen on their own. And if you have relationships and time, offering your time to more experienced and successful investors can be a great way to learn the ropes as you save that seed capital. We'll come back to this episode after this word from our sponsors.

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ourselves personally, our own lives. And within our own lives, there are two classifications, two buckets of things that matter. One of those buckets is our mindset, but the other bucket features our resources. There are three major resources. One is cash or access to capital. One is time and energy. And one is our relationships. So we've just talked about those three major resources in terms of taking that personal inventory. What about that other bucket? Yeah, mindset. Man, if I knew this before I started investing, I think my life would have been a lot smoother. Right. So just putting it out there, real estate investing is never totally easy or totally smooth sailing. And it's really important to understand your potential mental biases before getting

started, especially, especially as they revolve around fear and personal limitations. It's important to know what you're afraid of and the kind of questions that you ask, especially if they have implied meaning. The first question is, what are you most afraid of? It's a really big question. Sometimes it helps to reframe this as what are the potential issues you are having a hard time grappling with as you evaluate. potentially investing in real estate, investing in real estate long distance. Are there any specific exercises people can do? Like, can you bust out a piece of paper and a pen?

And is there like a prompt that people can write? Typically, the questions and commentary that we hear a lot of start with the phrase, I am afraid of investing because dot, dot, dot. So that's the prompt. Yes. I don't want to lose all of my money. What do I do if the tenant doesn't pay? What if there's another moratorium?

There's a lot of questions that come up. And my question back is, is the real issue about a hypothetical situation that may or may not happen for a long time or may happen extremely infrequently? or is it that you are afraid of not knowing how to handle these and other complex unknowns when investing? Either way, the question is how do you get what you need in order to feel comfortable taking on these challenges? For some people, it can be building that network of relationships so that you can have feedback and contacts when XYZ happens. Okay, who do I call now? And they can say, call X person, ask for why. And then you have a path to a solution that you can trust.

For others, it might be a surplus of cash just so that they have the peace of mind knowing that they can ride out whatever short-term obstacles come up because they know that the long-term investment is worth it. You know what strikes me when I think about all of these imagined hypothetical scenarios that make people afraid, right? Like, I'm afraid of investing because dot, dot, dot, because if my tenant just stops paying, I don't know what I would do. Because if there's another eviction moratorium, I don't know what I would do. Because I don't know what a tankless water heater is. So how can I possibly fix one if I'm not even quite sure what they do?

Right? You hear all of these questions and all of these like imagined what if scenarios. And what strikes me is that not only are there so many unknowns, but there's also kind of a loneliness component to it. Yeah. Yeah. Because people imagine that they're going to be dealing with this by themselves, that there's going to be no one that they can turn to for help. That's a great point. The reason that this comes up for me right now, as I'm listening to you talk, I'm thinking about how scary it is for an 18-year-old to go off to college, right? For the first time in their life, and I know this sounds like this is coming totally out of left field, but bear with me on this train of thought for a second. Imagine you're 18 years old, and for the first time in your life,

you're not living with your parents. That's weird, right? You don't. You don't. You don't. You don't know how to do basic things like laundry. And then there are all of these unknowns and fears and questions that come up. Like, will I be able to balance a full course load with working 20 hours a week, which I have to do in order to pay my bills? What if I completely flunk out of some classes? Heck, what if I can't even find my class? What if my car breaks down? What if I get bacterial meningitis? I hear that's common on campuses. It's like, there are, are all of these fears, but millions of 18-year-olds do it almost without question. And part of the reason for that is because it's a shared experience, a common shared experience, when you know

that you're not the only person doing it, when you know that there are going to be thousands of other people on your same campus who are also going through that exact experience, it makes that experience easier. And so despite all of the unknowns and all of the fears, the fact that it is common and shared makes it comfortable, or at least makes it doable. And I think that that is often what's missing from the real estate piece. And that's a big part of why, you know, previously we talked about relationships. And I know on this show we often talk about the importance of community. I think that's why that matters so much.

Because when this becomes a common shared experience, when long distance real estate investing is, Not just something that Joe from Los Angeles is doing alone, but rather something that we as a cohort, as a community, are all doing together, then it becomes a lot easier. And a lot more enjoyable. Yeah. I would agree wholeheartedly with that. I think especially, especially when you're starting investing, just the act of considering investing can feel like an isolating experience because the majority of. of people do not engage in these activities. I know that when I started investing, I felt very isolated and alone because no one I knew was doing what I wanted to do. And it was building

those relationships, finding friends that made me realize, hey, this is real. And look at all of these other people who are able to do it successfully. And if they can do it, then I probably can too. And there are a lot of people successfully investing. And not only are there a lot of people successfully investing, but a lot of those people, people who have 5, 10, 15 properties, they're not handy. Right? Like, hi, it may. Yeah. Yeah, so when we're talking about personal limitations, this is a big thing that pops up almost constantly. And frankly, I think it's something that all of us investors go through, those who aren't handy.

People usually focus on what they don't have. And people think houses, I don't know what a tankless water heater is. I'm not handy. I think it's really, really important to flip that script. If you're investing long distance, what good is it to be able to know how to install a toilet? Yeah. The real skill set is, can you manage a project? Yeah, exactly.

Can you talk to people and vendors in a way that makes them want to work with you? Yeah. Frankly, that would be like me saying, I can't be a podcaster because I don't know how to edit audio. I've been podcasting for six years. I still don't know how to edit audio. So hi, Steve. Thank you, Steve. It's really important to think about what you do bring to the table. Exactly. Even audience won't see this. I'm placing air quotations around this next word. Even just the ability to think critically or creatively and have common sense can go a really long way in the investing world.

similar to the data dump, the brain dump that you would have done to document your relationship network, I'd highly recommend doing the same thing for skills that you're good at and write down all the skills, whether you think that they relate to real estate or not, because I promise you, there's probably some way that you can bring it back to help and benefit your real estate business and also keep that list on hand to periodically revisit to see if you can apply these skills to investing. And what we're talking about right now sounds a lot like beginning with the end in mind, which is this theme that we come back to so often on this podcast. I know Joe, Saul See-high, from the Ask Paula and Joe episodes, he quotes that expression all the time.

That's a quote from Stephen Covey from the book Seven Habits of Highly Effective People. Yeah, it's especially important in real estate. Your end goal, your end life, and what that looks like should strongly influence your investing strategy. That's where you begin. In terms of beginning with the end in mind, are there any specific questions that people should ask themselves in order to better visualize that end, that end goal, that end life? Absolutely. One of the first ones should be, what do you? want your real estate to provide? Do you want to build a business that will support an entirely new way of life? Or do you want to just maybe take a nicer vacation each year? What kind of life do you want to live until you get to the life that you hope that your real estate investments can provide? What are you willing to sacrifice to get there? Do you have the resources or network to buy

larger asset values? Is that something you want to get involved in? Or do you need an additional active income stream to expedite the growth of your acquisition fund? Do you prefer grinding out projects alone, or do you find part of a team to be more fulfilling? This is just the start, but these questions are large enough to get you moving on that path to figure out what the best strategy is for you, for your life as it is, for your life on that bridge to the eventual goal, and how that life would fit that eventual goal. So we're talking about goals right now. And this makes me think about the last Invest Anywhere episode.

Invest Anywhere, of course, this is the special presentation that we do on the first Friday of every month. And in our most recent first Friday episode, which was the main main. a 2022 episode, episode 384, we talked about the mental framework of a tree. And in this mental framework, the root structure of a tree represents your values. Stemming up from that, the base of the tree are your principles. And then that tree trunk, those are your goals and objectives. And from that we extend into limbs, which are strategies, branches, which are tactics, and then leaves, which are the execution of all of that. And we covered strategies and tactics in last month's episode to give an insight into what it would take to succeed in those strategies, especially along the spectrum of passive to active.

so that we would be able to share, okay, you need X amount of time, you need this, you need that in order to succeed. Now that that information and that insight has been shared, and as we think through a personal situation, you can also think through at a high level, whether you have the time, whether you have the resources, whether you have the intestinal fortitude to navigate these strategies. I love the phrase intestinal fortitude. Love it. I mean, tell me it's not accurate.

Right. We'll come back to the show in just a second, but first. So in the last episode, we focused on the top of the tree, right? We focused on strategies and tactics. Those are the limbs, the branches of the tree. To close out this episode, let's talk about, for lack of a better term, the bottom of the tree, the roots, the base, and the tree trunk, the values, the principles, and then how that leads to that. that tree trunk of your goals. Let's walk through a couple of examples. And let's start with the values, because values are the root system that root all of this. Let's walk through a couple of

examples of different types of values that different people might have and how that would influence the goals that they ultimately set. Absolutely. One example is family. If it is important for you to be present for them and to take care of them, that can manifest as a principle of wanting to maybe take care of aging parents. Right. Yeah. We get a lot of voicemails from people who say, hey, my parents haven't saved enough for retirement. I want to help them out. And then the next step would be to think, okay, what does that look like? Some people really want to be the sole caregiver. And that would require a consistent focus on a pretty continuous list of tasks in front of you for a very specific period of time without the flexibility to attend to pressing investing matters as they arise, right?

Right. So that then would make more active options where you would have more time-sensitive matters come up. Those active options might not be the best option for a person in this scenario. In this scenario, maybe taking a more passive route and acting as a lender, as a private lender, or investing in a reet or buying and holding a new build that's in a great area that's not going to have a ton of CAPEX because it's a brand new house. Right, right. So, yeah.

So if you are the caregiver for a parent with dementia, for example, you're so busy. You're probably not going to be wanting to flip houses, but a buy and hold for a A minus property. Right. That would be something that would be passive. enough that you might be able to do that? Others have still different values, right? Some people value experiences, and maybe that looks like they like to travel a lot without any further changes to their lifestyle.

A goal that could help them reach that would look like having an additional stream of income that maybe throws off a few thousand a year to put into a vacation fund or even have a place to return to when it fits into their schedule. A strategy that could work in that scenario would be purchasing a short-term rental that you can, A, use as a vacation home, and B, there might even be an additional sense of fulfillment helping others enjoy their vacations while you earn that extra income to meet your goals. Right. So if travel is a huge priority for you, yeah, the short-term rental route provides. that the numbers work could be a really good one. Or alternatively, buying some super cheap property in cash or buying some super cheap property and paying it off as fast as possible so that it kicks

off cash flow as quickly as possible so that you can use that cash flow to go fly to Egypt or fly to Greece. Right? You can use that to cover the cost of a two-week trip every year. given that those are on my short list and you know that is that a subtle hint paula we have one more example there are many who value freedom of time and that can show up as a desire to set your own schedule to work when you want to work to go to the gym and sleep when you want to sleep usually but the overall idea is to set a schedule that's more aligned with your life and your personal wants and needs. If that is a goal, owning a business where you can earn a more active income might be a decent

fit and that could look like operating a wholesaling or a flipping business. So a more active strategy, like transitioning out of your job entirely, eventually and doing real estate full time could be the type of thing that gives you the time freedom that comes from self-employment. Exactly. Yeah, and these are very different goals. If your goal is adventure and experience and travel, but you don't necessarily want self-employment, right? Like we've just talked about how those goals, they seem closely related, but they could

lead to very different investing decisions. The person who's happy in their current job, but they want more travel in their life, might optimize for owning a short-term rental or might optimize for owning a short-term rental or might optimize for owning just one or two properties that are inexpensive and that cash flow really heavily. Whereas the person who hates their job and wants to get out as fast as possible might optimize for a more active strategy that they could do full time and that helps them quit that nine to five. And so that's why starting with the end in mind means starting from that root structure of, all right, what do you value more? What is the most important? What is the most important

thing to you. Yeah, exactly, because that's going to influence every upstream decision. I realize upstream and tree is like, I'm really mixing metaphors here. Zooming back out, what we covered in this episode, the base question of the episode was, should I bother investing? In order to answer that question, you need to take a personal inventory of your life. And that personal inventory requires looking at both your resources and your mindset. Those resources include your time and energy, your access to capital, and your relationships, or your willingness to form new relationships, and then your mindset, that largely revolves around answering the question, I'm afraid of investing because, dot, dot, dot, listing your fears. And then thinking through how to

solve for that, what would make you feel better in the long run? How is it best for you to tackle those fears head on? And so that is how to take a personal inventory of whether or not long-distance real estate investing is right for you. Because if you decide that it is right for you, then the how of it, the tactics, the strategies, the external component that we've talked about in previous Invest Anywhere episodes and that we will continue to talk about in future First Friday Invest Anywhere episodes. I mean, there's so much to say about the how of it. How do I find properties? how do I learn about Kansas City or Wichita given that I've never left California in my life? Right?

Exactly. There's so much to say about the how. But oftentimes people have questions about this internal component or they have doubts or fears or uncertainties about the internal component. But they disguise those internalized doubts, fears, uncertainties in the first. form of external analysis. And that's the reason that we wanted to make a distinction between external analysis versus this internal personal inventory. It's really important to know the difference between what is a question that I need to figure out in my environment versus is this

something that I need to address within me? Because those are two very different solutions. Right. Exactly. And so much of the time, I know I did this. When I would feel afraid, rather than acknowledging I'm feeling scared, I would instead just rerun another spreadsheet, right? And that turns into analysis paralysis. Maybe this house will work. Yeah, exactly. It's the house.

It's not me. Right. It's the city. I'll find another city. Exactly. Exactly. And when that happens, you're asking the wrong question. that's where so much of analysis paralysis stems from.

So hopefully this episode might help some people bust out of that analysis paralysis by shifting focus towards internal analysis. And internal problem solving. Excellent. Well, high five, Sunny. Virtual high five. Nice work. Right back at you.

So this is the Invest Anywhere, First Friday series. We will be back on the first Friday of, The next month, with more of this series, and as we said in the beginning, this series, Invest Anywhere, is dedicated to helping you become a long-distance real estate investor. If you live in a high cost of living area, which so many people listening to this podcast do, and you want to invest in real estate, but you know that because of the numbers, you're most likely going to want to do that in a location that's thousands of miles away. All right, how do you get started?

That's what we're here to answer. And we are here on the first Friday of every month to tackle that question. So thank you so much for being part of this community. If you want to discuss today's episode, go to afford anything.com slash community and discuss it with other people in the afford anything community. Again, that's affordanything.com slash community, completely free community. It's here for you. I'm Paula Pant, host of the Afford Anything podcast.

I'm Sunny Rao, co-host of the Invest Anywhere series. We will catch you in the next episode. So one example is family. If you value your family, that sounds awful. Yeah. And I don't.