Whether business or investing you must know how to handle three things:
If you wish to simplify your life, invest in a real estate property that is rented to a large tenant who is paying you a NNN lease (long term lease with escalation and a corporate guarantee where the Tenant pays you the lease Net of property tax, Net of property insurance and Net of property maintenance, hence the acronym NNN).
In the book “In Search of Excellence”, the author revealed eight principles of organizational behavior gleaned from conversations with the successful companies. He talked about “businesses” and I want to juxtapose that with the world of investing.
The Business world vs. the Investing world:
1) A bias for action vs. A bias for inaction
(Once you place a large tenant into your commercial property you are done for 10 to 15 years based on the lease terms)
2) Stay close to the customers’ vs. Stay at a distance from the clients
(Your client is the Tenant that occupies your commercial building and they want to be left alone to do their business whether it is a clothing company or fast food company. You must let them have a quiet enjoyment of the space)
3) Autonomy and Entrepreneurship vs. Independence and freedom
(The end goal of making money, is independence and freedom. You could even say that the freedom is the ultimate measure of your success and you get that from having your property rented and you are free to travel or enjoy life)
4) Productivity through people vs. Profitability through assets
(The last thing you want to do is keep training, directing and supporting people. There is nothing like having an asset, such as a property, that is occupied and producing reliable income without having to direct it or manage it in any way)
5) Hands on- value driven vs. Hands off- bottom line focus
(Many CEOs brag about how detail oriented and hands on they are as if the company would not operate as well without them. The true measure of a leader’s efficiency is what happens when he/she is not there. A rented real estate property that produces income without you having to be involved or present is the best value you can have)
6) Stick to the knotting vs. Stick to value over time
(In case you are unfamiliar with the term: If a person of a company sticks to their knitting, they continue to do what they have always done instead of trying to do something they know little about. But when it comes to real estate investing the “knitting” is simple, just hold on to the property and as the rental income increases and the debt decreases you end up becoming wealthy and wealthier over time)
7) Simple form- lean staff vs. Simple structure – no staff
(It does not get any simpler than having a tenant occupying a property and sending you direct checks that are guaranteed by the entire corporation. That’s called a Corporate Guarantee. – You would not need any staff because there is no marketing, management, or accounting needed – very simple indeed)
8) Simultaneously loose – tight properties vs. Holding on to assets & paying off debt
(Another clear advantage is having the rental income pay down debt over time – in fact the inflation works to your advantage in such a scenario because the rental income increases due to the scheduled escalations in the lease and the debt value not just amount decreases over time as the dollar devaluates over time)
No matter what job, professional career or business endeavor you end up having, you must consider investing real estate. The key thing however is to look for turnkey income whether from a commercial NNN lease or a residential home, that is rehabbed, rented and managed by a reliable company. This way you will become wealthy in a reliable, easy to calculate manner, and time becomes your friend.
I have set up special syndications and real estate funds that allow you to participate in reliable steady rental income and/or also give you the opportunity to just purchase direct assets that produce turnkey income from my Fund that is filed with the SEC. You can join us with as little as $25,000 and you do not need to be accredited. You could own the assets directly, hassle free and have a true compounding effect over time.
Watch my webinar and contact us to schedule a time to discuss you are in control to invest in the fund, or buy assets directly from the fund or just partner up with us at www.SFIFundDirect.com.
Here is the link to the webinar:
SFIFund Directs Cherif Medawar presents: How to Start a Residential Turnkey Rental Business in 2017