The THREE investor levels: Where do you fit?

For every serious real estate investor or ‘would be’ investor, it is essential that you acquaint yourself with the three investor levels and be able to know exactly where you fit. In this piece I will be critically analyzing the three investor levels and hopefully answer that question that lingers in your subconscious, “Where do I fit?”

Going down memory lane, I once had an awesome conversation with a mentorship student in December 2014, and this piece stems from our discussion.  The young man shared with me how he and his wife were on their way to selling their third house (their first two houses they still own) and hopefully net up to N7.6m. It inspired me because I had talked with them over a year ago when they had a tenant/buyer back out of a deal, and they were at an emotional low.

Let’s face it, the hard truth is that if you’re in real estate long enough, you will have moments of frustration and emotional lows. However, on the contrary it is worth it. You have to look at real estate investing from the “Big Picture” perspective. And this piece intends to help you gain new insight to your business for your long-term success.

The Three Investor Levels
The end goal of this article is to ensure that you create both the passive streams of cash flow needed each month to live an incredible life, and to build a significant net worth. It is the combination of these two financial markers—cash flow and net worth—that guarantees you financial success over time.

Cash flow is the money you get each month that you can use to fund your lifestyle, to invest in more appreciating assets, and you can use to share for the greater good.

Net worth gives you long-term financial health. It’s equity you can use to convert into lump sums of money. It’s capital you can convert into cash flow. It is stability and an important long-term piece of financial abundance.

From my perspective, I see real estate investors needing to grow through three distinct levels. See where you fall and, more importantly, where you want to end up.

Level One investors
They’ve proven that real estate doesn’t just work for other people, but that it works for them. They have done this the most simple way—by making a significant profit on their first few deals. Level One investors have the certainty that real estate will be their proven path to financial success. They know they still have a lot to learn, but they’ve seen that they can do it.

Level Two investors
Level Two is all about mastering the five core skills of real estate investing and building a business to support a real estate portfolio. Level Two investors have created a net cash flow of N850,000 to N8.5m per MONTH and an increase in their net worth, N42.5m or more per year.

Most investors think Level Two investing is all there is to investing in real estate. They aren’t even aware that another level exists, and they stop short. But there is so much more that’s possible for them, and the rewards are worth the effort.

Level Three investors
Imagine having built your mini-empire in such a way that you earn massive income without having to be involved in the day to day direction of the business. Level Three investors earn at least as much as Level Two investors, but they do it passively.

This means Level Three investors work less than ten hours per MONTH. Their property portfolio and business work without them needing to be there to run things. I’ll share some thoughts on the key steps to progress through each of these three levels.

Key steps to moving through the investor levels

Level One: Since this level is about proving that real estate works, you have three main hurdles to “climb.” First, to get out of THINKING mode and into DOING mode. This means going out and meeting with at least three sellers–this week!

One of the reasons we make every mentorship student go out and meet with sellers right there at the training is it’s too easy to let fear push you to rationalize away your dreams: “Oh I’m too busy.” Or, “I’m not ready.” You can either have your reasons or your dreams, but you seldom get both.

Second, learn from the best coaches and teachers. Notice that this learning happens AFTER you’ve broken through the inertia of inaction. Learn from the best, but make sure you are really willing to DO first.

Third, stop and learn from your experiences on a regular basis. This triangle of Do, Learn, Regroup; Do, Learn, Regroup is the key to your initial success.

Level Two: Here are the five core skills you have to master:
1. How to consistently find motivated sellers
2. How to be a master negotiator
3. How to quickly analyze deals to know the deals from the dogs
4. How to structure a variety of deals: short sales, lease options, cash sales, “subject to” deals, selling on a wrap mortgage…
5. How to write up the deals and understand the contract part of investing

Level Three: The key here is belief systems. There really is no difference in skills other than the beliefs that support you seeing the opportunities that exist all around for BIG deals. At a certain point it’s actually easier to buy a shopping mall than it is to buy five more houses. And you’ll make 10-fold to 100-fold more cash flow from the shopping mall, potentially.

I hope this got you thinking. I’ll revisit this topic over time to share more thoughts on it. For now, what’s important for you to do is to identify yourself on this spectrum. Where do you fit?

Debo Adejana
MD/CEO Realty Point Ltd