Today’s question comes in from Charms and she writes in and says, hello, Marco, your podcast is practical and with an outstanding delivery. Thank you. Please give examples of SMART Goals for real estate investors. And she says beginner real estate investors that are possibilities for 2021. And in the next five to seven years, for couples who are still working day jobs, what is the average cash flow per unit outside California? So I assume you live in California, which is a very expensive market. Is it a requirement to set up a company before? And when an investor has bought the first rental property, I want to replace my income with cashflow properties and become a full-time real estate investor. Well, that’s a goal right there. Congratulations.
We also appreciate your recommendations for books. Do you read actual books, Kindle or Audible? I have been listening to Rich Dad, Poor Dad on audible and motivated to grow my real estate education. Also, what personal finance tracking software would you recommend for real estate investors? Thank you, Marco. For the excellent work and helping beginner real estate investors have something productive to focus on, especially in these challenging times.
Well, you’re very welcome, and thank you for the questions. There’s a number of them here. The overall arching question you have is goal setting in real estate investing. So I’m going to focus more on the SMART goal setting, but just to quickly answer your other questions here. As far as books go, I actually do all three. Well, let’s just call it this. I have actual books. I love paper books and I have a lot of them. I just love the feel and the smell of the paper. And I love holding books in my hand, and I like to thumb through them and just read a, an actual paper book. There’s just something about the physical book, but I also happen to love eBooks and, don’t use Kindle as much as I use the books app on the iPhone and on the iPad. I just prefer that app over Kindle. They’re both very good by the way, but I do like eBooks because of portability. I can literally put my phone in my pocket and I can carry around 500 books in my pocket. And then on top of that, I have audible. So I have again, hundreds of audiobooks. So between all of those, I’ve probably got well over 3000 books and,uI just love books. Now. I haven’t read all 3000 books, but I just use all of them, some of them for convenience, some of them for just the convenience and portability of audible books. Listen as you go.
So anyway, enough about that glad you’re listening to Rich Dad, Poor Dad, personal finance tracking software. I mean, that’s maybe a conversation for another day. I used to use Quicken many, many years ago, but I just found it too time-consuming and tedious. I don’t bother with it anymore. I just find that a simple spreadsheet to just keep track of your assets and liabilities, you know, from the different properties or companies that you have just thrown into one personal financial statement is just the easiest thing. It’s just easier to manage things in a simple spreadsheet. And so I prefer that over tracking software, but as far as tracking software for properties, there are different options out there for that. You could use QuickBooks, you can use Quicken, you could use software, like Stessa, there are other tools as well out there. So believe it or not. I know a lot of investors just simply track it in a spreadsheet. You know, they have their bank accounts, but they track it in a spreadsheet.
Um, what else do you have on here? Average cash flow per unit outside California. Okay. So let’s talk about SMART Goals. This is actually a simple question but can be expanded and elaborated on in great detail. So let me just tell the audience what I see as SMART Goals. Now, SMART is an acronym I’ve talked about this actually in a podcast years ago, but specifically what it means is this SMART being the acronym S is Specific, M is Measurable, A means Achievable, the R means it’s Relevant, and lastly, and probably very importantly, the fifth letter T is Time-bound. So when you are writing out and I do mean write out your SMART Goals, you want to make them specific, meaning, you know, what is it you want to accomplish?
Why is the goal important to you? You don’t need to touch on all of these, but it’s good to touch on it. Sometimes it’s, this is just kind of a pro tip. If you will. Sometimes what you can do is write out your goals, your SMART Goals, but above the SMART Goal, write out what the overall objective is. So the objective doesn’t necessarily define the goal, but it just defines the context of the goals that you are going after. So you have your objective and that might be made up of one or more specific goals. So your SMART Goal, again, being specific, you know, who’s involved, where is it located? What resources are involved or what resources might limit it. So don’t get lost in the detail here. Just understand what a SMART Goal is, because I’ll give you a quick example of that. So the M in SMART, meaning measurable, you know, you know, how many, how much these are things that could be in dollar terms, a number of units, when it comes to property, it could be a percentage of a rate of return.
So this is important because you don’t know whether you achieved it or not. You can’t measure it unless you have a number attached to it. So how do you know when you’ve accomplished a goal, you have to have a number. It needs to be measurable. Thirdly, it needs to be achievable. You’ve got to be able to define how you’re going to get there and whether you can get there. So it needs to be achievable. And that just means that it’s going to be realistic. Now it can push the constraints, it could push you out of your comfort zone and it probably should. But as long as it’s achievable, you can set the bar high and not make it impossible, leave it within the realm of possibility, but that is how you keep the goal realistic, but yet push yourself to continue forward. So you want it to be achievable, but you want it to set the bar high enough that it’s going to keep you reaching for it relevant.
Of course it needs to be relevant, you know, is it worthwhile? Does it fulfill your overall objective? Does it fulfill your overall life goals or your purpose? If that’s what it’s aligned with is the time right for it? Does it match other important needs or efforts that you’re working on? Are you even the right person for the school? Is it applicable? So make sure it’s relevant. And then again, lastly, time-bound the T and SMART. When are you going to have it accomplished by, or what’s the timeframe for this? Is it a six month, six weeks, six-years goal? Can you start it today? So those are the things that make up SMART Goals, but you want to make sure they’re specific, measurable, achievable, relevant, and of course time-bound, and then write it out.
You want to make sure that you detail this out. So a quick example for one, relative to real estate investing would be, I will purchase to single-family rentals each year for a total of 10 properties in five years, each rental will generate over $200 per month at the time of purchase and be located in a middle-income neighborhood in the city of Memphis, Tennessee. So now I have a pretty clear idea of what it is I want to purchase how much cash it will generate a minimum of $200 per month at the time of purchase. I know I want to purchase two of these per year. I want a total of 10 over the course of five years, and I know that I’m going to be focused on middle-income neighborhoods in the city of Memphis, Tennessee, so that I could tweak and refine this a little bit more if I wanted to, but you can see that is specific. It’s measurable. I know when I’m going to achieve or attain it. So it is achievable. It’s relevant because it’s fulfilling my overall goal of passive income to reach a particular target or goal for my passive income goals.
And it’s time-bound, I know I need to purchase two a year. So now what I’ll do is I’ll take that goal. I’ll break it down into action items or steps. And that way I can define how much I need for down payment capital each year for the down payments. And I know what I need to look for and how much it needs to generate in order for it to be inside my buy box. So that’s basically all there is to it. I think some people overcomplicate goal setting, and they just honestly don’t know where to start and then people get stumped, and then they just think about it for a few minutes and then give up on it. And they just realize that, okay, I realize a simple, but it’s too complicated. Cause I don’t know how to write a real goal. And it’s not that hard.
In fact, if you just go to a search engine and you type in SMART Goals or SMART Goal setting, you’re going to find a lot of information. It’s not all the same. It’s going to be similar, but you know, people have kind of defined SMART goals a little differently over time and SMART Goals. I think first came up at least the term back in November 1981, it was in a paper called management review. That’s actually could be a magazine, but it was a professor Robert Rubin who popularized it. But the person who came up with the SMART Goal concept was a person by the name of George T. Doran. And I know that Peter Drucker who’s written many, many books actually refers to it, a fair amount in management by objectives. It’s the whole concept of management by objectives. What you do is you take those objectives like I said before, and you break those down into SMART Goals and a, so Peter Drucker has latched onto this and talks about it quite a lot, but it is effective.
SMART goals is a great way to write out your goals and again, write them out, put them in your pocket, put them on your smartphone, review them, rewrite them if you have to, as often as you can, and that will help to drive and guide you along the way. So you can do this with any area of your life. It doesn’t have to be real estate investing, but goal setting in real estate investing is not that complicated. And that’s it. I think I’ve covered your questions here, but again, the main question was the goal setting. So thank you for the question. I appreciate it. And with that, I’m just going to wrap the show-up.
Thank you for listening, help us share it with likeminded. People. Just tell your friends about the show and if you can go to iTunes and leave a rating and review and I greatly appreciate it. So thanks again. Thanks for listening. I’ll see you on the next episode,
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