The Real Estate God

Set Strict Guardrails to Protect Your Investments

I’ve lost a lot of money over the course of my life. Here are some guardrails so that you can avoid that: - never invest in an asset that isn’t backed by cashflow - consult 3-5 people you trust before making an investment that constitutes more than 10% of your net worth - never give a loan that isn’t backed by *sellable* (within 3 months) collateral - never put more than 10% of your net worth into assets you don’t personally control (“personally control” means you have decision-making-rights and bank account access) - if losing the amount of money you’re investing would materially change your life, scale back the investment - set a firm limit on how much money you’re setting aside for a particular investment. Once that limit is hit, put $0 more in, regardless of any change in circumstances. Be willing to lose everything up to that limit but nothing more - if you can’t easily explain the investment and how it works, you don’t know enough to put your money in. This doesn’t mean that you “sort of” know. It means you *actually* know. Have a friend quiz you on the investment. If you answer “I don’t know” to anything, you’re not allowed to put a dollar in until you do know - your default position should be “in cash”, not fully invested. If you’re ever between the two, stick to holding the cash - investing in new assets should actually be your last option with your capital. First should be investing in yourself, second should be starting a business/reinvesting into your business - anytime you get an investment opportunity, ask yourself how many people said “no” before you. Why are you so blessed to be getting this opportunity? Write down why you think they said no. Just because other people said no doesn’t mean you shouldn’t invest, but it does mean that you need to figure out why they said no and make sure that reason is an acceptable risk - when you have a core competency in investing that you consistently make money with (real estate, small businesses, whatever), your threshold for investing in something outside of that competency should be insanely high. Almost never makes sense. You have a proven system, stick with it - no single opportunity or deal is ever that important. If you feel pressured into making a quick decision, pass. They’ll always be another deal Finally - if something does pass all of these tests, you diligence it and have extremely high conviction, don’t be afraid to size up. Those type of opportunities don’t come along often and they’re usually multi-baggers