219: Your next 12 months – Goal Setting for Property Success

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Today I want to talk about something that I get asked about all the time. I’d say at least a couple of times a week someone will send me a message asking about goal setting or the idea of financial freedom or picking an investment strategy or something along those lines.

To me there are 3 parts to a good goal setting process. The first is coming up with your actual goals, and I’ll start in this episode by talking about how you can create meaningful goals for yourself. The second part is understanding and defining the strategies that will enable you to hit your goals, and again I’m going to run through my thinking on how you can determine where your strategic focus should be.

The final part is the lowest level. So if you imagine a triangle or pyramid, your goal is at the top level, then your strategies to achieve the goals are the middle section, and the bottom section is the tactics you deploy against your strategy.

Goals – Lifestyle and Financial

A lot of people, me included until recently, will jump straight to a financial goal or destination, but let’s shelve that for now, as I don’t think that’s specific enough. We’ll come back to it, but keep in mind that money is only a tool to enable your goals, it shouldn’t be a goal in itself. And the reason I don’t want to start the discussion with money is that until you know what your actual goal is, your idea of how much money you need could be totally skewed.

So instead of starting with a focus on money, I want to start by looking at your lifestyle goal. That is, what you want your life to look like or how you want it to change. You can use any time period you’re comfortable with here, but I find 1-2 years is a good period.

SMART Goals

Once you’ve got an idea of what your goal is, you need to get some real clarity around it, and as cheesy as it sounds there’s no better way than to go back to the classic SMART goal format. It’s one of those annoying corporate buzzwords, but in the right context it’s really helpful.

If you’re not familiar with it a SMART goal is one that’s specific, measurable, achievable, relevant, and timely, and a good goal will cover all of these elements.

 

In pretty much every case, some level of income is going to be required to achieve your goal, but because we’re now really clear on what that goal is, we can get specific about exactly how much money is required rather than picking an abstract number because it sounds about right.

Financial Freedom….

When I look at financial goal setting, there are 3 different levels I focus on – financial security, financial independence, and financial freedom.

Financial security means you have enough income to cover your essential living costs – food, accommodation, utility bills and so on. Independence means you could maintain your current lifestyle, and financial freedom is how much you need to live the life of your dreams.

This is a really useful process that I suggest every one of you goes through either on your own or with your partner. In most cases you’ll likely be surprised at the number you need, certainly for the security and independence levels, in terms of how low it is.

Strategies

Determining the right strategy or strategies for you needs some further reflection on the resources you have available, things like your available time and money, as well as your knowledge, skills, and passion.

Single lets are easy to understand, pretty much always in high demand, and can be quick to set up and generate an income from, but that income typically isn’t going to be huge when expressed as a return on your investment.

Flips are also pretty easy to understand, but in order to add value these days you typically need to do some serious work rather than just giving something a lick of paint. Adding space, reconfiguring layouts, and proper renovations are needed, which is rewarding if you like the construction and design process, but if you think magnolia is the latest trend then you might need some help. You’re also more dependent on the property market as your profit is only realised when or if you can sell your house for more than you’ve spent.

Other options that involve buy and hold investing are HMOs, serviced accommodation or holiday lets, and commercial property investing.

Then on the buy to sell side, in addition to residential flips you’ve got new build developments, and things like commercial conversions.

It can all get a little confusing when you start to combine them, for example more and more successful developers are now building to rent instead of building to sell. We have a big focus on HMOs but many of them are created through converting commercial property into residential.

You also need to think about what happens when you hit your goals. If like us you want to travel the world without much stress then growing a portfolio of HMOs maybe isn’t the best option, unless part of your plan is also to find a good agency you can trust or start one yourself.

There are plenty of ways to achieve your short term goals, so if your current strategy will work but doesn’t tie into your longer term vision then that’s a real reason to reconsider as well.

Next Steps

As you get to the end of this session on setting yourself up for success in your next 12 months, your goal should be crystal clear and you should have worked that back to a specific financial target, whether that’s a monthly income, a profit target, or a specific return on your cash, and now you should also have an idea of which property investment strategy and / or which other related business or services will help you achieve both the financial and lifestyle goals you’ve set yourself.

This is only the beginning though. This is the easy part. I used to be terrible for setting myself goals every couple of months, then sticking them in my top drawer and forgetting about them.

Execution is where your success comes from, and that’s where the day to day tactics you implement will set you apart from everyone else saying they want to be a property investor, they want to work for themselves, they want financial freedom.

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