You're plan A sucks.

People fear that which they do not understand. People also fear change. I'm not sure why, but it causes people to become complacent and sedated. It also causes people to be paranoid, stubborn, racist, sexist, and narrow minded. People feel safe knowing everything will remain the same. They take comfort in the fact that there will be minimal variables, so that they can predict the outcome. The thing is, the more you learn about things, the easier it is to understand why they are the way they are, and how they work. As the mystery is peeled away, things don't seem so scary after all. The added benefit of learning about something you don't understand, is that it will truly help you predict the outcome, or how that thing will effect you, and allow you to adjust your strategy accordingly, instead of becoming a victim of it.

I recently began investing in real estate for passive income. I knew very little about it, aside from the basics. A good friend of mine had already began investing heavily, and his strategies seemed very high risk and scary to me. Every time I talked to him, I understood a little more, and the fear slowly became confidence. Not wanting to take all my advice from one source, I read books, listened to podcasts, joined forums and meet up groups. I heard from people that had succeeded and people that had failed. Again, my knowledge of the topic grew rapidly. With something as complex as investing in real estate, there are infinite variables and infinite avenues to approach it. I learnt about flips, BRRRs, small multi family, large multi family, financing, hard money lenders. I learnt what the difference between forced appreciation and natural appreciation was. I learnt about wholesalers, notes and leverage. I learnt what ROI, REI, REIT, cap rates, and cap exp all mean and why they are important. Every time I talked to my friend, the things he said seemed less scary. It started making sense. Perfect sense. I'd talk to family and friends that aren't involved in real estate investing, and all of them approached it with the fear I once did, because they didn't understand. It wasn't a light bulb that just turned on in my head, and then I understood. I was hours upon hours of reading, and listening to people that did understand. If you completely disassembled a cars engine and laid it out on a work bench, and asked someone to put it together, you'd get two responses. People would be stressed and in fear because that had no idea what they were looking at, or how to do it, and then you'd have people that would put it together, because they understand it. If you spent a week to teach the person that didn't understand engines, what the parts where, and what they did, they wouldn't be scared any more, because they would understand it.

The funny thing I have found with people that know very little about real estate, is they still offer their opinion, and yet would not offer their opinion on assembling and engine if they didn't understand it. Many people have explained to me how I'm going to fail at real estate, none of whom know much, if anything about real estate, except maybe a deal they botched in their past because they didn't do their due diligence, or understand what they were doing. People that know more than me about real estate, say I'm doing well, and should proceed as I've planned, and I will succeed. I might stumble and make mistakes, but it will just be part of learning as I sharpen my skills. People that know less than me about real estate, say I'm being risky, and I could lose everything. But what's really to lose?

Most people have the same plan for their lives. Go to school, find a decent career, work your way up the ladder at your job, get raises, buy a bigger house and a newer car, then after working for 40 years of your life, hopefully you've saved enough to live out your remaining years. That's it? Your plan is to bust your ass your entire life so the company you work for can get rich? That sounds like it should be plan B, and even then, that's a shitty plan B. That is also VERY high risk. You become specialized at your one job. Yes you improve your skills, but what if your skills are no longer required? You spend 20 years repairing crashed cars, only to no longer be needed because cars become automated, and no longer crash? Now what? Back to the bottom of a different ladder? Or what about the very real possibility of no longer being able to work? Maybe an accident, or illness prevent you from working at your current job, or maybe you won't be able to work at all? What then? What if at 40 years old, you lose your vision due to diabetes, or lose a hand in an accident. You aren't prepared for that are you? That doesn't fit into your plan to work until you're 65. But even if that doesn't happen, do you really want to grind your body down to nothing for 40+ years for someone else? I breathe paint fumes, and dust, and kneel on concrete, and wear myself sore sanding cars. What's left when I'm 65? Or maybe you work a high stress job, just to run into nothing but stress related health problems at 65. That's your plan A? That's not just high risk, it's fucking ridiculous.

Then there's banking on your planned retirement income. Maybe you have a pension plan at work. You work 30 years for a company, and then they will take care of you when you retire right? I just heard today that Sears, a major company that has been around for decades, is going bankrupt, and will no longer be paying out their pensions. How many people were banking on that money? How many people at 65 years old, were expecting to be set for the rest of their life because they gave 30 years of their life to a company, only to have the company fold, or be bought by another company that won't honour the pension plan? I guess that's "bad luck", but it's not, it's just something that happens. Or maybe you are relying on a government pension? Not sure if you are aware, but governments tend to over extend themselves, and then lie about it. Sooner or later, someone is going to call in their debt, or at least cut off their spending. It's not sustainable. In 2015, the Canadian government paid out over $40 billion dollars for the Canadian Pension Plan. As baby boomers retire in masses, are you still banking on the government being able to pay out? Or maybe you've got your money in some safe stock investments. In 2007, the companies that controlled these "safe" stocks decided to try to line their pockets. They took everyones money, without them knowing, out of the safe stocks and invested in hedge funds. The idea was they would take everyones money and pay them 3%, and invest it at 10% and take the 7% for themselves. You know how that ended. Everyone lost everything. People had to go back to work at 70 years old because their life saving had been wiped out, no fault of their own. You still banking on your money being where it should be in 20 years? I trust me with my money. I know me. I'm not out to screw myself over, or try to make a dollar off my back. I will control ever aspect of my investments. I'll choose, who, what, when, where and why. Trusting someone else to come through for you with money is high risk.

I plan to acquire assets. I've already begun. I have cash flow coming in every month from various real estate investments. When I go on holidays, they keep paying. When I break my leg and can't work for 6 month, they keep paying. When I get cancer and can work for 3 years while I battle for my life, they keep paying. When I'm sick of getting up every morning to go breathe dust and fumes, and work my fingers, knees and back until my joints are swollen, and I'm sore, so someone else can make money off my back, they keep paying. That's called being prepared. That's having a real plan A. And if I fail at real estate? I guess I'll have to go back to doing the same shit everyone else does. Work like a slave until I can't anymore. I'm really no further behind am I? But the thing is, I won't fail. The only people that fail are the ones that give up, and don't let their mistakes become lessons. I might lose large sums of money. People spend large sums of money on education all the time, and that's considered a smart investment. If I lose large sums of money, that's my tuition, I've learnt, and I'll do better moving forward.

The only thing that really grinds my gears, is that the Chicken Littles that believe what I'm doing is high risk, will never understand that they are wrong. When I succeed, all they will say is "You got lucky, you could have lost everything." Everything that happens in the world happens for a reason. Luck isn't a real variable. People that don't understand how something works try to comprehend things by applying a supernatural force like luck, or a miracle, or an act of god, but if you understand how things work, you realize that there is an explanation for all things that happen. If you educate yourself, you can predict outcomes, alter outcomes, or at least be able to prepare outcomes. Just like any craft or trade, people that educate themselves, do their due diligence, and commit to something usually succeed. I has nothing to do with luck. Investing is no different. Whether I succeed or fail will be determined by skill, research, education and commitment.

Ambition>Intelligence

So I think all people will fit into four categories. 1: Stupid and unambitious. We aren't going to talk about them, because there's not much they can, or will do. 2: Smart and unambitious people. 3: Stupid but ambitious people. 4: Smart ambitious people. We aren't going to talk much about them either. We know who they are. I think the bulk of the population falls into category 2 and 3.
Let's talk first about group 2. I'll put myself in that category. I've never been an over achiever, content to do what I need to get by. Never doing my homework, or showing up to class, but still got Bs. I have a niece that fits in this category as well. She is very smart, and has now tested as "gifted". The problem is nothing seems to motivate her to apply herself. Why give 100% when you can give 50% and keep up with everyone else?
Now lets talk about category 3 people. I'll give you the pinnacle example of this group. Donald Trump. He's not smart. He makes decisions without a thought, or consulting an expert, or doing a moment of research. And yet he is massively successful. Yes he's failed, and lost his wealth many times, which proves my point because he always got his wealth back. How did he become president? Smarts or ambition? Have you ever worked for someone that you knew you were smarter than? Did you know you could run the company better than they could? Why were YOU working for THEM? If you could run the company better, why weren't you running the company? The food chain will always start with category 1 at the bottom, followed by category 2,3 and 4 at the top. Why are the smart category 3s working for the stupid category 2s? Ambition. Maybe the stupid people are to dumb to calculate risk, so they just do it. Just start a company, or apparently run for president. I know many people that are far more successful in life than I am, and it's not because they're smarter, it's because they tried. I know a real estate agent that isn't the brightest. She owns 10 rental houses. Her numbers aren't great on them. She could be making better margins if she bought in better areas, or knew her rental markets better. The fact is, each house still makes money. Maybe they only make 7% instead of 10%, but it doesn't matter, she has 10. 10 at 7% is infinitely better than none at 10%. She just did it, and it works. She has 4 kids, a full time job, and manages 10 rental houses. She's getting it done. Are you?
A lot of people mock self help books and seminars. I know I did. I wondered who would give money to people that want to tell you how great you are and pat you on the back. The thing is, these seminars are made for the category 2 people. Maybe you just need the confidence to be ambitious. Maybe you need to see that there is no reason a category 2 should be working for a category 3. If a stupid person can make it work, why can't you? I don't know why a smart person can see a successful company or person and think that's out of their reach. Most companies and people started at zero. All you need is ambition. If that's all you have, you might fail, or you might get by, but if you're smart, you will succeed, and if you fail, try again. Many hugely successful people fail, but they believe, and they prove themselves right. Steve Jobs go fired from Apple, only to later become the CEO.
So what's stopping you? If you tell yourself all the excuses why you can't, you'll always be right. Stop saying could have, should have, would have and be the person that did. Think of all the people you know that have pulled the trigger on something big. Most of them, even the idiots, succeed. The real idiot is the smart person, working for an idiot.