Can You Be An Investor Without Being A Jerk?
How to use the OOSTK strategy to contribute to society while making money
We are living in a decade where it appears the purpose of all the information we receive is to give each person ammunition to argue for one belief system over another. Recently, wearing a mask turned into a political statement where wearing it is showing that you’re leaning towards politically left ideas, and not wearing it is showing that you’re leaning towards politically right ideas. Politicians and the media are attempting to make us pick a side.
The way we decide to cast our vote is another one of those examples. It used to be that people would check circumstances on the date of the election and decide if casting a vote at the ballot box or by mail, on voting day or early would be the best way to have their voices heard and make their votes count.
Now politicians and media outlets are strongly insinuating that voting at the ballot box on election day is a sign of patriotic voters leaning towards politically right ideas while people who prefer to vote by mail to avoid exposure in public are portrayed as weak and leaning towards politically left ideas.
I recently discovered that there’s a similar theme developing around the topics of money and investing.
Anybody with substantial investments is automatically associated with being rich while the ones going to work and not boasting about substantial investments are seen as regular people. In a way, the public is influenced to believe that investors are selfish people who only look to benefit themselves and don’t care about others.
It’s similar to the categorization of political ideas forcing us to pick a side over the other: either you’re an investor and probably rich, or you’re not and probably struggle to put food on the table and keep your family safe.
To me, these choices and characterizations are wrong, misleading, and unhelpful.
The truth about what people want and how it’s possible to get there
When I ask or read about what people want, what they dream about and how they’d like their life to look like if they had no obstacles to overcome, here’s what I hear them say:
- “I want to be helpful.”
- “I want to have an impact.”
- “I want to protect the environment.”
- “I want to protect my family and my friends.”
- “I want to do good and help the less fortunate.”
- “I’d like to contribute to the community.”
Can you do all these things and be an investor at the same time? Yes, absolutely, you can!
Now for the big question: how can you achieve this?
In a nutshell, you have 2 options:
- You live in an area where the price of houses is at a level that allows you to get about 1% of the purchase price as monthly rent. If that’s the case, you can be a local residential real estate investor and build a wonderful portfolio of properties that will provide you with economic independence sooner or later. For this to work, all you need is consistency and patience. Put as much money as you can into an accumulation savings account, then buy your first property. Repeat this process until you’re able to live off the passive income all your properties bring. For most people, this takes about 15 years (often even less).
- You find yourself living in an area where the price of houses is much higher than the rent you can receive, nowhere near the 1% rule. An example would be in my area in San Diego County. The median home price is about $650K and the median rent is $2700/month. For the 1% rule to work, the rent would have to be $6500/month, an amount nobody can afford. If that’s your situation and you’d like to be an investor and reach economic independence sooner rather than later, learn how to apply the OOSTK strategy.
This strategy comes with two components working directly with each other:
- Mindset: Your mindset should be of a person who wants to offer a high-quality property your tenants are happy to live in and call home. Because of that, they’ll treat the property with respect and not damage it or think of it as a transition to a better place. You want to help them live a good life in a nice, safe place allowing them to raise their family and earn a decent living.
- Deal components: OOSTK stands for Out of State TurnKey. It means you want to find a turnkey provider. But not just any turnkey provider, there are many bad ones out there. You want to find one of the few good ones who combine the three most important components together: they will purchase the property, renovate the property before selling it to you, and then manage it for you, including finding the best suitable tenants and taking care of maintenance, rent collection, and other support services.
Here is an example of how the OOSTK strategy worked for me
I was offered a property: 3 bedrooms and 2 bathrooms, on Chicago’s westside. The turnkey company bought it for $33,000 dollars. For 6 months, the turnkey company’s team took care of renovating the property and invested about $52,000 into the renovations.
I purchased the property for $100K from the turnkey provider. Before we closed the deal, they found me a great tenant who signed a 2 years lease agreement for $1050/month in rent.
Because everything is newly renovated, the turnkey provider gave me a 12 months warranty on all the work that was done and I bought the maximum extended warranty on everything connected to electricity, gas, or water. This includes ceiling fans, refrigerator, oven-range, light fixtures, water heater, air-conditioning units, etc.
Because the property was renovated with great quality work, the appraisal came in at $105K, so it was no problem to get financing. The turnkey provider manages the property and the tenant. Everybody wins.
Why is this a winning deal for everyone?
- The turnkey provider made a profit on the sale and collects a management fee each month.
- The tenant and her family live in a house that literally smells new because it’s been renovated from top to bottom (think HGTV flipping show). They pay a fair rent that makes them happy and proud, especially compared to living in an apartment complex.
- I, as the investor, own a great property putting about $200/month in positive cash flow in my pocket and I participate in the increase in property value over time.
You can become an investor who cares about others
If you live in an expensive area and don’t want to fall for the myth that investors are all rich people out to cheat other folks for their own benefit, then you should consider the OOSTK strategy for yourself.
All it takes to realize the dreams described earlier and become economically independent is to consistently save money so you can keep buying one of these houses each year on average. Over time, you’ll have a growing portfolio of assets.
But there’s something more important than that: you can provide others with a nice property at affordable cost and help them be proud of the place they choose to call home.
In my team, we use the slogan of my alma mater at Antioch University:
“Be ashamed to die until you have won a victory for humanity”. — Horace Mann
The OOSTK strategy is the path. When you provide nice, high quality, affordable places to live you are winning one of those victories.
Are you interested in building your way towards financial freedom? Start by downloading your free Mindset Manual