037: OUR PLAYBOOK TO MAKE DECISIONS
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We’re coming at you all today to discuss a serious topic and address the rumors. This is still a pain point for us, and we’re working through the drama. But, we figured it was time to come clean.
We can’t stand house flipping. 😱😱
We thought the “Chip and Joanna Gaines” life was for us! The glamor of Magnolia Market took over our lives. The perfectly curated eucalyptus, the warm-toned wool blankets, and we spent way too much money on milk jugs we will never use. All in the name of aesthetics.
It didn’t take long to realize, that this venture to grow our wealth for our financial futures was not it, it didn’t feel right to us. And frankly, it’s very difficult to recreate the charm they both have!
So we decided to be our most authentic selves. We took a step back, put down the sledgehammer, and removed those dusty goggles. After that, we were able to really analyze our goals and ask ourselves some tough questions.
It was during that time that we realized that our flipping ventures alone were never going to lead us to build the life we both wanted. Kind of ironic considering we were doing nothing but building. We needed to change course and create a step-by-step plan for how we were going to achieve our dream life that didn’t require trading our time for money.
But building a dream life starts with asking some questions that were both personal and kept each other honest. We asked ourselves three questions:
👉 NO. 1 How are we going to significantly increase our income from sources other than flipping?
This one was tough because we were basically saying “how in the world are we going to make money if it’s not house flipping?!”
👉 NO. 2 Which of the possible sources of income should we pursue?
This one was necessary because it freed us up to start dreaming again! We discovered so many other opportunities to dig deeper into our love for real estate beyond painting everything cream-colored.
👉 NO. 3 How do we balance our time between family and work?
The last question was our motivating factor since we knew one thing was for sure: We didn’t want to trade our time for money. This quickly became both our mantra and prayer. And this line of thinking led us to pursue a career in apartment syndication.
While we have talked extensively about our pasts, moving from the fashion world to real estate, one of the most commonly asked questions we received from you guys is 〰️ How? And we get it, this can be a lot to process. So we’re finally going deep into the playbook about our decision-making.
This playbook 📖 we’re about to go into helping us achieve financial freedom in less than five years. And the playbook in question is like a field guide to help you map out your next move. Like any good coach, they are always 10 steps, or plays, ahead. They can see what the players can’t on the field and are always on the lookout for weak spots and how the team can make up for them.
Consider us your coaches, if you will, at least for today as we dive into today’s episode, open up the playbook and start making sense of your next moves. But, before we begin we want to note that there are many decision-making playbooks out there and that everyone’s situation is different and unique to them.
Our goal for you is that by understanding our way of approaching decisions, you’re inspired to create a decision-making process that works for you and your family. 💪
Time vs. Money
Do you know this quote from one of the posts’ long-running soap operas to date? “Like sand through the hourglass, so are the days of our lives…”
While neither of us is pivoting into a soap career anytime soon, we could definitely play into the “secret twin sister” trope!
You might feel like money runs through your fingers, like sand through an hourglass… but you can always get more money. 💰
What you can’t get more of is time.
The truth is you have more money than you will ever have time. Even if you’re sitting there thinking there’s no way that’s true with the bills you might have mounting. We’ll say it over and over again but time, not money, is our most precious resource.
Let’s flashback to our house flipping days. In those days, we were trading a lot of time to renovate each project, and at times we had up to four projects running‼️
We ran ragged spending days at the construction site and pulling all-nighters to make sure we hit that target sell date. But of course, when dealing with the city and outside contractors, things don’t always go according to how we envisioned them.
For example, the city doesn’t approve our plan, contractors take other jobs– in the middle of our job! Or the real estate agent goes on a family vacation right before they’re supposed to sell our house and sends a newbie agent to finish the job.
The last one still stings, clearly.
After a lot of deep breathing exercises and putting away those HVACS, we have a completely new outlook on what our priorities are and should be.
The first thing is making sure that we are present in our own lives, spend as much time as we can with our loved ones, and do everything we can to protect our time. Hey, you saw how Rose 🌹 in the Titanic safely guarded the Heart of the Ocean diamond ❤️🌊💎, so we have the same mentality when it comes to our time. Keep it safe.
And to further prove our point on diamonds and money as a not-so-valuable resource, she just ended up tossing it into the ocean anyway!
Again, as a reminder, this is our playbook 📖 and a very intentional and personal choice for both of us. Over time, it will likely shift to take on more of an outward focus.
The Freedom Factor
What a lot of this comes down to is the simple act of having freedom.
What does freedom mean to you?
This could be a great beginning question to ask yourself for your playbook. For us, the definition is simple. Freedom is about having the flexibility to do what you want and spend your time the way you desire. Freedom is all about controlling your own schedule.
Yes, I totally agree with you Nan.
People have different visions of what is important to them and how they want to spend their time. For a lot of people, that means spending time with friends and family, for others, it might look like honing in on those chef skills and applying to be someone’s sous chef!
And as long as we’re invited to eat where you’re cooking, we’re in full support!
In this example, it makes sense to free up some of your life so you can get closer to the vision you have for yourself and make the time to reach another goal. No matter your vision, don’t miss the keyword 〰️ Yours. Not ours, not your parents or spouses, but yours. Remember, this is the book you’re writing and living, and we’re happy to play a small role!
It’s never too late to wake up from those dreams you thought were left for dead. If this journey has taught us anything, we know it’s never too late to pivot, change, or simply shake things up to get closer to our desired life.
We’ll let you in on another secret. You need to think hard about whether it’s worth it to give up freedom considering your personal goals. Is it worth a little sacrifice of freedom at the top, to move you closer to the future you envision for yourself? There is no right answer here, and this question is tougher than it seems. No matter what, there is no right answer and it will vary from person to person.
It’s also important to note that we’re reframing our thinking and trying not to think of our situations as losses, but as opportunities. When faced with an opportunity ask yourself: How will this decision affect my freedom to spend my time in a way I desire? If I choose less freedom, is it worth it to me and the people care about the most?
The Game of Risk
Would you consider yourself a person who takes risks? Do you watch action movies 🎬 and think to yourself: I could totally do that. Does the idea of dying your eyebrows bright red and then showing up to work the next day gives you an unexpected adrenaline rush? Or what about your confessing feelings to a potential partner? Risk is a part of life on a large or small scale and we like to look at risk as two sides of the same coin.
On one side, you’re considering the personal exposure and liability a certain path may hold for you and your family and on the other side of the coin is whether a certain path of life offers enough of a guaranteed outcome for the amount of time and effort invested. Basically, what’s the return on investment? You can also reframe this mode of thinking by looking at it as an opportunity cost.
We are entrepreneurs at 🧡🧡 heart, so our decision to jump-start our 🏢 apartment syndication career was not a difficult choice for us. While there are always risks in investing, including apartment syndication, we work our way through them by education, surrounding ourselves with peers who inspire us and continuously checking in on ourselves. Are our goals still the same? Are they leading us to where we want to go?
Are what we currently doing absolute needle movers?
Communication is essential when starting this journey, and we are not excluded from this rule! Before we made the leap, we sat down and talked honestly about the risks ahead of time.
We remember discussing the risk of not having an income, what if we made a bad investment, or worse, ended up on a team that was not supportive and did not deliver results.
After our conversation, we combined all three parts of our decision-making (time vs. money, what freedom looks like for us, and calculator risk) to come up with a comprehensive plan. We were writing our 📖playbook for decision-making before we even called it a playbook before we even knew how essential it would be in our lives!
So now it’s your turn to ask yourself: How much risk does this path put me in, and is it worth pursuing? If you can answer that, then your next question should be: How can you offset the risk?
Today, we apply this risk concept frequently while evaluating potential apartment investing deals. All of those days and nights thinking, pondering, and looking each other square in the face to ask one other tough question led us to where we are today. And together we agreed to focus on three main goals for our business.
Focus on cash flow producing assets, build relationships with the right people, in other word-finding our WHOs, and form the right relationships with the right team.
That’s for us, so what will it be for you?
Let the Playbook Apply to You
So, it’s safe to say the flipping house was not the gig we hoped it would be. While it was pretty rewarding to see an older home come to life, it wasn’t enough to overshadow the one thing we can’t stand to do. Trade our time for money.
At the time, we were overall of the meetings with contractors, the city to get permits, running around sourcing everything from sink faucets, appliances, and even garage doors to touring the properties looking for the next house to flip, while both of us sat there hungry and annoyed. 😩😩
At the crux of this, one of the risks we considered was how often we were going to make our money back. With house flipping, we were getting an influx of cash every 8-10 months once we finished the renovation. With apartment syndication, and in the role of general partners, we won’t see money for upwards of 5 years.
Again, this all goes back to time. Time invested in apartment investing can feel substantial but it’s nothing in comparison to the large return you’re going to see in your bank account. Who knew a little patience could quite literally pay off? 🤓🤓
The other thing to consider is the massive tax benefits that are awaiting you at the end of tax season. Such as long-term capital gain if you’ve been in the apartment syndication business for more than one year. We get it, the appeal of the time to money ratio can be enticing.
In continuing with the freedom factor, apartment investing has granted us that freedom. You remember Aladin, right? What was Genie’s only wish? To be freed. 😌😌
In a lot of ways, we’re the ones holding the magic lamp ✨ and our wishes are unlimited because our time is ours to own now. We also grant that wish to our team, who support us and, in some cases, know even more than we do! We truly could not do this work without them.
However, when we were flipping houses, this was not the case. We were at that dusty job site every day making sure everything was going to plan and constantly communicating with contractors, and managing them.
Honestly, we could do a whole other 🎙️ podcast on the headache that is dealing with contractors. Once we had a guy not show up because it was raining even though his job is to set tiles in the bathrooms!.
And that’s why we’ll probably never house flip in LA again.
Luckily, in apartment syndication 🏢, it’s fewer contractors and more contracts. As in, signing contracts that will land you massive returns. All in all, house flipping was more time-consuming because it included managing all the details from toilet placement to landscaping the property.
The risk involved in all of this is just simply that 〰️ risky! Starting a new venture in apartment syndication, especially for our friends who are new to this world, feels so unknown.
Ever traveled to a foreign land? You know how isolating that feeling of not knowing the language or culture can be. Now apply that same feeling to a new career and that’s apartment syndication for ya.
It’s not all bad though, because, for us, it was well worth the leap. We had to start from scratch in everything we were doing. From identifying markets to forming relationships with brokers, sellers, lawyers, and property managers– eventually landing on people we trusted to shape the stellar squad of people we have today.
Oh, and don’t forget raising millions of dollars to actually buy the apartment itself. Another consideration when leaving house flipping.
But honestly, we wouldn’t trade it for anything, because for us, the risk was too high to stay in-house flipping than it was to leave.
That, and knowing there was a bigger paycheck waiting for us in apartment syndication land than there was in the world of house flipping. We knew that apartment syndication is where the freedom was, and ultimately, it granted us the time to spend with the people we cared about the most. And that was it for us.
It was with that final goal in mind that we made the choice for our short-term sacrifice for the long term again. To have an abundance of the most precious resource. Time. ⏰
So if you’re looking for the three rules to kick start your 📖 playbook, take a page out of ours and think through time vs money, consider what your freedom factor is, and take some calculated risks. Those three considerations will help you make thoughtful, well-planned, and informed decisions.
We have a clear vision for what success looks like for us, do you? Anything that doesn’t fall into that vision isn’t for you. Do what serves you, set goals that inspire you, and soak in the abundance of time. It’s all waiting for you, and now you have a playbook to help you get there.
Be sure to join The Kitti Freedom Club – an ordinary investors’ club for people like you to gain an inside scoop on all things apartment investing, and tax-saving ninja tips, and have our exclusive pre-vetted investment opportunities delivered to your inbox!
Keep up with the Kittis online at thekittisisters.com and on social @thekittisisters.
Talk to you soon!
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