You may have heard ABOUT “The Compound Effect” before... but you may not be 100% sure what it is.
Hi there, Moguls, Patrick Riddle here to tell you: The compound effect could be the key to your success as a real estate investor.
Now, stay with me here (I know you might be rolling your eyes right now), because this is a valuable lesson.
So, what exactly is the compound effect?
Well, imagine this...
Someone approaches you and gives you the choice between taking $1M in cash immediately OR taking one single penny that doubles in value every day for the next 31 days. Which option would you choose?
If you chose the $1 million, congratulations! You’re a millionaire. But... you missed out on having so much more.
If you chose the penny that doubles in value every day for 31 days, you are now the proud owner of $10,737,418.24 on day #31.
THAT’s the compound effect... the idea that a little bit can multiply over time and lead to A LOT.
Now, I can’t take credit for this concept (although, that would be awesome!)…
This is actually based on a book by Darren Hardy called The Compound Effect: Jumpstart Your Income, Your Life, and Your Success.
So, if you’re into books (and, really, as an investor, you should always be exploring and researching books like these), make sure to check it out.
This leads me to my point... you can apply the compound effect to your real estate investing business.
Think about it...
A little bit of effort (whether it’s marketing, finding deals, networking, etc.) can multiply over time, leading to a successful business that allows you to achieve financial freedom.
Let’s take a closer look at how this works...
Slow and Steady Wins the Race
Long story short: doing something every single day will move you quickly toward your overall goals.
To illustrate this, you can look at Darren Hardy’s life. As a successful entrepreneur and businessman, he definitely knows what he’s talking about in The Compound Effect. In fact, he was enjoying a 6-figure paycheck by age 18.
Most of us, at age 18, were working at the local store, bagging groceries (or lounging at home, testing our parents’ patience.) But not Darren.
By the time he was 24, he was a millionaire. At age 27, he owned a company that was producing $50 million per year in revenue.
Talk about serious financial goals, am I right?
But, as you can imagine, Darren worked HARD for his success. It wasn’t handed to him on a silver platter. And it didn’t happen overnight.
With effort, you can achieve success in the same way.
Consider these examples of how you could use The Compound Effect:
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Direct mail: Making a commitment to mail 1,000 postcards, once a month, to a targeted list of potentially motivated sellers, could lead to, say, 3 property deals. Those 3 property deals could result in 3 solid relationships with the motivated sellers, which – over the course of the next 20 years – could result in 100 more property deals for your business.
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Calling motivated sellers: Setting aside 30 minutes, every day, to call people who may be interested in selling, could lead to 1 or 2 property deals per month. Those motivated sellers may recommend your services to others, leading to multiple property deals in the immediate and distant future.
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Networking: By committing to attending your local REIA meetings (or any other investor-related groups), you could meet 1 investor who connects you to 3 others who you haven’t yet met. Those 3, over the course of a few months, could each introduce you to 3 more investors – meaning, you quickly have a solid group of 13 investors you could work with on deals, ask for advice and learn from. And it all started with your commitment to making just ONE strong connection at the REIA meeting. (You could also apply this same concept to real estate agents, which are also beneficial connections to have).
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Writing offers: If you make a commitment to write at least 3-5 offers each month, the chances that at least 1 will be accepted is fairly high. The next month, you might commit to writing 5-8 offers, and so on. With time, you’ll be scoring deals left and right. It just takes dedication and consistency.
Obviously, these are just a few examples. There are so many ways you can commit to small, daily tasks that will add up to BIG success over time.
Destination: Success
Being an investor takes a level of discipline that not every person has. But you know that already. That’s why you’re here. That’s why you’re reading this lesson.
The upside, however, is that investors often experience a level of financial success and independence that many other people will never know.
If you’re ready to embrace The Compound Effect, you need to know that it takes dedication. Still, the payoff is worth the effort.
But you need to get started, right now.
Ready, Set, Grow
How will you use The Compound Effect to build your business? Let me know in the comments section below.
Make a plan – be extremely detailed with your schedule, goals, etc.
Start small – don’t overwhelm yourself, because you’ll be tempted to give up; create small but attainable goals that you can eventually build upon
Get support – find a fellow investor or mentor who can hold you accountable and give you advice throughout your journey
Stay positive – the work will be hard, but the result will be worth it
Patrick Riddle
has been investing in real estate ever since he got the bug in college at Clemson University and - to his parents dismay - dropped out of college to dive full-time into real estate at the age of 22 with a couple friends/partners from school.
The first few deals were rough for them, mainly using their own cash, credit, and hard money loans. But, soon he found out that was a rough and unsustainable way to build a real estate business.
After "on the job" learning through the school of hard knocks at first, he found the key that helped their company get deals done more quickly, with higher profit, less risk, without having to go to banks or use their own cash.
Fast forward to today, their company has closed over 130 real estate transactions and has put over $6 million in private money into their own transactions.