Financial Education through Real Estate Investing — The SMP Philosophy
April 19, 2022
This one is arguably the ‘giving away the farm’, the ‘secret sauce’, and the ‘peek behind the curtain’ of how I’ve been able and continue to create the financial results today. It’s simple and yet not easy to hold onto (full disclosure here). It’s also one that’s central to all of Trust Your Talent Academy’s training curriculum. It’s a process, a formula, a mantra or simply my investing philosophy. And it is proprietary.
This process has been my guiding light for the last 7 years (since ~2015). Yes, 7 out of the 12 years since I started learning how to become a professional investor in real estate. Like some, I jumped in once I started learning about the different strategies. Lease Options, in particular, is one that provided me with the initial financial freedom I was looking for. Unlike many, I wanted to make sure that my new found “time & money freedom” is one that lasts. So, every step of the way, I looked for patterns and methods to create systems that are duplicatable.
1st SMP = Strategy — Market — Property.
And yes, in that exact order.
A strategy for an investor is a way to determine how we make money and how much money we make BEFORE we get into any deals. Read that again.
That is the whole point of why someone wants to start investing wisely and ‘strategically’. First of all — having a strategy contributes directly to your income and financial goals. It is, after all, why you are even reading these articles in the first place— to create and gain more financial resources to build the life that you want and deserve. Secondly, having the right strategies is like having the right tools — you get things built much more effectively and efficiently. Time is everything as we’ve discussed in the past.
From the Wheel of Wealth, we’ve learned some of the currently available and popular strategies that real estate investors use (in North America). Those strategies are only meaningful and USEFUL when your ‘why’ has been translated into goals, and those goals translated into a money figure. Now, it’s time to let your properly determined goals decide the strategies you should embark on.
For example, my goal was to quit my corporate job within 3 years so that I could free up the time to take care of my health, and later create a “career” that I would love and not have my livelihood depend on it. As a result, I chose Lease Options as my first strategy to focus on given the assessed resources I had at the time during my first mentorship with a real estate investing mentor. From my 1st class (January 2010) to the day I declared financial freedom (July 25, 2012), I focused on only this one strategy.
Calling Edmonton, Alberta home had its advantages at the time because I was able to leverage this strategy right in my home market. Although it’s not a must nor does it provide the best return, after an exhaustive process of listing pros and cons and market selections, that’s what we decided would make the most sense.
Then we would look at the properties that would support this strategy.
And there you have it:
Strategy(-ies): Lease Options (tenant-first)
Market(s): Edmonton & surrounding areas, AB
Property(-ies) Type: Single Family Home
The reason why this process is so powerful is because it’s pretty much the exact opposite of how most amateurs or real estate investor wanna-bes operate. It’s what we’d call the Buy Rent & Pray. The most successful investors of our time, Warren Buffet, is famous for his contrarian way of making investing decisions. In essence, do the opposite of what the majority is doing strategically and we can all create financial successes in life.
Let’s quickly break down the Buy Rent & Pray process so that you are clear about WHAT NOT TO DO:
BUY —
Inevitably, you have to acquire properties to make money from them, right?! In short, yes. However, it depends on how you define ‘buying’ in this case. We will cover that in another article down the road. For now, we’ll look at the behaviours amateurs exhibit during the buy part of this process:
- Get onto realtors’ mailing lists (likely in their home market) and attend open houses to look for properties. These properties are probably within their affordability. They also tend to be emotionally involved in the buying process or easily swayed on what to buy just “to get into the market”.
- Sign up for alerts on pre-construction from developers. These properties are likely within their affordability. And they are convinced that the property value has nowhere to go but up.
- Join investing clubs or conferences and get lots of ideas and opportunities about properties and markets. These ‘ideas and opportunities’ tend to support the amateur’s existing confirmation bias. This is an interesting one for me personally. To me, it’s like joining the alumni association without every attending the school prior. It’s buying an expensive country club membership without ever learning how to swing a golf club properly. It’s also like wanting to build a bridge with a marketing degree (that was my degree).
Don’t get me wrong, I’m not saying any of the above 3 things are bad. I’m just saying that they are a BAD FIRST STEP in the process of leveraging real estate investing to create financial wellness — in both the short- and long-term.
RENT —
Once the property’s acquired, here’s generally what happens:
- Do the advertising and start showing the property to potential tenants.
- Take the time to do showings. Most of the times amateurs will self manage because it’s in their home market to save some money. That right there is symptomatic and against the fundamental investor mindset. An investor is one that focuses on ‘how much is it going to make me’ vs ‘how much is it going to cost me’ — this spells the ROI (return on investment) mindset.
- Overestimate revenue and underestimate budgets because they either didn’t know how to do a proper deal analysis or misguided by the wrong people who just wanted to sell them the property in the first place.
PRAY —
Forget about the first 2 steps for a while. This is really the focus of this process for many amateurs. Now that they’ve acquired the property and rented it out, they simply pray that:
- The tenants always pay rent on time and don’t cause troubles;
- The tenants always take care of the property well;
- The physical asset (aka the property itself) doesn’t have too many defects and issues over time that will call for a lot of time, money and energy to fix.
In the perfect world, this process could work. In the perfect world.
Professional and educated investors take calculated risks. Again, investing inherently has risks. All we are doing here is arming ourselves with the tools and strategies to:
- Predetermine the viability of every deal and the range of profit we will make BEFORE committing to the ‘purchase; and
- Have multiple exit strategies should we choose to exit them and move on for whatever reason.
Side note: notice how I said ‘for whatever reason’? That’s because I’ve attended countless real estate investing courses and meet-ups over the years and one of the common ‘regrets’ I hear people say is this: I regret selling my properties. What is so bad with that? For starters, properties are like people. The older we get, the costlier it gets to maintain. From a financial performance standpoint, it typically means that the profit level goes down at the year goes by regardless of how much equity has been built. Like people, there’s no point being the wealthiest person in a cemetery. There’s also little to no point having a portfolio with the most equity. Also, with the highest inflation rate in 40+ years, money is devaluing faster than usual. True financial education in real estate investing means that your money needs to at least outrun inflation. Unfortunately, most amateur investors weren’t taught to think that way. And, to be honest, I didn’t in the beginning either.
So, here’s the difference with my personal and initial SMP:
Strategy: Lease Options (tenant-first)
I know that I will cashflow from Day 1 once I’ve acquire the property (or within a few short days of possession). I know that an average deal will cashflow $800-$1,200 per month before I even make an offer on a property. There’s no guessing here when the proper steps are carried out. By the way, how many of these deals do you need to not have to worry about life expenses?
Market: Edmonton & surrounding areas, AB
I know that this market has a lot of the right tenants (we actually call them tenant-buyers in this case) that can use the help through this strategy to become homeowners as they’ve dreamed and planned for. The market itself also provides a healthy range of options in price that make sense for the end buyers.
Property Type: Single Family Home
I know that this is what most people (tenant-buyers) want to get into so the demand is there. “We buy for demand” vs “we buy properties” is also another way to look at it.
One of my favourite quotes by Zig Ziglar is this:

This strategy not only contributed to my personal goal, but, better yet, can create such a positive impact in so many people’s lives.
2nd SMP = Support — Mentorship — Program/Steps.
This one is much more comprehensive and serves as an ingredient list for sustainable success in all areas. However, since we are focusing on financial education through real estate investing, this is how we’re going to use it.
Having support from like-minded people is HUGE especially when you’ve had zero role model in your life who has achieved what you want to achieve. Knowing that there are others (while not many) out there yearning for the same thing (better life standards, more resources, less financial stress) and are on the same journey is invaluable. A community like that is one of the key ingredients.
Mentorships in life for most of us happen from the day we’re born. Our parents (at least the ‘good’ ones) are our first set of mentors. However, a mentor really is someone who not only wants the best for you, but have already achieved what you want to achieve so that they can show you the way. I remember how against it my parents were when I asked them to support some of my tuition in financial education (remember I had just lost my life savings when I discovered financial education through real estate infesting?). They promptly rejected the idea and my ask. Instead, they offered for me to go back to get my MBA (Masters of Business Administration) and they would be happy to go into more debt to pay for that. I had to quickly get a hold of my own frustration and remind myself to look at the situation objectively. My parents, middle middle-class at best at the time, are telling me not to get educated to create a better financial future for myself. What? That seems to go against everything they’ve taught me and wanted for me. Then I realize that it’s because they don’t know what they don’t know. There’s no disrespect here because that is the simple truth. Fortunately, once I made up my mind that I was going to have a mentor (and many more as I grew as a person, as an investor and as a mentor to others) to help me, all that frustration and anger just subsides.
Program/Steps. “Success leaves clues.” This is why we often see people joining programs and follow the steps to achieve certain results we want. Be it physical health or financial health, the concept is the same. While not all programs are created equally even for financial education, it’s important to know that this is a core ingredient for success.
For my dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two.
For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.
(Written at the Four Seasons Whistler Residences)