Author name: Erion Shehaj

I help professionals achieve financial freedom through real estate so they can live life on their terms. The ideas I write about come from my 20+ years of experience as a real estate broker, investor, and guide. I’ve helped clients purchase over $300 million in real estate assets to build their wealth. More importantly, I’ve been through different economic cycles and watched patterns emerge. I know what works and what doesn’t for busy professionals with demanding careers. I consider it my job to cut through the noise, eliminate the overwhelming options, and present you with a clear, proven path forward. Too many successful people never achieve financial freedom because they’re paralyzed by options or chasing the next shiny strategy. I am originally from Albania, a rugged country on the Mediterranean sea in southern Europe. I came to the US as an exchange student in 1999 and was the first member of my family to go to college. I believe that we best appreciate opportunities by way of contrast. Growing up in a totalitarian and communist country was not easy – but it has also provided me with a unique perspective that I utilize to spot opportunities and help my clients apply to reach financial freedom. My work isn’t about get-rich-quick schemes or building “empires” that become second jobs. It’s about using real estate as a tool to engineer the life you truly want—where work becomes optional, time belongs to you, and your finances support your values rather than dictate your choices.

Should you pay off debt or invest in real estate?

How do you decide between paying off debt vs investing in it real estate or the market?

A client asked me this exact question last week and I want to share with you the thought process I used to arrive at a good decision. The client has received an end of the year bonus at his job plus they had some additional money in savings. The sum was large enough where both investing and debt payoff were viable options.

The way this question is typically answered is by comparing the cost of the debt (interest rate) to the expected rate of return on the investment. If the rate is rerun on the investment is higher than the interest rate on the debt then you should invest. And vice versa. But is that really true?

Let’s say you have credit card debt at 16% interest. When you make the choice to pay off the credit card debt, your “rate of return” on that move is 16% (same as the interest rate) for as long as the debt would have been outstanding if you hadn’t paid it off.

Even more importantly, that rate of return on paying off debt is GUARANTEED. The moment you paid the debt off, you earned that return. On the other hand, the expected return on the investment is an estimate. An educated estimate if the analysis was done properly but an estimate nevertheless. So, it’s not correct to compare the returns in each move apples to apples. Instead, the expected rate of return on the investment should be adjusted down to account for the possibility that it won’t materialize.…

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Property-centric vs Tenant-centric real estate investing

Ever heard the expression: “When you invest in real estate you make money when you buy”?

The idea is that the quality of your investment depends on how good a deal you get up front and it’s what I call Property-centric real estate investing.

This method may work well for you if you aspire to make real life estate investing your full time career. But it won’t serve you as well if you’re looking to invest in real estate long term to create an income stream.

Here’s why. The flaw in choosing a property centric approach for long term investing is that there might be a mismatch between the property you got a great deal on and the type of Tenants you want to get. And when you put together a real estate portfolio with multiple properties, Tenant issues compound and become your nightmares.

There’s a better way and I call it Tenant-centric investing. When you invest in a long term investment property, what you’re really buying is Tenant relationships over the period you’re holding the property.

So instead of focusing on price alone, we focus on the type of Tenant we want to have. Then we ask: what type of property are those Tenants looking for? What’s making them rent here vs there? And we buy a property that can provide those things while also providing a commensurate ROI for us.…

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Advice I would give my 18 year old self

What advice would I give my 18-25 year old self, knowing what I know today

One of the most frequently asked questions I get from readers of InvestingArchitect.com is some variation of: Knowing what you know today, what advice would you give your 18-25 year old self?

I’ve thought about this question a LOT. The critical concept I didn’t know at that age that I know today is that Money is not the only resource/currency that matters. In fact, 18-25 year olds have a MAJOR advantage when it comes to TWO other resources that can help overcome the lack of investment capital: Flexibility and Time.

So, the advice I’m giving my sons when they are that age is:

  1. Build and take care or your credit score. Don’t dig a hole that will take you years to fill up again
  2. Buy a home with low/no down payment as a primary residence. Live in one of the secondary rooms or the couch and rent out the others to roommates (it’s okay to be a little uncomfortable)
  3. After a year or so, turn that house into a full rental property and purchase another property as primary residence.
  4. Leverage your flexibility and rinse and repeat that process 3-5 times in the next 3-5 years.
  5. With time on your side, you’ll be AMAZED at what this strategy will do for your financial future. You will easily be in the 90th+ percentile of your peers, with lots more options to live the kind of life you want, not the one you have to.
…

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How to make high leverage decisions and bring exponential growth in your life

Real estate investors are very fond of Leverage: the ability to control a higher asset value by investing only a fraction of it in capital and multiplying returns by a factor of 4 or 5 in the process.

There’s another kind of leverage that can have exponential effects on your life. It’s called Decision Leverage.

Here’s how it works: you make a high leverage decision once and it impacts your life going forward. Its effects cascade and compound over time. For example: making the decision to automatically transfer 10-15% of your income to a savings or capital account every month. You make the decision once and it will chance your financial life. Plus, momentum and inertia now work for you instead of against you. Another example might be the decision to get enough sleep every night. Yet another might be to read 20 pages a day every day (that adds up to 50 books a year by the way).

What other high leverage decisions can you think about that can have impressive effects on your life? …

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3 Smart Strategies to beat Analysis Paralysis for new real estate investors

If you have thought about getting started in real estate investing but haven’t taken action yet, you are in good and plentiful company. Most everyone knows that real estate investing can help you achieve all your major financial goals often with less risk and volatility than other alternative options (i.e. stock market). You probably already know that if you succeed in building a solid real estate portfolio you can create a stream of passive income that can serve as retirement income you can enjoy much earlier than your typical industrial revolution retirement age of 65. Or, that quality real estate investments can help you build a seven-figure net worth over the next 15-25 years. Last but not least, you’ve probably heard that investment properties can serve as a hedge against the eroding effects of inflation while they help you diversify your investments and lower the risk across the board.

The main reason behind the lack of action rarely has anything to do with doubts about the benefits of investing in real estate. Instead, there is one main reason that holds people back from real estate investing. Today, I will give you an overview as well as offer mental models, mindset shifts and strategies you can use to keep it at bay so you can finally take action.

The Obsessive Research Loop

By far, the main reason that holds real estate investors back from taking action is Paralysis by Analysis. This reason typically holds back investors who are otherwise ready to go: The capital has been saved and ready to deploy and financing pre-approval is in place.…

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How to budget if you want to reach financial independence

Today I want to tell you about one of the biggest myths in real estate investing. It is the disempowering belief that people who succeed in building substantial portfolios and reaching financial independence early do so because they hit a financial “home run”. Usually, it involves some type of windfall event like an inheritance, large bonus, help from rich parents or lottery winnings.

The reality I have experienced firsthand is the exact opposite. With rare exceptions, the overwhelming majority of real estate investors that have reached financial independence have done it by doing “hitting singles” consistently. A pile of money didn’t drop on their lap from a long-forgotten uncle. Lady luck didn’t grace them on the lottery numbers they played. Instead, they mastered the basics. And here’s the kicker: You can do it, too and I will show you how.

If you’ve been a reader of mine for some time (both here and on BiggerPockets), you know I like to present case studies of how investors can reach financial independence by building real estate portfolios that produce $50-$100k in passive income. I frequently get bristling responses after those posts are published from readers that see the large numbers on display and cannot fathom how they could possibly replicate that performance. “How am I supposed to save all that capital on my $_______/year salary?”.

Listen, I get it. It can seem overwhelming when a real estate investing case study is presented from a 10,000 ft view and you see large figures being thrown around like it’s nothing.…

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Should I sell my house or turn it into a rental property?

You’ve made the decision to move. Maybe it’s because you were bursting at the seams and your family needed more space. Or you wanted to get the kids into that excellent school district. Or perhaps it’s time to enjoy the good things in life and you really wanted a backyard paradise with a great swimming pool. Whatever your reasons for moving, now you face a critical decision that could have important repercussions for your financial future.

Should you sell your current house, unlock your equity and take any capital gains that might have accumulated off the table tax-free? Or, should you turn your existing home into a rental property and use it as a building block for your real estate portfolio?

It’s a very good (and common) question that like most good questions doesn’t have a one-size-fits-all answer. But, I’d like to offer you a mental framework to help you think through this important decision.

Eliminate bad options

A decision is only difficult if it’s a choice between two very good options. If one of your options at your disposal isn’t particularly attractive, the decision makes itself, doesn’t it? So the first thing you should consider carefully is the validity of your options.

Is selling your house even an attractive outcome? For instance, if you were upside down on your mortgage as many homeowners were coming out of the Great Recession of 2008, selling your property isn’t a great option on its own, regardless of the alternatives. So that option will eliminate itself and make your decision more obvious.…

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Should you use a property management company for your rentals?

Should you manage your investment properties yourself or hire a professional property management company? It’s one of the stickiest decisions real estate investors face.

While there is not a one-size-fits-all answer there are a few advantages and disadvantages of each method.

If you decide to go the self-management route, the biggest and most obvious advantage is that you can save money on management fees each month. You can also save money by avoiding price markups that most property management companies put on the repairs they supervise. Finally, you can establish a personal relationship with your Tenants that, with proper boundaries, can help you retain your Tenants longer.

On the other hand, self-management does present some challenges. You will need to handle your own rent collection, keep accurate accounting and coordinate repairs on short notice. Plus you will need to handle move-ins and move-outs. This requires you to be organized and can be quite time-consuming.

Also, property management companies get preferred access and pricing from vendors due to economies of scale that’s not usually available to individual investors. Finally, while having a personal relationship with your Tenant can be positive, it can also lead to negative outcomes if the investor is not skilled in people management. For instance, the Tenant could take advantage of the investor’s kindness and flexibility to fall behind on their obligations without consequences. Or the lack of people skills can cause the investor to push away a great Tenant and cause an unnecessary turnover that wouldn’t have happened if a professional were managing the property.…

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Real Estate Investing Rules of Thumb are Dumb

You can’t escape it. Everywhere you look – in online forums, blog posts even books – you will run into real estate investing rules of thumb that promise you an escape from doing boring, old-fashioned analysis.

There’s the “world famous” 2% rule:  The monthly rent on a good investment property should be at least 2% of the purchase price. As long as the rent is 2% of the purchase price, your analysis is done. You set out on your quest to find these unicorn properties that abide by this golden rule. Single-family properties that sell for $150,000 and rent for $3,000 a month? Got it. Small multifamily properties that sell for $380,000 and bring in $7,600 per month in rent? Sure. I have some good news and some bad news about the 2% rule. The good news is that should you find such a deal you should jump on it because it is an absolute steal! The bad news is that such deals are at best, fossilized remnants of decades past and at worst, pure fantasy.

Then we have the reformed 1% rule: The monthly rent on a property should be at least 1% of the purchase price. Not as radical to be sure but you keep looking for properties that fit into that box and you find yourself being pushed to lower and lower quality neighborhoods. Properties in these neighborhoods attract more problematic tenants that lead to evictions and turnover and expenses. In the end, you have a terrible investment experience and your actual returns aren’t that good when it’s time to face your accountant and year-end.…

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Capital, Income and Net Worth are not the Goal

Have you ever had that experience where you set an important goal for yourself, get intense about achieving it, work hard and grit your teeth to push it over the finish line and when you arrive there’s absolutely no joy? Just a whimper.

I have – and it feels like you just ran a whole marathon only to find out that the actual marathon isn’t until next week. And you were wondering why participation seemed so low this year. You get the wind knocked out of you and all that’s left is a deep disappointment and lack of direction.

The reason why you feel no joy about the achievement of a goal that you thought you wanted is because your inherited someone else’s goal and tried to make it your own. But it never was because there was no alignment between that goal and what matters to you. Here’s how you can tell if you’ve set such a misaligned goal: The aim of the goal is the accumulation of resources not what those resources will do to better your life.

Think about it this way: Imagine you are a farmer and your family is the most important thing to you and your mission in life is to take care of them. In order to do so you need your fields plowed, planted and harvested and for that you need tools. So you set a goal to accumulate the tools you need to take care of those you value most. You work hard, take extra jobs, pinch every penny you can and get obsessed with getting those tools.…

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