Setting goals keeps you focused on what you are trying to achieve. Setting ridiculous or far-fetched goals is very counter productive and can make progress feel very slow. It is always best to set small achievable goals that can be realistically achieved if you stick to your plan.
The importance of setting SMART goals
When it comes to property, we have always set our version of SMART goals because it offers a framework to ensure each goal is structured and serves a purpose.
Setting the goal “I want to be financially free to travel the world” is not a very good goal, it’s too ambiguous and serves no purpose. You need to be very specific. Your goals should be something along the lines of “save £20,000” or “buy my first rental property”. Once these goals have been achieved you can set more lofty ones such as “achieve X amount of passive income from buying and renting out 3 properties by applying the methods used to buy my first”.
Your goals need to be measurable so there can be no arguing if you have achieved them or not. Having a goal of “buy my first rental property” can only be achieved when you complete on your first purchase. Likewise aiming to save £20,000 can be measured by how much is in your savings account.
Don’t set yourself a goal and keep it to yourself, it’s not a good way to stay motivated because there are no consequences for failure. If you tell someone what you are doing you become accountable and are much more likely to succeed. Why not tell someone that if you don’t achieve this goal you will wash his or her car every week for a month? It’s making yourself accountable for your goal that drives you to achieve it.
Your goals should be challenging whilst still being realistic. Setting yourself a goal to “save £10” is not a great goal if you want to invest in property, but then again neither is “save £1,000,000”. Also setting the goal “buy 100 properties within 3 years” is probably unrealistic unless you have a trust fund.
Always strike a balance between challenging and achievable and think about where you are right now. If you don’t have any savings, set a goal to save X amount next month. If you achieve the goal set yourself that same goal, but for each month, for a year.
So you have set your goal, or one of them, as “buy my first rental property”, that’s fantastic but if you don’t apply a timescale to this goal it becomes somewhat meaningless. This plays into being achievable and realistic as well, don’t set unrealistic timescales or you are just setting yourself up for failure.
Our goal history
So what goals have we set? We started investing two years before we even purchased our first house. We were saving, and saving hard. We both sold our nice cars, lived off 15p instant noodles and didn’t go out. We saved everything that we could.
Therefore our first goal was: “Over the next two months we will change our living style / expenses so that we are able to have £X a month”, closely followed by “We will save £X a month for two years.”
Exceeding our two-year goal the next goal was really exciting “Purchase our first house within 6 months that, through refurbishment, we could add at least £20,000 of value to.”
We purchased our first house, renovated it, and moved in. This would be our home until we left to travel. The next goal was “Purchase our first rental property and have it tenanted within 12 months.”
Following this our final goal was to “Generate £X of passive income per month from property within 3 years”.