Why would real estate investors fail?

Let’s face it, there is tons of real estate investing information out there. But of all the people you’ve seen at seminars enjoying the wise words of real estate gurus, or the people you see at Barnes and Noble hanging around until 11 pm reading every real estate investment book they can find (A charge of which I’m guilty!), how many do you think are really successful in their real estate investment businesses?

I don’t have exact numbers, but based on my experience as a real estate investment advisor and information provider, I believe that only 1-2% of people who want to be real estate investors get into the business and stay in it. the business and make it profitable.

Those numbers are so disappointing.

Why is so difficult? Why do so many would-be investors fail before they start? And why do others, who are able to take the first steps of their real estate investment career successfully, still fail to achieve their long-term goals?

I realized the deck was stacked against me when I started out as a real estate investing student at a seminar a few years ago. I bought all the real estate investing courses, signed up for private training, and watched as many of the people around me fell by the wayside. There were many times that I wanted to quit smoking. You probably have your own story of struggling in your real estate investing career.

It’s the million dollar question. These are the conclusions I have been able to reach.

Why Real Estate Investors Fail Despite Great Real Estate Investing Information?

1) The myth of getting rich quick – Why do potential real estate investors fail?

The fact that there are real estate investment strategies, like moving houses, that can be implemented quickly (60-90 days), does not mean that it is easy to find offers, negotiate them and close them in the first month or two. after beginning his real estate investing career. In my experience, most people need to take a little time to become familiar with their area’s real estate markets, terminology, and real estate strategies, and then start implementing them so they can practice finding and negotiating with motivated sellers.

Even with a good closed deal, you may only walk away with $5,000 or so of an investment. With a lease option contract, it can take years for the property to “mature” in your portfolio before you can sell it for a significant profit. The biggest money I’ve seen people make quickly comes from rehabs and short sale negotiations. Pursuing these kinds of deals can become a full-time job. They work and work quickly, but their implementation takes a lot of time.

two) The myth that there is no down payment

Many times I’ve heard students come to training calls with me and say, “I just lost my job, so I’m really motivated to get this up and running quickly.” or “My goal is to trade one house a month every month because I need some cash for start-up capital.” These sentiments are probably being perpetuated by gurus who encourage people to think of real estate investing as a business that doesn’t require capital. Even after learning the formula, it can take years before a paper profit turns into cash if you own a rental property or lease/options.

The exception proves the rule and I’m sure it’s true that some people for some periods of time can make “thousands” quickly, when they need it most. For example, I know people who get a lot of free offers from craigslist or call through the newspaper. For the vast majority of real estate investors, however, some money is required for marketing to find motivated sellers if they want to keep their deal portfolio reasonably full. In addition to marketing to find motivated sellers, offers require money for due diligence, legal fees, inspections, etc. If you plan to keep a property as a landlord, the costs increase even more. If I had to point out one of the main reasons for the lack of success in this business, besides false expectations, I would mention lack of funding in the first place.

3) The TRUTH in “It doesn’t work where I live”.

There is a cliché in the real estate guru field that speakers like to joke about. It’s just that a lot of students like to say, “Your strategies won’t work where I live.” Guru interprets it as a joke, as if the person is making an excuse not to start investing, because “he can’t”.

The truth of the matter is that there is a LOT of variation in the performance of housing markets across the country. In some areas, such as the South and Midwest, property values ​​are relatively stable and cash flow from properties is good. In other areas, Southern California, Florida and Las Vegas come to mind, property values ​​fluctuate wildly and you can make a fortune or lose your shirt in the changing tides of appreciation.

It is very important to understand real estate market cycles and where your market fits into the current phase of the market. Implement to take strategies that work in your market if you want to be successful locally. Otherwise, you should do what I’ve done and learn to invest where it makes sense, without feeling obligated to invest where you live. There are advantages and disadvantages to each strategy. However, my point is that it is not okay for gurus to make fun of people who raise this objection. It’s a valid concern raised by thoughtful investors, even if it doesn’t help sell the guru’s real estate investment courses.

Therefore, I have raised many concerns about misinformation circulating in the real estate investment industry. Have I disappointed you too much? Are you “out” of investing now? If you’re any good, if you can talk yourself out of it so easily, I’m glad I took you out BEFORE you spent more of your valuable time and money on a strategy that doesn’t appeal to you.

If not, even better. It’s certainly possible to take a realistic approach to investing in real estate and make it work for you. You can increase your net worth to millions, but it takes time and perseverance. I hope you’re willing to put up with it.