Think about the math classes you have taken in your life.
Think back to elementary school through high school and into college. How did your math classes work? You probably started by learning how to add. Then the teacher got sneaky and threw in a twist to addition and called it subtraction. Shut the front door, where was she going with this? She was leading you into learning multiplication. Multi who? Then came division. Now things had just gone crazy. Where was all of this leading? Most likely it led you to pre-algebra, algebra, geometry, algebra II, pre-calculus, trigonometry, statistics, and calculus. Then, just when you think it is over, you hit college. You may have then been thrown calculus II, followed by III, differential equations and eventually applied calculus. Maybe you didn’t take those last few classes, but regardless, the principle stays the same- you started with addition and ended with something significantly harder. How would you be able to learn calculus if you had never learned how to add? How would you learn statistics if you had never learned fractions which you couldn’t have learned if you never knew how to divide?
Whether we knew it or not at the time, there was a method to the education system’s madness (believe it or not), which was to teach by building upon what we had already learned. Teach addition first, build up to subtraction, slowly add in multiplication and division, and eventually use those fundamental skills to venture into algebra and calculus. Makes sense if you think about it. Granted, lots of people still had trouble with math no matter what building blocks were in place, but that’s fine because it most likely meant they were better at language or history or art or something. We can’t all be fellow math nerds or we’d be living in a really, well, nerdy world.
So how does the math class sequence explain why real estate investing is so hard?
How to Learn Calculus When You Never Learned How to Add
Oh, oh! Now you are seeing it. Real estate investing has a prerequisite, which is money. If you don’t understand how money works, you can’t understand how to invest properly or even why you should invest at all. Ok, money is the prerequisite. Which grade did you learn money in? Oh, ha, that’s right, you didn’t. I went to school in Georgia, which was at the time ranked as having the 2nd worst statewide education system in the country, but I’m pretty sure we weren’t the only ones who weren’t taught about money. Not only did we not learn about money, we were never taught business or entrepreneurship either. Fan-tastic. Understanding money, understanding business, and understanding at least a rote level of entrepreneurship are critical components to being a real estate investor. We were never taught any of these, so where does that leave us? Other than screwed, of course…
Thanks to our formal education systems, we are completely left to our own devices to teach ourselves what I consider to be a fairly complex subject. Calculus is a perfect metaphor for real estate investing- there are a ton of different skill subsets within the general subject, ranging from beginner all the way to advanced, some of which you may never use and some you may use all the time, not everyone is going to understand all of them (if any), and, well, it’s hard! Although there is always that one guy in the class who just naturally gets everything the teacher says and you just want to punch him.
You decide you have to understand and be able to apply calculus, but calculus isn’t taught in schools (wouldn’t that be nice?). You look up evening classes for it through an adult education program. Each class you can take only focuses on one skill set and is very expensive. Ok, you’re willing to spend the money but how do you know which skill set you want to learn so you know which class to buy? You don’t. There are a ton of calculus experts who will tell you which skill set you need, but what if you pay all that money for the skill set they recommend and you decide it’s totally not for you? The chance of that happening is really high. Better, maybe there are people willing to teach you calculus for cheap or free. Unfortunately, none of the teachers are guaranteed to actually know what they are talking about. There is no real certification they can hold that you can check on to ensure you are being taught correct information. Books are an option, and very affordable so you go ahead and buy a few of those. Some might be interesting, some might be horribly boring, but excitement level aside, none of them really seem to give a step-by-step on how to integrate the rational function to solve for the logarithmic tangent. What the frig? Useless books.
Sound familiar? You have to figure out how to teach yourself calculus real estate investing all on your own with absolutely no fundamental starting point, no formal course structure to help you build onto a knowledge foundation, and no way of knowing which teachers are legit and which ones are total scammers. Awesome.
Since there is no formal education path for real estate investing, you just have dive in and try to learn everything you can. Sorry, that’s just how it is. Start with books, attend seminars, ask around, check out everything on BiggerPockets, reach out to people who are doing things that seem like something you could be interested in, ask questions, meet more people, ask more questions and then just go for it and try something knowing full-well you just might fail. Failure is going to be one of your biggest teachers in real estate, so don’t let it deter you if it happens.
The best way to get the most out of your real estate investing journey is to have good mentors and experience (and get through) failures. The better the mentors, the less failures you will have to endure (as long as you are listening to them of course).
If it makes you feel better, I’d say just about all of the big-time investors, and even us smaller ones, had no initial education on the subject and have just had to figure it out. Welcome to our club. The good news is that the journey through learning real estate investing can be a lot of fun! Frustrating, no doubt, but a heck of a lot of fun. Keep your perspective positive and it will be well worth your efforts.
Any other reason you can think of why it can be so tough to be a successful investor?