Real Estate Investing Basics

3 Lies New Investors Like to Tell Themselves

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP, Real Estate Investing Basics
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Real Estate investing Lies

Do you ever lie?

No, I’m not talking about lying to the tax man, lying to your boss, or even lying to your spouse (shame on you!) I’m talking about something potentially much worse.

Lying to yourself.

Most of us do it all the time. We tell ourselves one thing, and try very hard to believe that. Really, Brandon, it’s okay… that extra hot peppermint hot chocolate from Starbucks isn’t going to mess up your diet… it’s such a small drink anyways…

Can you identify?

However, while lying to yourself about nutrition might be bad – lying to yourself about your real estate investing might be even worse. As an investor, I know I've done this multiple times and I'm not proud of it. However, I'm slowly learning my lessons and learning that the best way to succeed is to tell the truth, the whole truth, and nothing but the truth when looking at a real estate investment.

This post is going to look at 3 big lies that new investors tell themselves, and how you can learn to overcome these lies to succeed in real estate. Let’s get started.

1.) “I Don’t Know Enough”

Education is one of the most important steps you can take as a beginner investor which is why we released “The Ultimate Guide to Real Estate Investing” for free to everyone who wants to read it. Since coming out, this online book has been read by tens of thousands of people, helping people learn the first steps needed.

However – many new investors stay in this phase indefinitely, believing they simply don’t know enough to get going. However – it’s not a lack-of-knowledge that stops people.

It’s fear.

The truth is – no one knows “enough.” This is a learning process for our whole lives. I’m sure even Donald Trump is learning new things every day!

Don’t lie to yourself – if you’ve read the books, interacted on the forums, and read the blogs here – you probably know enough to at least take the next step. For advice on getting moving past this education, check out “The ONLY Step You Need to Get Moving in Your Real Estate Investing” or “How to Start Wholesaling: Getting Past The Education and Into the Field

2.) “I Know Everything!”

On the other end of the spectrum is those who feel they have it all figured out.

They’ve read a book (well … skimmed it) and they watched a couple episodes of Flip That House so they are ready. They don’t need to talk with experienced investors about their plan – heck, they don’t even need a plan. It’s easy – they got this.

While it’s dangerous to stay in fear for your whole life -it might be more dangerous to venture out in the world of real estate investing with no knowledge and just passion.

I talk with a lot of investors who are really excited to get going – and they are making offers on properties and trying to push forward – but don’t understand the basics. If they are lucky enough (or dumb enough) to actually land a deal – they probably are not going to succeed. There is a balance that these investors refuse to believe.

Don’t lie to yourself – you need to learn the basics. Go slow and steady and invest at your knowledge level.

3.) “This Deal Is Great!”

Most deals are not great.

Many investors look at a property and instantly think it’s a good deal just because it’s ugly and has the word “REO” in the property description. Excitement sets in and the lies begin.

“This only needs paint and carpet!”

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“Everyone says it’s too much work… but I can do this easy!”

“This project will only take a few weeks to finish!”

As I said – most deals are not good deals, and most projects take more time and more costs to complete. You need to be honest with yourself on this. Will it really be that quick? Does it really only need that much work?

Before you go out and try to invest in a piece of property, it's important that you are conservative in all your numbers and liberal in all your time estimates. I generally recommend that new investors double the amount of repairs costs they think a project will take, and double the timeline they plan on completing the project in. This could be for flips, buy and hold, commercial, notes, whatever.

Don’t lie to yourself about the numbers because the numbers don’t lie. (Click to Tweet This Quote!)

How to Overcome Your Own Lies

So how do you deal with these lies? When we’re lost in the moment, filled with excitement and anticipation, what’s the best way to stay grounded?

It’s actually quite easy – reach out to other seasoned investors.

Really, it’s that simple. Talk with several experienced investors about your deal. Often times investors are afraid to ask for other’s opinions because they don’t want to be shot down.

However, if you are asking several seasoned investors for their opinion on your deal, and you are met with criticism on those deals, assume that you probably have been lying to yourself.

This is one of the largest benefits of the BiggerPockets Forums. Go post your deal details and ask what people think – and then listen. They’ll tell you whether the deal is worth pursuing or worth dumping. Listen to them!

What about you? What lies have you told yourself as an investor? Or what have you heard other investors tell themselves? Let me know under this post in the comment section!

Photo: Michiel Jelijs

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Replied over 7 years ago
    Great post…Made me laugh when you mentioned the Starbucks diet lol. I can absolutely agree that the only thing holding me back…. (as a new investor who hasn’t made my 1st deal yet)…. is fear. — That is why I’ve grown to understand the downright importance of having a partner, and working with people, who are smarter than you! I am waiting to hear back from an agent who offered me a job working for his realty group. I could definitely use the money, AND the experience at the same time! Keeping my fingers crossed. 🙂
    Brandon Turner
    Replied over 7 years ago
    Thanks Jennifer! I have a terrible addiction to those drinks. I’m forcing myself to drink coffee (I could never stand the taste) because it might curb my peppermint hot chocolate addiction. I find if I dump enough sugar in regular coffee, I can tolerate. Then I just need to slowly decrease the amount of sugar I put in until I’m drinking straight black coffee with 5 calories. I’m sure there is a real estate investing lesson in there somewhere. I sense another blog post coming on 🙂 And yeah – great idea. Working in the field is really important when starting out. I did maintenance work for years while I built up my investing business, which gave me a ton of contacts and is how I found my mentor who has helped me a ton. So kudos to you for going the route. Good luck!
    Dawn A.
    Replied over 7 years ago
    Brandon, water is free and it allows you to save money over buying coffee — more money to invest in real estate!
    Brandon Turner
    Replied over 7 years ago
    Haha Dawn! I spent years only getting water at Starbucks until I discovered the peppermint hot chocolate. Now I have a terrible time choosing to drink water! That Peppermint Hot Chocolate is calling my name right now… must … resist…
    Replied over 7 years ago
    Great post…Made me laugh when you mentioned the Starbucks diet lol. I can absolutely agree that the only thing holding me back…. (as a new investor who hasn’t made my 1st deal yet)…. is fear. — That is why I’ve grown to understand the downright importance of having a partner, and working with people, who are smarter than you! I am waiting to hear back from an agent who offered me a job working for his realty group. I could definitely use the money, AND the experience at the same time! Keeping my fingers crossed. 🙂
    John Thedford
    Replied over 7 years ago
    Another great post! As still a new investor, I would bet #1 remains the biggest issue as it does with me. There is so much information out there it can seem overwhelming. As for #3, if anyone thinks they know it all they probably need more help than anyone:) As always, a big THANKS for the article……..
    Brandon Turner
    Replied over 7 years ago
    Thank you John for the comment! I know the info can seem overwhelming. I think it’s good to read as much as possible, and then pick a niche/strategy and just go with it. What’s going to be yours?
    John Thedford
    Replied over 7 years ago
    Right now it is buy and hold with fast equity growth through appreciation and debt reduction. I turn 58 today. My goal is to have x dollars income with -0- debt by the time I hit 63. If I don”t have cash to buy then I am getting hard money with 5 year notes interest only but paying on them as if they were straight am. So, no cash flow in my pocket for a handfull of years but no debt in five more years. If all else fails, I can always troll BP searching for a RE millionairess and marry her:)
    Sharon Vornholt
    Replied over 7 years ago
    Brandon – It’s just so much easier for everyone to stay in their comfort zone. It’s a nice cozy place, but just can’t grow there. At some point, you have to make a move. I tell everyone; feel the fear and do it anyway. Go ahead and walk through the fire. You will come out on the other side. That’s what winners do. Great post. Sharon
    Brandon Turner
    Replied over 7 years ago
    Great advice Sharon! “feel the fear and do it anyways.” Awesome!
    Replied over 7 years ago
    Great article Brandon! Being honest with ourselves is the only way to really see where we really are and what we need to learn to move forward. I can’t think of a better way to cross check the things I’m learning than being active in the forums and engaged in discussions. The deal analysis section is a godsend! There is so much value in having some of the best minds in REI just STRAIGHT UP tell you what’s going on with your deal. “Leave your Ego at the door” (Or BP login screen)
    Karen Rittenhouse
    Replied over 7 years ago
    The biggest one from your list that I see is “this deal is great” from investors who just don’t have enough leads. Then they wonder why it didn’t work out and they got burned….. Another big lie is thinking that our flips are worth more than they are. Once we’ve put in the blood, sweat, tears, cash, TLC, we expect others to see the property as valuable as we do, and we’re confused when they throw darts. Ultimately, it’s just another piece of real estate, so don’t lie to yourself that it’s anything more than that. (easier said than done…) Thanks for your post.
    Huffar Group
    Replied over 7 years ago
    Good read Brandon. You forgot the one that has NO fear. They just jump in with little or NO knowledge. Do all the work themselves ( half way) and them ask someone in the know what they will get in return. Most of the time investors expect to much. They did not do there due diligents. Now STUCK with an investment they either way over improved or under improved. Now comes the bills. OMG!!! Knowledge is power and we as investors need POWER. Please ask,ask,ask before jumping in. WE have enough fatalities in the investment world. Really enjoy your article’s. Good Job!
    Replied over 7 years ago
    Good stuff Brandon, thanks for the read. Not knowing enought…fear..being a newbie, I understand that all too well! I am trying to absorb it all. Great podcasts too by the way, I continue to listen to those as well. Alot of good information!
    Replied over 7 years ago
    Brandon.thanks good reading, My story is simple! I came out of the “real estate broker world with all its trueditions” and found myself in a world completly new. (frank Sinatra)ha ha. Sooooo..Like you said “fear” is there, I’am on the side of renewing my mind and office to this new world(but I love it) another song…and your right about asking for help! I don’t mind asking for help from a more experianced Wholesaler/investor and I have..Lets stay intouch and I’ll give you a heads up on my first deal….Your right GO SLOW..I learned that in this business,My back ground inreal estate helps,BUT it don’t means beans if your not teachable. ‘(JUST A FEW FOR OTHER BROKERS) I would like to hear from other Brokers who have made the move over. Its not for everyone…So lets dance to the next deal…Thanks Joe,a newbe as youall call us….
    Replied over 7 years ago
    Great post! It’s actually really hard to get a good deal on an REO. It never hurts to ask for some help and you should always keep your mind open to learn new things.
    Ali Boone
    Replied over 7 years ago
    Great post. And I think you nailed the solution- reach out to seasoned investors! Other (experienced) people are likely to be better gauges of your knowledge level than you are. Don’t be skeert, but don’t be stupid either!