{"id":105148,"date":"2019-01-11T15:02:41","date_gmt":"2019-01-11T22:02:41","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=105148"},"modified":"2021-03-16T14:51:50","modified_gmt":"2021-03-16T20:51:50","slug":"the-surest-way-to-destroy-your-real-estate-investing-career","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/the-surest-way-to-destroy-your-real-estate-investing-career","title":{"rendered":"A Surefire Way to Destroy Your Real Estate Investing Career (and How to Avoid It)"},"content":{"rendered":"

As co-host of the How to Lose Money <\/em>podcast, you may think I\u2019m just going to say that \u201closing money is the surest way to destroy your real estate career.\u201d<\/p>\n

I could say that, but it would be a very short post. You would probably not read it, and I\u2019d probably get fired by BiggerPockets.<\/p>\n

So, let\u2019s dive a bit deeper.<\/p>\n

Many of us believe that real estate investing is the best path to long-term wealth available on the planet. If that\u2019s true, then\u2026<\/p>\n

Why Do so Many People Lose Money in Real Estate Investing?<\/h2>\n

Last week I wrote about Warren Buffett\u2019s margin of safety concept<\/a>. A lot of people commented, and it\u2019s spurred some more thoughts on the topic.<\/p>\n

Let\u2019s start with a few quotes from the man himself.<\/p>\n

“We insist on a margin of safety<\/a> in our purchase price. If we calculate the value of a common stock to be only slightly higher than its price, we’re not interested in buying. We believe this margin of safety principle, emphasized by Ben Graham, to be the cornerstone of investment success.”<\/p>\n

Buffett is my investing hero. Graham is Buffett\u2019s hero. Graham wrote the epic book\u00a0Security Analysis<\/em>, and Buffett synthesized Graham\u2019s thoughts to create a legendary fortune. As I\u2019ve said before, we would be foolish to ignore Buffett\u2019s advice to us as real estate investors.<\/p>\n

Related:<\/strong> How I Hired Warren Buffett as My Real Estate Mentor<\/a><\/em><\/p>\n

That\u2019s why my friends, John Jacobus<\/a>, Bryan Taylor<\/a>, and I are synthesizing Buffett\u2019s investing ideas into the real estate realm and co-authoring these BiggerPockets posts. We hope you\u2019re enjoying them. (Please, keep reading so we don\u2019t get fired. Management tracks these things, you know.)<\/p>\n

Key Investment Insight from Buffett<\/h2>\n

\u201cYou calculate\u2014I think you take all of the variables and calculate them reasonably conservatively. But you don\u2019t try and put too much windage in at every level. And then when you get all through, you apply the margin of safety. So I would say, don\u2019t focus too much on taking it on each variable in terms of the discount rate and the growth rate and so on. But try to be as realistic as you can on those numbers, but with any errors being on the conservative side. And then when you get all through, you apply the margin of safety,\u201d he said in 2004 at\u00a0Berkshire Hathaway’s annual meeting<\/a>.<\/p>\n

Other Important Buffett-isms<\/h2>\n