{"id":98290,"date":"2018-04-15T11:00:29","date_gmt":"2018-04-15T17:00:29","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=98290"},"modified":"2021-03-16T13:53:16","modified_gmt":"2021-03-16T19:53:16","slug":"5-ways-to-know-youre-not-ready-to-invest","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/5-ways-to-know-youre-not-ready-to-invest","title":{"rendered":"5 Ways to Know You’re NOT Ready to Invest in Real Estate"},"content":{"rendered":"

I love investors, because like myself, they tend to nerd out over spreadsheets and let the numbers do the talking. They are risk takers who have found a way to maximize their money, so much so that they are <\/span>very <\/span><\/i>comfortable, and\/or may not need a job all together. <\/span><\/p>\n

Because that\u2019s a pretty awesome place to be financially, I meet a lot of aspiring investors who want to be in that world. And while it may not be easy for them to tell if they are ready or not, it is fairly easy for me to tell 1.) if they are ready; and 2.) if they are someone I\u2019d like to work with. Below I\u2019ll break down some indicators that you\u2019re not ready, plus some ways to help you become more prepared for the investing world.<\/span><\/p>\n

1. You Have Not Read a Single Book on Investing<\/h2>\n

I know some people might push back and say they listen to podcasts or contribute to BiggerPockets forums, but I say having read at least one book on investing is important. Reading a book takes more effort than listening to a podcast or occasionally going to a forum. It\u2019s deliberate. It takes time. It requires a commitment. And, if you can\u2019t commit to 250 pages on something you say you want to do, then maybe it\u2019s not something you really want to do. (Need book suggestions? Here\u2019s a few excellent books on real estate and investing: <\/span>Rich Dad, Poor Dad <\/span><\/i><\/a>(Robert Kawasaki)<\/span>, Long-Distance Real Estate Investing <\/a><\/span><\/i>(David Green) and the <\/span>E-Myth Real Estate Investor<\/span><\/i><\/a> (Michael Gerber).<\/span><\/b><\/p>\n

2. You Have Not Adjusted Your Spending<\/h2>\n

You spend your money on what you value, and there is no right or wrong on that. B<\/span>ut<\/span><\/i>, reviewing your finances will give you a good idea of whether or not your lifestyle reflects your goal. If it\u2019s not, maybe it\u2019s not actually your goal. Are you still going out to eat a lot? Still paying for glamour coffees? Been on two international vacations this year? That sounds awesome. It honestly sounds like my perfect year. But it doesn\u2019t sound like a good way to prepare for an investment.<\/span><\/p>\n

Related:<\/strong>\u00a04 Signs You Are Ready To Get Started Investing In Real Estate<\/a><\/em><\/p>\n

\"advice-for-millennials\"<\/p>\n

3. You Haven\u2019t Talked to a Lender Yet<\/h2>\n

Assuming you aren\u2019t planning on paying all cash (and you likely shouldn\u2019t, because paying all cash means you are buying one property instead of leveraging your money for multiple properties), you should talk to a lender. This is true whether you are a first-time home buyer or a serious investor. Talk to a lender as soon as you can. They will run your finances, build out a plan for you, and help you really understand where your finances are. <\/span><\/p>\n

4. You Focus on Too Many Metrics<\/h2>\n

Analysis paralysis is a real thing. Pick one metric and know it well. Know why you picked that metric, and know why it matters to you. The metric I use for my two rental properties in Denver is cash flow, because I value having someone else pay my mortgage on a property that is appreciating fast. So, if it cash flows, I\u2019m happy.<\/span><\/p>\n

Related:<\/strong>\u00a0Blogger Roundup: 21 Reasons Newbies Struggle to Close Their First Deal (& How to Overcome Them!)<\/a><\/em><\/p>\n

5. You Have Unrealistic Expectations About Your Market<\/h2>\n

\u201cI want a multiplex for $250k within two miles of downtown Denver,\u201d and\/or \u201cLooking for off market properties that fit 1 percent rule, prefer 2 percent.\u201d I get emails like this all the time, and while I understand where this comes from, and I admire the optimism, it needs to coincide with reality. Investors do like to tie their numbers to cap rates, cash-on-cash, etc. but they also understand where they can get those numbers (Denver isn’t great for it, Pueblo is better), and it\u2019s not in a super hot market with a lack of inventory. Worse yet, this commentary can make you seem unserious and limit your relationships with the kind of serious professionals that can get you a good deal.<\/span><\/b><\/p>\n

You can help prevent this from happening by doing two things: 1) access Redfin for different markets and run deals on properties similar to what you want. You\u2019ll quickly learn what is aspirational versus unrealistic. 2) Call a few real estate agents and just ask: What seems realistic for an investment with this amount of money?<\/em> You should be noticing a pattern, and you should be weary of outliers. <\/span><\/b><\/p>\n

I hope I haven\u2019t scared you off because I think investing is very smart, and a great way to set up your future. I\u2019m just trying to help you do a little leg work that will help you decide if investing is really for you.<\/span><\/p>\n

\"\"<\/a><\/p>\n

How do you gauge when you’re ready for something big?<\/em> <\/strong><\/p>\n

Share your experiences in the comments below!<\/strong><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Today we break down some indicators that you\u2019re not yet ready to invest, plus some ways to help you become more prepared for the investing world.<\/p>\n","protected":false},"author":281659,"featured_media":97681,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524],"tags":[],"class_list":["post-98290","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/98290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/281659"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=98290"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/98290\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/97681"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=98290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=98290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=98290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}