Let's Get Real about Investing in Real Estate

Think of me as your grumpy, nay-saying Uncle. It may be helpful to think of him at a family gathering after he's had a few cool, refreshing beverages of the canned variety, and just watched his favorite sports team lose.

He just heard you're excited about getting started investing in real estate.

"Whacha wanna do that for!? If you've got a pile of money in the bank you don't need, why not just give it to me!?" He says with a guffaw only the inebriated can achieve. "My buddy at work tried that a couple of years ago and he lost his shirt! No-good scumbag tenants never paid rent and trashed the house he bought. When he couldn't take it anymore, it took him a year to sell it, and he only got half of what he paid!"

You want to jump in and defend your idea, but in a moment of clarity, it hits you: the only thing stupider than being the drunk in the argument is being the sober person in the argument.

But if you were to tilt at that particular windmill, your weapons would be the wealth of knowledge you’ve accumulated from reading Grant Cardone and Robert Kiyosaki’s books. And of course you spend all your free time on BiggerPockets, learning from those successful people already making fortunes investing in Real Estate. Maybe you’ve even read “The One Thing” or “The E-Myth” or other business books, preparing for the day when you own so many properties you need to pay someone to manage your business while you go out and find better and better deals on bigger and bigger properties.

Here’s the reality: very few investors ever reach that point, no matter how many times they 10X!!!!!!!!! Their goals. Or how many times they build systems, and One Thing, and find The Secret, and Get Things Done, and Rhinoceros Success…..are we getting it yet?

A less cynical way to look at the millions of books out there to help people achieve business success might be: there are at least half that many different ways to actually be successful. (The other half of those books are 99% recycled garbage being peddled by people who are trying to build some sort of following online in an effort to get “students” for their $2,000 class/bootcamp/seminar/mentorship program.

If you are brand new to investing in real estate, and you’re reading this, the most important question to be asking isn’t flip versus buy and hold, or what market to invest in. It’s “Why do I want to invest in real estate?”

If your answer has to do with money, prestige, or (God Forbid) because it looks cool on TV, you need to stop, right now. Because there could very well be a better way for you to achieve the things that you want in life, using the skills you have right now.

Real estate is a business, just like any other. And it has quite a few advantages, and many disadvantages, just like any other business. And especially in today’s market, when traditional investors (not real estate investors) can invest in real estate via syndication, real estate investment trusts, crowdfunding sites, or with one of the many, many successful private real estate investment firms, and get from 10-30% return on their money, you better have a real reason to want to spend all the extra time, money, energy, and stress it takes to invest directly, for similar returns - and that’s if you get it all right on your first try. Get it wrong, and you lose everything you put in.

In reality, many would-be real estate investors would be a lot better off staying out of the business, and investing their money with already successful operations.

My goal for this blog, reverting back to Uncle Budweiser speak, is to talk as many people out of investing in real estate as possible. The nicer way to say that would be: I’m trying to help people better understand what investing in real estate looks like for quite a few investors, and if you don’t have a bigger, higher purpose behind doing it, you’re better off investing your money with someone who does.

Stay Tuned.