What's with all the pessimism?

What's with all the pessimism?

Binghamton, NY · Member since 2013 · 56 posts · 4 votes

I'm in my data gathering/learning stage and yet to do a deal (except the three homes I've owned and a few business deal/leases.) In any event I'm talking to people in my local market and those in real estate (agents mostly) are so pessimistic it's incredible. You would think they would say "I will be happy to help you on your journey." Instead what I keep hearing is, "This market is too tough," "problem is you have to hold too long to make money," "Forget it, put money in stocks," "No deals out there, they're all taken."

I like a challenge so tend to brush these comments off, but it's a little discouraging when folks in the business are down on REI. I am hoping what I'm reading between the lines is that some agents aren't very good at real estate investing, just like my son's soccer coach was a horrible soccer player (I played with him in high school.) Anyone else find more pessimism than optimism out there? Except on these boards, this place is a "virtual cornucopia of positivism" : )

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Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
13y
Originally posted by Andrew S.:
I'm in my data gathering/learning stage and yet to do a deal (except the three homes I've owned and a few business deal/leases.) In any event I'm talking to people in my local market and those in real estate (agents mostly) are so pessimistic it's incredible. You would think they would say "I will be happy to help you on your journey." Instead what I keep hearing is, "This market is too tough," "problem is you have to hold too long to make money," "Forget it, put money in stocks," "No deals out there, they're all taken."

Welcome to Real Estate. These comments never end and they always come from people who DON'T invest in Real Estate. Most Agents don't like the 'small' commissions and submitting low ball offers. It will take you some time to find an 'Investor Friendly' agent. Took me two years and 6 agents prior to finding my current agent.

IGNORE EVERYONE who is NOT making money in Real Estate Investing! Many agents do not INVEST.. they SELL. Some dabble in Investing. You need to find the INVESTING AGENT as I did. Then things start to smooth out in that area. But the negative feedback will still come from all directions.

Read my success story if you haven't already. You're not alone with negativity and obstacles.

http://www.biggerpockets.com/forums/223/topics/94794-and-they-said-i-would-never-do-it--if-i-can-so-can-you

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  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y
    Originally posted by Andrew S.:
    I'm in my data gathering/learning stage and yet to do a deal (except the three homes I've owned and a few business deal/leases.) In any event I'm talking to people in my local market and those in real estate (agents mostly) are so pessimistic it's incredible. You would think they would say "I will be happy to help you on your journey." Instead what I keep hearing is, "This market is too tough," "problem is you have to hold too long to make money," "Forget it, put money in stocks," "No deals out there, they're all taken."

    Welcome to Real Estate. These comments never end and they always come from people who DON'T invest in Real Estate. Most Agents don't like the 'small' commissions and submitting low ball offers. It will take you some time to find an 'Investor Friendly' agent. Took me two years and 6 agents prior to finding my current agent.

    IGNORE EVERYONE who is NOT making money in Real Estate Investing! Many agents do not INVEST.. they SELL. Some dabble in Investing. You need to find the INVESTING AGENT as I did. Then things start to smooth out in that area. But the negative feedback will still come from all directions.

    Read my success story if you haven't already. You're not alone with negativity and obstacles.

    http://www.biggerpockets.com/forums/223/topics/94794-and-they-said-i-would-never-do-it--if-i-can-so-can-you

  • Binghamton, NY · Member since 2013 · 56 posts · 4 votes
    13y

    Thank you Aaron! I will read it now. Negativity usually motivates me.

  • Real Estate Broker · Troy, MI · Member since 2012 · 42 posts · 12 votes
    13y

    Yeah, Aaron's right. Don't assume just because they're agents that they understand investing. The vast majority don't understand it, or do it personally.

    Depending on what brokerage you're working with, it might be wise to speak to the "team leader" and ask them directly "Are any of the agents in your office real estate investors themselves?"

    I won't lie though, if you don't have a track record (haven't done any deals yet), it's going to be hard to get the real investor-oriented agents to work with you. If they're good, they already have a network of people they shop deals to. Getting on their buyers list might be the best you can hope for, in which case, they'll just send out deals they've located. Don't expect an agent to take you out to look at tons of properties, because they probably won't.

    Build a relationship and things get easier.

    New agents might be a better bet until you get your first deal under you. Newer agents are just so desperate to start doing some business, they'll accommodate a lot more BS from investors. A new agent will take you out to places, run comps, submit lowball offers, and pull public record data for you. But take their advice with a grain of salt, and run your own numbers, because they might not know a whole hell of a lot yet.

  • Real Estate Broker · Troy, MI · Member since 2012 · 42 posts · 12 votes
    13y

    Oh and if someone's a pessimist, stop talking to them.

  • Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    13y

    @Andrew S.

    at least they didn't tell you that you're too 'old' :)

    Anyone start late in life?
    Started by Andrew S.

  • Binghamton, NY · Member since 2013 · 56 posts · 4 votes
    13y
    Originally posted by Pat L.:
    @Andrew S.

    at least they didn't tell you that you're too 'old' :)

    Anyone start late in life?
    Started by Andrew S.

    That's great Pat!!!

  • Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    13y

    @Andrew S.

    I'm up on real estate. It's a great time to buy, but I'm always buying. In less than 4 days this week I bought 6 properties. I'm not in the least bit pessimistic.

  • SFR Investor · Friendswood, TX · Member since 2013 · 136 posts · 11 votes
    13y

    no matter what you do... You could tell people you are buying something for .50 and able to sell it guaranteed for 1.00. People would still tell you not to do it, its not a good time, just look at the economy... all of them are just excuses that enable them to stay complainers and not moving to the next level.

    IF you want to go to the next level you will always hear its risky (it is), Im not sure you can do (They aren't u and dont know your capabilities), the market is tough (thats good that means the lazy people aren't getting deals so you have to work at it).

    As the saying goes excuses are like buts, everybody has one and they all stink.

    IF the numbers make sense for you then go for it.

  • Real Estate Investor · Desoto, TX · Member since 2013 · 560 posts · 528 votes
    13y

    Receive the pessimism, feed off of it, educate yourself in REI, then go do your thing! I was once pessimistic about REI until my wife convinced me otherwise. Heck, there are pessimistic people on BP believe it or not! Once I started to educate myself and learn from people who are in the business, that is when I stopped being pessimistic and starting seeing opportunity for financial freedom. I am a long way from it but so far I am enjoying the journey.

  • Greentown, IN · Member since 2012 · 140 posts · 18 votes
    13y

    You will find plenty of people out there that don't like real estate as an investment for one reason or another, most of them think it's too much work or they just don't understand it.

    Any investment has it's risks, you just need to educate yourself in your choice of investments.

    Me, I prefer real estate because it's something I can see, understand, and after our initial expenses to obtain and renovate a property... someone else pays for the rest of it for me!! What other investment can do that for you?

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    13y

    Hi Andrew,

    It is possible that your market is overheated or that the brokers and agents you talked to are just not wanting your business.

    I wouldn't call brokers or agents lazy all the time. Some are and others are very intelligent and know the time and value of money.

    If they only have so much time to work with clients and one wants a needle in a haystack for a small payday it doesn't make sense to take that business if you have larger deals where a bunch of property is available.

    It's just like an investor who does a flip on a house. Is the investor lazy because they do just a little work versus a gut rehab to make faster yield?? No they are not lazy just smart. If you can do a light rehab and clear 30k versus a gut taking a month longer for 40k then you are not getting much more upside for the increased aggravation and time. Everything has to be analyzed. If you have a broker or agent that isn't qualifying you and what you are going to purchase and return on the relationship and time you need to run very fast from that person.

    If the market is that over heated in your area you might have to adjust your anticipated returns or move to another area to buy for increased yield.

  • Landlord/Mentor · Baltimore, MD · Member since 2011 · 96 posts · 97 votes
    13y

    People are funny. They will do anything to discourage you and then a few years from now after you have worked your *** off, done tons of research, put 50,000 miles on your car looking for deals and in the process actually created a fantastic business they will tell you that you are lucky! Ignore the naysayers!!!

  • Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    13y

    Find a system/business plan that works for you, build a network around you who's supports your plan. I know this is a lot easier said that done but this was our method.

    Everyone other than our support group thought we were nuts and going to "lose it all". Now we are just crazy to a minority! Many people as our opinions. This site is great. They are very supportive and offer tons of different perspectives and markets.

  • Specialist · Las Vegas, NV · Member since 2013 · 639 posts · 176 votes
    13y

    The last person in the world you go to for RE investment advice is a Realtor or Broker, sorry to tell you. The highest and best use of agents for you is to take your instructions and then execute them.

    Treat those negative vibes like radiation and get as far away from them as possible.

    There are always opportunities in RE, it's just a matter of being committed enough to find them!

    Good luck with your investments!

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y

    I'm going to present the opposite side of the argument here than others (always good to hear a devil's advocate response :)...

    I have my real estate license. I occasionally work with investor friends/colleagues and make offers for them. In my main market (Atlanta), if a rehabber I didn't know (and many that I do know) asked me to start submitting offers on publicly listed properties for them, I'd politely let them know that they were wasting their time and by submitting offers for them, I'd be wasting my time.

    You see, there really are essentially no good publicly listed deals in that market. Perhaps 1 out of 100 listings is sold for a price where an investor could potentially make money -- perhaps even less. It really wouldn't be worth my time to submit those types of offers, especially if I were a successful agent who had other clients who could actually generate commissions for me.

    I'm not saying that I'd discourage anyone from investing (in general), but in many markets, an agent who refuses to make investors offers on publicly listed properties is probably doing the right thing in terms of not wasting their time and trying to maximize their income.

  • Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    13y

    @J Scott

    I agree that not all the good deals are on the MLS. I did a lengthy study of hundreds of deals that I did for my personal inventory and the MLS accounted for 25% of deals settled. I can assure you that not 100% of those deals was made at the asking price.

    Deals can be made off the MLS, but it mostly involves offering less than asking price. And it is still a buyer's market.

    One of the best type of deals and one of my favorite is property NOT for sale. I bought 2 properties from a co-worker who was being transferred out of state. the properties were not listed, advertised, no signs, etc. They very first day I found out he was transferred, I asked him what are you doing with your properties? I ended up buying both, one of which he financed 100% to me. It was 2 sweet deals and there was exactly zero competition.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    13y

    It all comes down to if an investor is wanting a great deal or the deal of a lifetime.

    That pertains to commercial, residential, etc. Basically any facet of real estate.

    Just like investors want houses really cheap so does some commercial buyers. Some are realistic and others are pie in the sky. I have had investors call saying they have cash and want a newer Publix shopping center with 60% occupancy. That's great their fund might find one of those after looking for years and years. Most banks will not take a sizeable haircut on a quality asset that has a chance of recovering if they just put payments on the back end for awhile.

    So as a broker and owner running a business you have to decide what you want to work on and not and chances of finding that property and a deal closing. You tell the buyers where the market is at and what they can expect. If the market is a 8 cap then realistically you can negotiate a 9 or better and squeeze out more juice with the structure of the deal.

    If they call saying they want fully performing at a 12 cap in an amazing area you have to bring them down to this planet. I am all for finding the best deal I can for my clients and myself but reality has to be part of the equation. If an investor wants to submit 100 offers to find the one that works then that is great for them to do it.

    What has always gotten me as a broker and investor myself is that investors are surprised that the brokers and agents that are closing deals and in demand will not submit not just low offers but not even close all day long to eventually land a sale (maybe). You can get new agents eating donuts at the office to maybe do that for a very small return for time invested.

    I understand as an investor what people are trying to do. For an experienced broker or agent it's just not worth their time shot gunning low ball stuff all over creation. That will get them shunned by the other brokers and agents listing property.

    Andrew just ask the brokers/agents why they feel you cannot land anything at that price. If the MLS properties are flying off the shelves then you will need to go off market or change your area.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    13y

    David that is the whole point if an investor wants to put in countless hours for 100 properties and get one for example and they make 30k then it might be worth their while. An agent getting an offer accepted after shot gunning for a 50k house and broker split doesn't make sense if they want to grow long term.

    If an agent transacted 100 deals a year at 50k and made 1,500 a pop that Is 150,000 gross. Say 25% goes to the brokerage then 150,000 - 37,500 = 112,500 gross before costs which will be substantial. It's just like property management in that the numbers do not make sense but if you look long enough someone will work for that. Investors need to accept that if they want to shotgun low offers all over creation an in demand broker or agent isn't going to jump up and down for joy wanting that business. The funny part is why investors scratch their heads wondering why an agent wouldn't want to do that........... : ) I am just trying to give another perspective to think about.

  • Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
    13y

    One of my mentors told me "Don't be a pessimist, Don't be an optimist, be a Realist"

    Stick to factual evidence, data, & avoid emotional attachment to financial decisions.

    A second thing he told me, "Understand & respect the power of human emotions & how it influences behavior, it is very predictable. When you do, you will never lack in opportunity.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y
    Originally posted by David Krulac:

    Deals can be made off the MLS, but it mostly involves offering less than asking price. And it is still a buyer's market.

    @David Krulac -

    Real estate is local -- don't assume that because you can still find deals on the MLS in your area that this is the case for all areas. If you were to go to Atlanta and start making offers on listed properties, I can pretty much guarantee that you're not going to find a high volume of deals. And it's certainly not a buyer's market -- for nearly every property listed, there are multiple offers these days.

    That said, if you were to go to some other places (like the Milwaukee suburbs, in my experience), you could find deals on the MLS all day. It's just a different market with a different investor demographic.

    Every location is going to be different, and trying to generalize on what others are seeing based on what you are seeing in your local market just doesn't work.

  • Binghamton, NY · Member since 2013 · 56 posts · 4 votes
    13y

    I appreciate all the help. To clarify a little bit about the original discussions with these agents: I never mentioned anything specific about wanting to low-ball offer for rehabs. I was merely making conversation about the market in general and I think they were painting a general picture of a troubled market and perhaps not high on REI themselves. Our area is economically an armpit. We've had two major floods in the span of seven years in which case hundreds if not thousands of homes have been condemned. On top of that the unemployment rate according to a labor board friend I have is about 10+% and poverty rate near 30%. That being said I THINK (just not sure) that there is a glut of 50K homes that are in bad shape in poor neighborhoods that even if cleaned up won't bring much more than 70K due to their location. They're all older homes approaching 80-100 years old...etc. There are many homes above 250K that sit because there are not buyers. The student rental market appears healthy but I'm not sure I want to play that game. I'm basically reading all I can, learning what I can and am committed to REI just not exactly sure where. Were I to have an extra several hundred grand laying around I'd probably scour any good market for a multifamily complex and put it into that and hopefully build from there, and use property managers. You folks are very helpful.

  • Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
    13y

    If you want to be wealthy listen to wealthy people. If you want to be broke...

  • Real Estate Investor · Milford, NE · Member since 2011 · 201 posts · 140 votes
    13y

    You'll be called names before you suceed and also after your successful, you'll need to get used to it. It all centers around jealousy in my opinion. No one thats struggling to make ends meet wants to see someone close to them succeed, they'll wish you well, but not to well. Only take advice from someone that is doing better than you are, pay no attention to the rest, they want you to be on their level, whatever that level is.

    Sean K

  • Durham, NC · Member since 2012 · 498 posts · 48 votes
    13y

    It is possible that your local market is just not that good for RE investment.

    Then search for opportunities nationally.

  • Real Estate Investor · Atlanta, GA · Member since 2010 · 126 posts · 43 votes
    13y

    All most realtors know is finding deals on the MLS. The people I know locally that are actually doing deals (which isn't many) are finding motivated sellers and off market properties. Most realtors can't help you with that. So I would have to agree when most people say the average agent isn't the best person to listen to when it comes to real estate investing.

    I just moved to Atlanta at the beginning of this year. In 2 weeks I will close on my 3rd deal in the last 5 months. I didn't know any agents, buyers, title companies, let alone what neighborhoods to target.

    Also it depends on your strategy. People who do only one strategy whether fix and flip, wholesale, or buy and hold, each may have a different outlook on the market.

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