90% of Bigger Pockets will never take action on REI

78 Replies

Today is Thanksgiving. Lots of time to talk shop, politics, or real estate investment with family and friends. I just spoke to acquaintance of in law, and he mentioned purchasing home within a year. I spoke to him about repairs and the need to get good at repairs or need to pay someone. The look on his face was glossed over. It's fine, its just small talk.

However, it got me thinking, I speak to a lot of people, family, friends, co-workers, and even people on BP. Only 10%, one of ten, people that I come into will ever take action and buy real estate as an investment. This percentage is also what Brandon of Bigger Pockets says.

Why is this? Of course real estate is just one investment tool, but historically it is the greatest wealth builder. Also, the current market conditions are good in terms of interest rate, economy, jobs, etc. I get the talk of peak cycle and future will be down turn. However, I think there is a still a good 2-3 years upturn, then can re-valuate again.

Terry

the easiest thing to get into and understand is the Vanilla transaction  IE buying rental property.. everyone can understand it and it is a VERY VERY simple concept.. buy a property rent it out.... end of mental math.

choosing wisely is important of course.

but basically there is so much more to real estate than owning a rental.. and much of it quite a bit more profitable than rentals as well.

Some people just don't want to be landlords... ergo you have people that invest in debt.. and COC debt is usually more profitable than rentals with quite a bit less hassle.

there is development deals for the more sophisticated.

there is flipping

there is new construction.

Timeshares.

Timber

mortgage industry

Guru / Trainer  

Mobilehome parks

Tiny homes  ( new thingee that is getting some speed)

Land business  recreational and path of progress

courthouse steps buying and reselling

Tax sales/  pre and post

on and on and on... so just because someone does not want to do the most simple transaction out there and the one that takes the least amount of thinking to understand the concept.. does not mean they won't do something else in and around real estate

Its jus so much easier to invest in a mutual fund... no real learning to the extent that property does.

I agree, so many think its a great idea, but there are a lot of hurdles to jump over.  Loans, money, repairs , inspections, flipping, agents, property managers, tenants. 

I have no desire to be a landlord, for now.

With that said I have a background in design, project management and construction. All of these things tailor themselves to flipping, so that is what I do. I speak with people often who want to flip, or plan to flip. A lot have zero real estate or construction knowledge, and even some have no money. They say they will or they want to do it, but without any knowledge, they usually don't ever pull that trigger. At least the ones on the forum are doing their homework, so maybe they are making the correct choice in not investing.

Frankly the day when the number goes below 90%, I'll get nervous.

The response of “I don’t want to be a landlord now” is more of an excuse in my opinion. If done correctly successful and wealthy investors understand the importance of a good property manager. When in place, you the landlord collects the checks and ever now and then advise the manager on what you want done.

@Terry Lao , My guess is the fear that comes of for people keeps them from investing.  Also, It isn't easy.  It takes work to learn and then do it.  Many people are used to listening to people telling them what to do and what they will get for doing it and they want a guarantee that they will get payment for their services.  Real estate is not a guarantee on making money.  Many people won't work unless they are guaranteed that they will be paid for their time.  

Truly I think it is about mindset that keeps people from investing.

@Shiloh Lundahl

Thanks for your response to post. Fear is one element, but with knowledge, can limit. My wife is still afraid of dark, and sleeps with night light.

The bigger fear is not doing something. That 1% at bank won't get you far, but at least it is guaranteed.

Terry

Hello, @Terry Lao , Happy Thanksgiving to you and your wife.  :)

1% at the Bank?  You mean .001%.  Nothing like making $1.00 and 13 cents on your 10 grand in the Bank. Yikes!

Real Estate for wealth creation, for sure.

Best of profit to you!  $$$

@Terry Lao , You may be supposing fear is logical and can be overcome with knowledge. However, fear/perceived danger is registered in the brain stem before it gets processed in the frontal lobe of the brain thus activating the flight, fight, or freeze response. In many people it activates the flight response. Therefore they do what others are doing by investing in the stock market looking for safety in numbers. That’s just my opinion.

This post has been removed.

Originally posted by @Christine Kankowski :

Its jus so much easier to invest in a mutual fund... no real learning to the extent that property does.

I agree, so many think its a great idea, but there are a lot of hurdles to jump over.  Loans, money, repairs , inspections, flipping, agents, property managers, tenants. 

 What is a mutual fund? 

@Justin Folkins , it goes along the lines of not wanting to do a lot of different things. I could be a mechanic, I don't want to be one. Not sure it is an excuse... just not something I personally want to be. At this moment, who knows what the future holds! I read enough horror stories on here about vacancy, large amounts of damage between tenants, evictions and other issues. Sure not every landlord deals with it all the time, however it is part of the business... 

There are obviously many reasons for inaction. Some find out the high risk combined with hard work does not fit their wealth wishes, some obviously are simply dreamers not doers and of course some think it is a way to get out of debt which could not be farther from the truth. These are only a few of probably hundreds of reasons why they never move forward.

I believe most simply do not have the drive to work which is why they are where they are in life.

Those living pay check to pay check do so by choice and always will.

I believe it's because most people don't want to get away from the beaten path - ie. they like to follow the 'proven path' of go to school, get a job, work hard, pay of your house and retire. 

Real estate investing requires people to make their own decisions, regardless of how many seminars they've taken, saying 'do this' and then 'do that' and then you'll have this much money. 

Most people simply aren't doers or entrepreneurs. Nothing wrong with that, but that's how it is.

Real estate looks easy but there is much more you have to learn in order to do it right. 

It is uncertain I will have a paycheck and it takes some decent work. 

One thing I rarely hear people mention is the stress of committing yourself to a goal. Most people have no real goals in life from what I see. They have wants but a goal is a want that you commit to. Most people in my life think I am a hardheaded arshe but that I get things done. I take pride in that but this whole real estate business is nerve racking. What keeps me alive is just seeing what is around the corner and I dont think most people have as big a desire to do that. You can calculate it as much as you like but that first property is a risk because you havent had any of your book learning or advice proven to you via results. Get 5 deals under your belt and life probably looks easy in hindsight but that is the primary existential problem; life can only be lived forward but you can only explain it looking backwards. You just never know where your decisions will lead you and that is intimidating so most people make no choice at all. 

its jus so much easier to invest in a mutual fund... no real learning to the extent that property does.
I agree, so many think its a great idea, but there are a lot of hurdles to jump over.  Loans, money, repairs , inspections, flipping, agents, property managers, tenants. 
 What is a mutual fund? 

Well, according to Tony Robbins a mutual fund is an investment device that underperforms the market 96% of the time so they are basically a scam. An index fund is the best way to go.

As far as this post goes...I don’t think I’ll ever understand why so many people don’t take action. I’ve been renting rooms (as a tenant) for about 9 years and in that time I’ve been dreaming of the day I could buy my own house and do the exact same thing. Well, I’m 47, literally walked through hell and back, and am finally about to buy my first house. I’m off to the mf races people! My credit score is over 800 and once I get my first house it’s on like donkey Kong! Someone posted that he’d be nervous if the statistic ever dropped below 90%. So, I guess his perspective is if only 10% ever seriously take action then that means there’s less competition for those 10%. I don’t know if that would be true or not. All I know is I’ve been waiting for a very long time for some very negative and obstructing circumstances to clear up so that I might become a real estate investor. That time has finally come and I’m full of gratitude to finally be able to get started. I wish the 90% who will never take action well. I truly and sincerely wish them well.

Most people do what they want...and wishes are not wants.  I know a lot of very happy people who do not spend their free time looking to get ahead financially...they think we are crazy.  Real estate is not for everyone and that's totally fine...we all have different goals. 

We should stop referring to REI as investing and call it business - which it is. Investing is relatively simple, passive and familiar. Business is unfamiliar, complicated, risky, scary, time- and labor-consuming, etc.

So, this is the shortest answer to your why.

For me, I have a strong desire to get started and have been educating myself while trying to align with mentors to help me start.  The biggest barriers I have are very little money down and people trying to point out everything that could go wrong instead of helping me figure out how to find solutions to do everything as right as I can.  The latter doesn't stop me, but the former is the most pressing thing.  

I have read about the many ways that I can invest with little money down, but its still scary as I am a single parent and have two little people relying on me.  On the flip, working my 9-5 is not going to get me where I want to be and I am not afraid of sacrifice or taking risks.  

I have a plan to approach a local investor with over 200 properties who has two homes in my neighborhood, one of which has been vacant for over 2 years. When I first inquired with him about it, he stated that its not on his list to rehab yet. I plan on making him an offer since I've done my research and know that it can be a great cash flow deal.  He keeps blowing me off, but I am persistent since it can't be of much value to him since it has been vacant for so long. The other property has been unoccupied for 6 months but has mold in it.  At any rate, when I secure financing, then I will make him an offer and hope he accepts. The house is worth about $30K, so if anyone has any ideas or suggestions, I'd love to hear them.  

Thanks in advance for any insight you can provide this newbie on a mission. 

@Terry Lao

90% will not take action. Of the 10% who do take action, the grand majority will only do one deal. Only 1% will ever do 4 or more deals.

This isn't a bad thing, it's just a fact of life in every skill, job, or profession. There are very few people who take the steps necessary to reach their goals. There are also masses of people who only go so far.

I still have a normal job, but making efforts everyday to learn and grow my real estate portfolio and hit my financial freedom number. I try to explain the concepts of leverage and OPM to my coworkers and their mind is not ready for growth/learning. They are still in the mindset of Dave Ramsey of paying everything in cash and consumer mentality of buying things for themselves. I told them that the ability to save and invest is more powerful than the next vehicle mod, vacation, etc. Their response to trying to get into the market is that they don't want the phone calls or the hassles of owning rental property or investing in RE. One coworker even made a joke that one day when they are both old working at the office in their cubicles, they would ask about whatever happened to me (coworker that spoke to them about REI and sitting on the beach somewhere on a Monday morning). His comments made me chuckle inside, but also makes me sad when people that you care about don't take action.

I don't want to be in my 60s with failing health and having to work for someone else in order to meet my monthly obligations.  The more people that don't take action, the better for investors as less competition for deals.  I plan to retire overseas and be mobile and let my real estate portfolio pay for my living expenses/travel.   

Originally posted by @Rachel Murphy :
Originally posted by @Christine Kankowski:

Its jus so much easier to invest in a mutual fund... no real learning to the extent that property does.

I agree, so many think its a great idea, but there are a lot of hurdles to jump over.  Loans, money, repairs , inspections, flipping, agents, property managers, tenants. 

 What is a mutual fund? 

 A mutual fund is an investment vehicle where investment companies, such as Vanguard, Fidelity and others pool resources from many investors and invest that pool of funds into particular investments. Quite often they invest in stocks, though can invest in bonds and even real estate ventures. They typically have a particular strategy, such as municipal bonds, large cap stocks, small cap stocks, certain sectors of business, etc.

The conventional wisdom these days seems to be either

- I don’t like real estate. It’s too much of risk and hassle. I am happy with my equity and cash portfolio.

Or

- I will read Kiyosaki, Invest in real estate, get very rich and retire early.

Both are extremes. Something in the middle is better.

Originally posted by @Terry Lao :

 I speak to a lot of people, family, friends, co-workers, and even people on BP. Only 10%, one of ten, people that I come into will ever take action and buy real estate as an investment. This percentage is also what Brandon of Bigger Pockets says.

 I once heard that 58.6% of all statistics were made up.  ;)

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