In Rich Dad, Poor Dad it says: the people who hurry to catch the wave late usually are the ones wiped out. I wonder if that pertains to starting real estate investing right now.
Maybe I wonder because I haven't started yet (other than listening to the hundreds of podcasts here and looking on MLS, etc.). I have listened to many investors who have become successful in the last several years and think if I try to catch that wave now I will get wiped out just like the surfers in Rich Dad Poor Dad.
BiggerPockets is awesome but I wonder if all this info is right for how the market is right now and someone just starting out--compared to the thousands of people who already have hundreds of thousands to millions in equity.
Best of luck to all you who just sat and read my post.
Hey @Adam Rudolph , in real estate investing there are always deals around (even in a hot market). It just helps to have contingency baked in to help mitigate the risks. I recommend listening to the recent podcast with @J Scott (6 Rules for Investing in Real Estate in the Coming Economic Shift). It will help show you some principles to follow to stay away from a sinking deal. Best of luck with investing!
That podcast had some really great info. Those are the kinds of numbers I understand. Thanks for the tip!
At some point, you have to get started. Studying and researching is great but until you actually apply it to the real world it doesn't mean squat.
I think new investors should just start off small. Research and find a small deal to get your feet wet. This way the deal won't kill you. REI is a long term game. The money is made in an up market, down, and flat. You scale into the investments over time.
Now if you still can't jump in and get started it is usually these two reasons. 1 you lack confidence in your education. Podcasts BP are great but it doesn't really teach you everything you need. Only real life experience or a direct mentor can do that. 2 you don't have enough savings which are causing you to pause. If you had enough savings you can weather any storm.
You can't get wiped out if you are properly leveraged. BTW its never too late to get started. If the timeline is 30yrs, just get started in some way.
I'm guessing you're under 60. You could easily invest in rental property and be cash-flowing in under ten years if you hustle. Then you could live another 20 - 30 years off that cash-flow.
The best time to plant a tree was 20 years ago. The second best time is today.
Are you looking for buy and hold or doing a flip? I'd be very cautious starting a flip right now but if you can find a deal on a rental, the market really doesn't matter much.
I LOVE this!
Originally posted by @Nathan G. :
The best time to plant a tree was 20 years ago. The second best time is today.
Don't think of it as a binary proposition like "can I get super rich or not?" That's setting yourself up for failure right from the start because most people will never meet such a threshold. Try to approach the ideas from the book more for the prospective of, "How can I make things incrementally better?" In other words, don't worry about if it's too late to acquire 1000 units and go buy a yacht with the residual income. Worry about how you can buy the first unit and immediately put yourself in a better position than all the people who never get past the starting line.
There are plenty of investors that jumped in at the peak of 2006, made it out, and have become very wealthy over the past 5 years.
"the people who hurry to catch the wave late usually are the ones wiped out"
This probably pertains to the people who just jump in thinking its a walk in the park, because everyone else is doing it. REI is hard work, so I found. I jumped in during the "craze", so I try to be extra careful. I definitely wont buy a turn-key property out of state and rely on somebody I don't know to manage it. I will however buy a property 10min away that needs to be rehabbed. In that case i have more control.
Im always thinking equity. I don't want to borrow from the banks, but I have to. So how much equity can I add to a property to lower that LTV? Am I managing well and placing reliable tenants? Can I take a hit on rent reduction during a downturn and still come out on top? These are some things I ask myself.
Great question Adam. I learned from reading your thread. Thank you!
I absolutely agree with what everyone else has already said. The people getting wiped out in the "wave" are the ones who caught the wave with no idea how to surf! If you educate yourself (and actually take action on that education), you can succeed in any market conditions. Buy right, know your numbers, and you'll be just fine!
How do you find deals that aren't on the MLS? Drive around neighborhoods?
Simplify the process. Buy smart. Harden your property when the time is right. And prepare for longevity. This is a long game. While cash flow is nice I think most people won’t see the fruits of their labor until their properties are paid off by their tenants in 15, 20 or 30 years. Your initial investment will yield great returns down the line. Don’t let all the outside factors prevent you from success.
The market conditions dont dictate your success, your ability to properly mitigate risk does. As previously stated, you can make money in absolutely any market condition if you've positioned yourself properly. 2008 taught a 1 dimensional lesson in a 4 dimensional world. All of those that lost their asses had positioned themselves poorly because of bias and poor leveraging. Try to readjust your perception of how the real estate market works. It doesnt work like the stock market, it really isn't about "getting in at the right time".
Market conditions dictate 2 things, how fast can I get out of an asset and how much can I realize off of its liquidation. Ultimately there are only 2 ways to get burned, over paying and over leverage. And the main thing that creates those problems is by getting emotional over a deal.
This game is hella fun and can make you very wealthy but it can also make you its b*tch if you're careless. Ignore the hype, check your emotions at the gate and invest smart and you'll have it in the bag.
I think that rich dad quote was related to stocks not real estate .
@Adam Rudolph real estate Investing is a marathon not a sprint. The market is a cycle and trying to time it is futile. In any market there will always be a deal under a rock, the key is to get good at turning it over. That’s why finding motivated sellers is one of the best skills to acquire. Happy Investing!!
The worst thing you could do at this point is not take action.
While you may not reap all of the benefits from real estate investing in your lifetime is there a possibility your posterity can benefit? Many investors invest for legacy not just for the immediate future of their lives.
Think of it this way. Imagine yourself 5 or 10 years from now. You are looking back on the decision you made this year to invest (or not). If you invested, do you think that you are likely to be glad that you did?
This game is rigged in our favor over the long haul. Some people make money quickly. Many of us do it over a long period of time taking advantage of inflation and rents paying down our mortgage.
As long as you buy a property with positive cash flow you should be fine even if the market softens for a while.
@Adam Rudolph The key thing is real estate isn't a fad or specialty investment. It's not "a wave" it's the ocean...
My point is real estate isn't going anywhere and you haven't missed out. As everyone else has said the key is creating and finding deals.
Robert did say the housing will crash and he’s holding back but a lot of people I know didn’t stop investing. Remember investing with long term strategy is not speculating.
It’s never too late to start. Flipping is profitable in all cycles of the market. You’re always buying properties at discount relative to after resale value!
Start with a small cosmetic flip!
@Adam Rudolph I believe it is late in the game. It’s not easy to find a good deal today but not completely impossible. Just make sure when you do your underwriting you don’t assume huge rent increases and small cap rates on the exit. Assume things aren’t going to go well and wrote that into your model and you’ll do fine on the deal.
Since you are referencing Rich Dad Poor Dad I am assuming your investment strategy is a rental portfolio. Building assets. You should read Cash Flow Quadrant if the rental market is your strategy. There are opportunities in every market. The key is education.
Attend local REIA meetings and learn as much as possible. When you have the opportunity attend local property tours and learn from others on acquisitions, rehab and rent. Add refinance and repeat you are in the BRRRR strategy. Being able to determine the difference between buying as a homeowner v an investor is critical. Start when you are ready. The real estate market is always changing and evolving. Start now and choose wisely. A mentor can guide you if you need that little nudge and hand holding.
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