Why Do You Young-ish Entrepreneurs/RE Investors Fail?

74 Replies

I cannot count how many times I've seen a post on BP from someone young-ish saying how they just want to quit college (or their job) and "jump" into Real Estate. When I see these posts my brain immediately chuckles (not me because I am a nice person, but my brain is kind of judgey).

As an entrepreneur, I feel like some people (young and old) cannot fully appreciate the level of commitment required to take on REI and be really successful at it.

Apparently, the facts are in: young entrepreneurs are more likely to fail than their older counterparts [Research: American Institute For Economic Research].Read more here: https://www.aier.org/article/its-a-disservice-to-urge-young-people-to-become-entrepreneurs/

Snippet from the article: "It turns out that succeeding in business is extremely difficult. It takes maturity above all else to achieve it."

QUESTION: Do you agree that younger RE Investors are more likely to fail than those starting at an older age

@Ola Dantis Absolutely, I'm a younger guy and the only reason I've (so far) been successful is because I started running businesses when I was 15 years old and managed a farm & rental properties for my boss at the time. My peers constantly tell me they want to get involved in RE but they have no life experience and do not understand the level of commitment it takes. Additionally, many of them do not have the proper "why" to motivate them.  

In real estate specifically I see newbies talk about how they want to wholesale to start and my initial reaction is "they're never going to do anything". Wholesaling requires the same set of skills as commission only sales roles (i.e. ability to handle rejection constantly, effective communication/persuasion skills, working 24/7, etc). 

So yes, I believe the article is 100% accurate. You need life experience, maturity, and a strong "why" to build a business. 

-Dan

I wouldn't want to paint any age group or generation with too broad of a generic brush, but here are a couple thoughts from the moderately dusty.

Excellence in anything requires a strong why and passion.  Just running from something you don't like, having an ideal or wanting $× per month passive won't cut it.  Ask yourself why 7 times to get close to your true reason.

Younger people usually don't have enough experiences to know what they truly want or don't want.  I had many 'character building' opportunities to discover where I didn't want to be and some for where I do.  More experiences will direct better, obviously.

Capital. Most younger people, me included at that stage, don't have a lot of capital or relationships with quality older people to leverage. Easy to drown in shallow capital waters. Easy to give up without a strong why.

Originally posted by @Daniel Haberkost :

@Ola Dantis Absolutely, I'm a younger guy and the only reason I've (so far) been successful is because I started running businesses when I was 15 years old and managed a farm & rental properties for my boss at the time. My peers constantly tell me they want to get involved in RE but they have no life experience and do not understand the level of commitment it takes. Additionally, many of them do not have the proper "why" to motivate them.  

In real estate specifically I see newbies talk about how they want to wholesale to start and my initial reaction is "they're never going to do anything". Wholesaling requires the same set of skills as commission only sales roles (i.e. ability to handle rejection constantly, effective communication/persuasion skills, working 24/7, etc). 

So yes, I believe the article is 100% accurate. You need life experience, maturity, and a strong "why" to build a business. 

-Dan

Oh, Dan, this is very interesting! And thanks for sharing. 

You said something that you skipped over: You managed a farm and rental for a boss

Do you think that "apprenticeship" even at a very age helped you a lot in your journey? There is this consesus that many young people don't want to answer to a boss. 

 

Originally posted by @Steve Vaughan :

I wouldn't want to paint any age group or generation with too broad of a generic brush, but here are a couple thoughts from the moderately dusty.

Excellence in anything requires a strong why and passion.  Just running from something you don't like, having an ideal or wanting $× per month passive won't cut it.  Ask yourself why 7 times to get close to your true reason.

Younger people usually don't have enough experiences to know what they truly want or don't want.  I had many 'character building' opportunities to discover where I didn't want to be and some for where I do.  More experiences will direct better, obviously.

Capital.   Most younger people, me included at that stage, don't have a lot of capital or relationships with quality older people to leverage.  Easy to drown in shallow capital waters. Easy to give up without a strong why.

 Thanks, Steve. LOL @ moderately dusty! 😂 I call it wisdom!

I think a lot of people see the whole "Get started in Real Estate with little to no money down" but without the context of everything else that comes with that. For instance, a wholesaler may spend $5k on marketing to get a deal closed. 

Maybe we, real estate investors, should start changing that narrative. 

Originally posted by @Nicole Heasley :

I'm 28 and just put an offer on my 4th property--do I qualify as a young entrepreneur?

LOL... Based on the article, at the age of 35 your probability of success increases. 

So, yes, you are one of the young ones crushing it!

What is your secret sauce? Please spill the beans...

@Ola Dantis Absolutely it helped, he was an economics professor and owned several businesses on the side and I learned a tremendous amount from him. 

Growing up I had to pay for my cell phone, car, insurance, college education etc. which forced me to start working young. Although I was not happy about it at the time, I'm glad that was the case now. Most millennials had all these expenses paid for by their parents growing up which ultimately cripples them as adults. 

I love your hesitation to label a generation, @Steve Vaughan . There's way too much of that happening these days. At the end of the day, there are rock stars and crap bags in EVERY generation. There always has been, and there always will be. There are so many things that younger generations are doing better than older ones. I also agree that lack of capital and experience are factors. 

Naivety is also a factor. Younger people are more easily swayed by elders who, of course, tend to be more conservative. Entrepreneurship isn't secure or easy. Naturally, parent-figures are going to push their kids into college, which they believe is the safe route despite mounting evidence that's it's a financially poor move. 

Then you have the impatience produced by our Netflix-binging, Amazon-primed, bring-my-groceries-to-me society. Success in anything, especially entrepreneurship, doesn't typically happen fast. Social media, texting, and e-mail are great, but they're destroying our social and communication skills. Every time you order your pizza online rather than picking up the phone and dialing or, heaven forbid, pick it up in person, you miss out on an opportunity to interact with other human beings. And sadly, that's something all generations will need to practice doing more and more. 

Honestly, this could be A NEW FORUM TOPICSocial media, texting, and e-mail are great, but they're destroying our social and communication skills.

Couldn't agree more @Nicole Heasley . I watched Public Figure on Amazon, a documentary about Social Media influencers, and I worry about my 2-year-old daughter and their generation. 

@Ola Dantis my coworker called me a "fake millennial" the other day. I hate avocados and still keep phone numbers and addresses in a paper address book (which was incredibly hard to find). 

Kidding aside, I credit my success to my social skills. I love face-to-face interaction with new people. 

@Daniel Haberkost I got my first job at the age of 11. I had a paper route and cleaned my grandpa's house for him. I don't get why parents would want to pay for their kids' stuff. Why wouldn't you want to invest that money? Whenever those articles come out about how high the average cost of raising a child has become, my first thought is always, "Stop buying iPhones for your twelve-year-olds and it won't be that bad." 

@Steve Vaughan I think you hit the nail on the head, at least for me. I didn't have a strong enough "WHY" until my kids were born and I realized how much I love volunteering as a firefighter. I don't think my "why" was strong enough in my 20's to give me the resolve and persistence that I have now.

@Ola Dantis My coworker was complaining about her middle school-aged daughter, step-daughter, and some brawl that had started between them and their friends on Instagram or some other app. If she didn't give her kids smartphones and was more proactive about her kids' use of social media, she wouldn't have anything to complain about. I'm not a it's-always-the-parents'-fault kind of person, but when I see these kids with these devices, I don't see anyone else to blame.

Succeeding at younger versus older has nothing to do with generations - i.e. boomers, millenials, etc.

I agree pretty much with everything @Steve Vaughan says above (why it won't tag you I have no idea). 

Things going for you when you are younger (everything is generalizations): no family obligations, unbounded energy, a mind that is not jaded/an open mind, a willingness to experiment, geographically mobile, lots of time.

Things going against you when you are younger: no money, no experience, no track record, unknown interests/abilities, no societal acceptance of ability. 

Things going for you when you are older: access to capital, life experience, honed interests, network of support, societal acceptance of standing & position.

Things going against you when you are older: geographically impeded, family obligations, developed biases & notions, less time.

You can see that the things needed for successful entrepreneurship tend to be divided between the two camps. Not set in stone - you can be young and have had all kinds of experience, or be old and be broke - but by and large it's true. 

Not to give the generic answer, but it comes down to a lack of competitive advantage, but that is why most people fail in business.

Most of the reasons @Steve Vaughan mentioned are the reasons that people get into positions that they don't have competitive advantage; not knowing what they are passionate about, not having a strong enough why forged in life experiences, lack of perspective on both the upside and downside, confusing profit and cash flow, ect.

It does stand to reason that younger people would be more likely to suffer from these faults, since they haven't had the time to learn from others or their own experiences.

Originally posted by @Nicole Heasley :

@Daniel Haberkost I got my first job at the age of 11. I had a paper route and cleaned my grandpa's house for him. I don't get why parents would want to pay for their kids' stuff. Why wouldn't you want to invest that money? Whenever those articles come out about how high the average cost of raising a child has become, my first thought is always, "Stop buying iPhones for your twelve-year-olds and it won't be that bad." 

I couldn't agree more! It's insane the way parents feel they have to pay for things like an Iphone/car/etc. So many of my peers graduated college without ever having worked a real job. That's a terrible way to enter the real world. 

And I'm from (near) Cleveland originally, where do you have your rentals there?

-Dan

 

@Nicole Heasley First and foremost, your posts are making laughed so hard here. 

And wait, what? You don't like avocados and you write things on paper??!!! Who are you? We are taking your Millennial badge with immediate Amazon prime effect! 

I'm a full-blown Millenial as I shy away from paper and you know I'm dropping one avocado + some organic wheatgrass in my morning shake...! 

I totally agree about smartphones (and devices) for really young people! My father in law bought our daughter an iPad and now I think she is addicted to YouTube on it. To be honest, it can be a lifesaver sometimes, but I always wonder at what cost? I am trying to shift blame to my father-in-law here since he's not on BP anyway, lol. Though I am trying so hard to limit her use every day, I cannot lie it is a struggle.

@Ken Swearengen Kids will give a why pretty quickly that's for sure. 

@JD Martin  I really like how you broke that down. 

@Daniel Haberkost There's a huge difference in the success of my peers who were handed more and myself/those handed less. 

I work in Beachwood and still own my former primary in University Heights. 

Originally posted by @Nicole Heasley :

@Daniel Haberkost  I don't get why parents would want to pay for their kids' stuff.  

The parents are doing it for themselves, not for the kids (it actually hurts the kids). It makes them feel good. Their identity is tied to it. And it's easier (in the short run) to give people what they want.

Ola, those college drop-out posts are full of limiting beliefs on debt, time, and opportunity cost. The rest of the BP membership have full time jobs, families, real estate portfolios, and other stuff going on.

Originally posted by @Steve Vaughan :

I wouldn't want to paint any age group or generation with too broad of a generic brush, but here are a couple thoughts from the moderately dusty.

Excellence in anything requires a strong why and passion.  Just running from something you don't like, having an ideal or wanting $× per month passive won't cut it.  Ask yourself why 7 times to get close to your true reason.

Younger people usually don't have enough experiences to know what they truly want or don't want.  I had many 'character building' opportunities to discover where I didn't want to be and some for where I do.  More experiences will direct better, obviously.

Capital.   Most younger people, me included at that stage, don't have a lot of capital or relationships with quality older people to leverage.  Easy to drown in shallow capital waters. Easy to give up without a strong why.

 Definitely agree with you on capital and having a strong network. When I started I didn't have much in the way of capital and when I my first major repair came another one came shortly after it. Ended up going into debt to cover the costs. And I had no network with any reliable handymen at the time to try and negotiate costs with.  3 years later and I've finally paid down that debt and developed a network. Now it's time to save and find my next deal. Many younger investors don't make it through something like this or don't have a strong enough passion to continue after experiencing some adversity. I am grateful for this bad experience though, it helped me learn a lot and I don't plan on making the same mistakes again.

Originally posted by @Nicole Heasley :

@Daniel Haberkost There's a huge difference in the success of my peers who were handed more and myself/those handed less. 

I work in Beachwood and still own my former primary in University Heights. 

 Agreed, I'm from Medina (mostly upper middle class) but I was the poor kid. Beachwood and University Heights are nice but those property taxes are painful!

I'm a millennial. I started my investment journey when I was 25. I've got 17 units currently with 4 more under contract. I think the biggest mistake anyone of any age makes with real estate investing is expecting to get rich quick. It's definitely a get rich slow (if at all) game.

Plus a lot of people want to get out of their corporate gig (which I did), but they don't realize that being an entrepreneur is massively more time consuming than a standard 9-5. A lot of people just don't have the discipline to get things done without the structure of having an office and a traditional boss, so they let the time pass without doing the things that need to be done to scale, and end up right back in that office they hated so much.