Is Bigger Pockets Creating Unrealistic Expectations For Investors

Chehalis, WA · Member since 2017 · 36 posts · 8 votes

9y

I think we the newbies should educated ourselves about investing in real state and not blame BP for our mistakes that we may make you don't jump in the river unless you kmow how to swim

2 Reply

Kent Harris

Real Estate Investor · Katy, TX · Member since 2014 · 81 posts · 20 votes

9y

I think these flip shows give unrealistic expectations on what you can get on a flip. I made $30,000 on my first flip. You would think it was a $200,000 home. In fact it was a house I picked up in the Ghetto for $28,000 and sold it for $60,000, six weeks later. The house was completely stripped even the copper was gone in the walls! My renovations costs were $1,000. I hired a clean out crew and did landscaping that was it. Flips are not my main business. If it takes me longer then 30 minutes to drive to a property I will not hold it for a rental. In the past 3 years I have only done 4 flips.

What the flips shows don't tell you is the tax implications of short term capital gains. I lost money on 2 of the 4 flips I did. With rentals if you make a mistake you can recover your money from rent income and would have to hold it longer. On a flip it's a one shot deal. You either make money or you don't.

2 Reply

Account Closed

Investor · Cleveland, OH · Member since 2015 · 150 posts · 58 votes

9y

@Russell Brazil

People are always going to have unrealistic expectations. There are also a lot of lazy people that do not want to work to build wealth. They see someone who has built a successful portfolio and has a team in place that works well and it looks like easy money. They do not see all the work that goes into getting started and getting the properties stabilized.

I would argue that BP helps bring out all the difficulties and obstacles investors face so that they have a better idea of what they are getting into.

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John Thedford

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

9y

I would not blame BP. Unrealistic expectations are due to a lack of education, and there is only one party that can be blamed for that:)

Here are a couple of examples:

https://www.biggerpockets.com/forums/93/topics/436...

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David Dachtera

Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes

9y

Originally posted by @David Grabiner:

@David Dachtera I was wondering why so many of your posts referenced the benefit of paid education and then I looked at your profile and saw my answer.

That's right! I'm a big believer in full disclosure.

2 Reply

Brian Nordman

Oregon, IL · Member since 2016 · 104 posts · 32 votes

9y

@Russell Brazil I think that it depends. If you're a newbie and the only information you are getting is from people telling stories within the forums, then I would say it is a possibility that they could be taking away too high of expectations. There's no real way to validate whether every "success story" on here is true. But as a newbie you have to do your own due diligence. I think in the BP Podcast, @Joshua D. & @Brandon Turner do an amazing job of bringing us back to the norm. They often times have very successful individuals on their show who have had a crazy deal in their favor at some point. Or took on insane risk and had it work in their favor. But what Brandon and Josh do is they constantly advise that if you are new to investing they would not advise following in those same footsteps and that this journey that we are all on is not a "get rich scheme." So for the people who are coming to you with unrealistic expectations, I would have to say it is because they have selective hearing and are being too naive to go out and do their own research. In my opinion, that is more on the individual investor than on BP.

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Frank C.

Rental Property Investor · Aiken, SC · Member since 2017 · 41 posts · 14 votes

9y

@Russell Brazil

There is no way you should blame BP for unrealistic expectations. As a whole, the company goes out its way to properly educate and keep new investors grounded in reality. Yes, there are stories of great success on the forums, podcasts, and blogs. Just like the illusion of beginners luck, the losers drop out and are never heard from again. As a newbie, I think BP has gone to great efforts to emphasize the risks, the pitfalls, and the fact that REI is no get rich quick scheme. Do you have to look for good deals? Yes. Success is not going to slap many people in the face like in "09. I know I have to dig, and hustle, and continue to learn. Mistakes will be made. The biggest mistake is not to try. BP is encouraging people to get in the arena, not to be (to paraphrase) a cold and timmid soul who neither knows victory nor defeat.

1 Reply

Chris Eaker

Buy and Hold Investor · Knoxville, TN · Member since 2013 · 450 posts · 270 votes

9y

I was talking to a wise, old real estate agent friend of mine once about how I had been programmed in the early 2000s NEVER to pay market price and ALWAYS buy at a discount. That mindset had hurt me because I was not able to find the deals I felt I needed at the price I felt that I needed. His response was don't worry so much about buying at a discount. It's all based on the numbers. If the numbers work on a market priced house, they work. I think newbies (I was the same way) get hung up on buying at a discount and don't look at the whole picture.

5 Reply

Josh Bigio

Real Estate Investor · Largo, FL · Member since 2016 · 6 posts · 2 votes

9y

@Russell Brazil Fantastic comment and question! It generated a lot of interest, including from me. My humble opinion, Blaming anyone or an institution whether it be HGTV, or BP, or the government, etc is not appropriate. RE markets are vastly different across the country and the talent and production of individual investors across the country are vastly different. These factors will determine the results achieved. Promotional sites and educators free or paid have their place and ultimately if they don't provide value to the market they will soon be out of the market, i.e. Capitalism, cold but fair.

@Chris Martin nailed it when mentioning a market correction. No one can predict future markets but I have been in RE before, during, & after, the great recession (and currently). I think one would do well by considering Warren Buffet's (greatest investor of all time) quote "Be Fearful when others are greedy and greedy when others are fearful". If one were greedily buying Real Estate in 2009-2012 that would have served them well. Now many are greedy....prices have risen and good assets sold at a discount are less plentiful. Yes local markets are different, yesthere are always possible deals, but we are treading very cautiously.

0 Reply

Dave FosterBusiness Member

Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes

9y

@Russell Brazil Your imitation of the the thinking of today's investor could have been written in 2005. Bigger Pockets wasn't around in 2005. So I'm guessing our biggest problem is ...us. People are people.

Which is why some people make lots of money and some contribute so others can.

The 1031 Investor5137 Reviews

Website View Page

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Sam Levine

St. Louis, MO · Member since 2017 · 18 posts · 12 votes

9y

@Russell Brazil A lot of good points here. I think the thing people like to overlook is that these amazing deals highlighted on the podcasts or success stories require a lot of effort.

That is exactly why they are amazing; they are so outside the norm due to the large amount of effort or effective systems put into place by the investor. People should be looking at these deals as the pinnacle of what they can achieve rather than the norm. Something to be aspire to, and be inspired by.

I believe Josh and Brandon do a good job highlighting this in the podcast, but it can be lost among the noise in the forums.

My two cents.

2 Reply

Bryan Reid

Real Estate Agent · Lexington, KY · Member since 2017 · 68 posts · 44 votes

9y

If anything, I would say the BP community is pretty good at speaking out against unrealistic expectations.

If I had to pick a specific party responsible for floating the idea that you can get rich quick by doing a few easy flips, I'd point the finger at HGTV and the 'gurus' out there.

But mostly, I believe there is always a segment of the population who will latch on to any fairy tale that promises huge rewards for minimal effort. That isn't a new phenomenon.

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Jeffrey RittenourPro Member

Investor · Rathdrum, ID · Member since 2017 · 12 posts · 10 votes

9y

Realistic thinking is based on what others think is possible—but they are not you and have no way of knowing your potential and purposes. -grant cardone 10X

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Sam Shueh

Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes

9y

Majority of postings are successful stories. Very few want to admit he failed or lost money.

I get calls constantly by investors. There are BP members here actually close to my city of business. They want good deals, steals. My ans is always please come to the office. Those with a realistic expectation and proof of funds get professional help from me.

"I am looking for a pocket listing, do not want to compete with others. I will pay cash. It needs to be 75% on a dollar after repair". I politely respond I work with all investors. They have deep pocket. I introduce to one at a time. You do not respond the next guy will come along.

Majority do not have the courtesy to stop at our law firm. I have financial planners brag they can get 30% return from equity and seek even higher return. Majority have no money. They come with a hard money letter. I see same people talking to other professionals. A few go direct to home owners etc and strike a deal directly after you showed them the deals.

Sam Shueh

Campbell, CA

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Ben S.

Investor · Tampa, FL · Member since 2017 · 122 posts · 87 votes

9y

This is a big forum with lots of posts. Anyone can selectively see the posts they want that give an unrealistic perspective. If you take it as a whole, along with the podcast and blog and such, I don't think it creates anything unrealistic.

As others have mentioned, there are a lot of newbies here, so someone has to be careful who they take advice from, and real estate is local, so one idea that works in one place may suck in another place. I think both of those are obvious to someone who really learns what they are doing, rather than cherry picking what they want to see.

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Mindy JensenPro Member

BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes

9y

Interesting question, @Russell Brazil .

I think there is this pervasive misconception that real estate is easy, fast riches.

There are also some people who will never listen, no matter how many facts you throw at them.

I think there are a lot of dashed hopes in the wake of BiggerPockets. People who think they have found the holy grail of money-making, and all they have to do is buy a property and start counting their piles of money, Scrooge McDuck style.

Our members do a pretty good job of knocking the rose-colored glasses off most people, but some just refuse to believe facts.

[email protected]Podcast Guest on Show #261

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John Woodman

New to Real Estate · Wilmington, MA · Member since 2017 · 16 posts · 12 votes

9y

Being a newer agent and newly re-interested in REI, I see the whole spectrum of buyers/sellers and their experience.

Recently was talking to someone who brought up the flip or flop show and thought that buying a fixer upper needing what they thought was $10k of work was really over $70k. "but the show can get kitchens done for under $10k!" good luck with that I said and explained to them wasnt happening like "reality" tv.

So with that being said, the REI TV shows are what I feel are causing the issues.

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John Thedford

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

9y

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Anthony Vann

Investor · Hampton, VA · Member since 2017 · 49 posts · 86 votes

9y

I have a background in education so what I see is a common problem. Remember when you were in school learning the "theory" behind whatever it is you were trying to learn. Then you hit the real world and realized that "theory" didn't exactly hold up. It's the same with everything. BP is a great place to learn the "theory" behind real estate investing. But once you go out into the real world nothing works out exactly the way it's planned. You have to adjust and modify. That's how education works. There's no way anyone can educate you on all the nuances of any subject. You just have to think your way through them when they come up. And having a solid background of "theory" and knowing how it should work helps you to do that. In my mind BP is doing exactly what it should be doing.

3 Reply

David Dachtera

Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes

9y

Originally posted by @Mindy Jensen:

Interesting question, @Russell Brazil .

I think there is this pervasive misconception that real estate is easy, fast riches.

There are also some people who will never listen, no matter how many facts you throw at them.

I think there are a lot of dashed hopes in the wake of BiggerPockets. People who think they have found the holy grail of money-making, and all they have to do is buy a property and start counting their piles of money, Scrooge McDuck style.

Our members do a pretty good job of knocking the rose-colored glasses off most people, but some just refuse to believe facts.

Well said, Mindy!

Building your financial future through REI is not a sprint, it's a marathon - you're in it for the long haul.

2 Reply

Pete Perez

Engineer/Real Estate Investor · Renton, WA · Member since 2015 · 368 posts · 120 votes

9y

@Russell Brazil

Those people probably just watched a video, or read some really simplistic example without realizing the numbers in that analysis are meant to be ease of explanation, or even rule of thumb. Remember in math class they'd do this? The teacher would introduce a topic in its most basic form, then would slowly expand the topic. Then they'd assign homework and it was about 5 times harder. When the test came around, and it might as well be in Greek (most of the symbols in math are greek- thats a math joke). Those people are finding out that real life isn't as easy as a simple math problem.

350/500 = 70%

Do we know any rule of thumbs that involve 70%? (Rhetorical question)

1 Reply

Joshua Martin

Investor · Milwaukee, WI · Member since 2016 · 389 posts · 193 votes

9y

As a newbie investor, I'd say no for me, but I see what you're talking about. Been working as an agent for about six months, sold several houses (and most importantly learned it's not really what I want to be doing), but still haven't found a deal. Frustrating, but it's part of the grind. I'd chalk it up to inconsistent marketing on my own part, so I need to correct that. Everyone says it's a numbers game, but I honestly didn't realize how many leads one had to burn through to find something going after. And I don't think I have unrealistic expectations about the profit margin from a deal, to be fair. People outside of BP are much worse though as they have no background. I encounter people and everyone wants to flip houses thanks to HGTV but doesn't realize the amount of work I involved in not only flipping the house,but finding the deal. Good topic. Best, JTM

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Matt Geerts

Investor · St. Thomas, Ontario · Member since 2015 · 692 posts · 312 votes

9y

I am a newbie and my answer is: Nope. BP showed me exactly what to do.

You expecting your investor clients to buy full retail for properties that your home-buyer clients would be after is what's unrealistic. If you want their commission money you need to show them the deals. If you don't have deals, then just stick with your home-buyers' commission money and turn down the investors who you don't want to put in the work for. Just hope the investors come to you when the seller's market dries up.

My agent was pretty sure I was nuts for a long time but he stuck with me. We've worked together to gradually improve my methods of offering - that doesn't mean I offer full retail! Then I get a phone call from him last week about a great deal and I've got an accepted offer in my hands 30 hours later. When the seller's market dries up, guess who I'll be talking to every day and paying good commission money to regularly.

Work with your investor clients or don't - it is up to you how you run your business.

2 Reply

Katherine S.

Investor · Grosse Pointe Shores, MI · Member since 2017 · 160 posts · 74 votes

9y

@Russell Brazil

I think it's Tarek and Christina's fault.

3 Reply

Chinmay J.

Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes

9y

Originally posted by @Russell Brazil:

One of the more complex parts of being a real estate agent is setting realistic expectations for what your client can expect from the market. There are always going to be people who have unrealistic expectations, but I seem to be getting more and more of these type of potential clients contacting me from Bigger Pockets lately. They think they should be able to buy a $500k property for $350k, or think they can make $100k on their first flip. They are so convinced they are right that no one is going to buy property X at price $Y, and if they do they will lose money...when in fact they are 110% wrong...someone will buy X at $Y and make good money. Or they want the cash flow of a C Class neighborhood in a Class A neighborhood.

So what do you think, does BP help to foster unrealistic expectations amongst investors?

It could foster unrealistic expectation, but that's not BP's fault. I have never heard @Joshua D. or @Brandon Turner say that it was easy money. When they say it, then I will hold BP responsible for fostering unrealistic expectation - until then.. People gonna believe what they gonna believe. But the moment they get from "day dreaming mode" to "action mode", they realize that is not all rainbows and sunshine.

If anything, I would hold those crappy HGTV shows more responsible for fostering unrealistic expectation. Chip is kinda annoying - but at least Joanna is hot.. So there is at least some upside there. lol.

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Is Bigger Pockets Creating Unrealistic Expectations For Investors

Is Bigger Pockets Creating Unrealistic Expectations For Investors

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