Is Bigger Pockets Creating Unrealistic Expectations For Investors
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
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Is Bigger Pockets Creating Unrealistic Expectations For Investors
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Priyanshu AdathakkarPro Member
Realtor · Columbus, OH · Member since 2017 · 313 posts · 245 votesThe biggest flaw I have seen here is inexperienced people giving advice when they themselves have no clue of what they are talking about!
136 Replies
- 9yNicholas BaughmanPro MemberSan Diego, CA · Member since 2017 · 61 posts · 20 votesPerhaps these same people are only listening to half of the podcasts, if any at all. I can see where they could come up with an idea like that but if you listen longer, or to other podcasts, it is made clear that, let's say the 70% rule, doesn't always work in every market. If you live in a market like I do, San Diego, you'll also find out that the 2% rule doesn't work that well either. That being said, it has been made clear that these are just "rules of thumb". I think the people you are working with aren't getting, or listening, to all the info. Because of that, they probably won't do well. That's my opinion. With that, I don't feel BP is giving unrealistic expectations at all. I think people are picking and choosing their info and not doing their due diligence.
- Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes9y
Yes most of the REI education programs out there are garbage.
Agent / broker classes, etc. only help you understand selling, marketing and fill-in-the-blank contracts. They don't address building a business, analyzing properties for profit or cash flow, or any of those topics.
Indeed - none of the professions or trades can be learned in a 3-day weekend, boot camp or other "deep immersion" event. It takes learning, it takes being mentored and it takes experience guided by others with successful experience behind them.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes9y
@David Dachtera "Broker classes just help you understand selling, marketing and fill-in-the-blank contracts"? Just?
Those are huge parts of real estate transactions. They also provide education on following the laws of your state. Beyond that, folks can look to various associations for education if classroom learning is their style. For instance: http://chicagorealtor.com/realtors-real-estate-sch... $145 for non-members for the Advanced Income Property Analysis course.
Going back to @Russell Brazil's original thoughts. I believe another issue with potential investors, like we see frequently with agents, is the low-to-no barrier to entry. No education is required to invest. Some will have you think no money is required and no time is required. So the ratio of serious folks to those who aren't prepared is very small - people loose nothing by reaching out and hoping to win the real estate lotto.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes9y
Personally, I think that taking a lot of linear/left brain courses like 'real estate agent' and 'business courses' and marketing is somewhat counter to real estate investing.
Maybe it's just me, but most of my investments utilized out-of-the-box thinking and being open to different tools and coming up with new concepts.
I feel that once you're so used to think linear, it'd be very difficult to be open to new ideas. That's why most real estate agents make bad investors. They simply are so used to thinking one way, that they can't or aren't willing to adapt.
Just my experience.
- Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes9y
Consider the breadth of topics that investing covers and you'll understand why I said, "just".
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes9y
Originally posted by @Adam VanOverbeke:
Everyone's situation is different this question is a waste of time
I disagree. Those of us who've been in the field for a while have seen it over and over: Newbie gets all excited, tells everyone that they'll be a real estate investor, go to a few meetings, comment on forums as if they know what's up and then they disappear into thin air.
So, yeah, we notice that probably 99% of those who want to be never will.
- Manassas, VA · Member since 2013 · 60 posts · 24 votes9y
Pro
Jeff Filali
"Real estate is just like any other business venture, 20% of the people who start in the business are making 80% of the money, and the other 80% will dabble for a while, many never doing a single deal, and most will eventually move on to another business they'll fail at as well. That's just life."
Jeff, I just finished the 80/20 book. Love your wise big picture analysis of the post question.
- Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes9y
@David Grabiner I agree with your comments.
Many people benefit from paid education, some don't. (No, I wouldn't spend $70k either, I can teach someone to use that amount to buy 3 houses using Subject To and I already do in WA AZ TX and CA)
But, I've seen posts from guys who have tripled their profits as a result of doing so.
We all learn from our mistakes.
Yes, I still pay others to learn from them, too. Markets change. Techniques change. Laws change. Taxes change. Codes change. Trends change.
I choose to pay a little $$ to Avoid the big $$$$$$ Mistakes ;-)
- I think BP fosters unrealistic expectations in the same way that gyms foster unrealistic expectations. If I am new to the gym routine, and Sometimes when I go to the gym I see the chiseled bodies and let my trainer know I want only the routines that will make me look like that in a few months, a good trainer would set my expectation, and remind me that these people with incredible results have been working at it for years. Also, I think the average real estate agents are really, really bad at finding good investments. They are looking for off market discounts, because that's what the pros they follow on here are getting. But they are looking on the open market, where everyone is pushing up price.
- Rental Property Investor · Klamath Falls, OR · Member since 2016 · 146 posts · 213 votes9y
This thread has been a very good read. I personally see this website and Real Estate Investing as Survival of the Fittest. Those with unrealistic expectations but the guts to take a dive will get a hard dose of reality very quickly. Those who are too scared to every try anything will comment and judge with nothing to support their arguments. Those who educate themselves, learn their market, take calculated risks and actually heed the excellent advice on here will find a level of success. Being the fittest simply means different things for different people. Not everyone is out to own 500 properties or flip 100 per year. For many obtaining enough good properties or deals to build the lifestyle and passive income that they want is sufficient. The unfit exist in every area of life. They either never learned critical thinking in school or they are looking for easy money. This would happen whether this site existed or not. This site gives the current and future "fit" the chance to learn and explore while getting in shape for the competition. If anything it has given me the courage to take more chances and push harder.
- Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes9y
The trouble with that "survival of the fittest" thing is that it's not what Darwin said. Translating the English of his day into the more modern idiom, Darwin said that those species which survive are those which are best adapted to the changes in their environment over time.
So, in that context, what you said is correct. The "fit", being the best adapted to the changes in their environment are best able to survive. The "unfit" are the least adaptable, the least flexible and the least likely to flourish or to thrive.
- Rental Property Investor · Klamath Falls, OR · Member since 2016 · 146 posts · 213 votes9y
Very well said, I'm in fact interested to see how many people adjust to the hot seller's market conditions. I've read posts from out of the box thinkers who seek out favorable conditions in cooler markets. Would that mean that Darwin's assumptions would have the most fit stay in their current markets and find new ways to adapt? BP definitely gives people the information they need to take on the current investment climate. However, most people will not adapt or flex to the advice on BP. They'll simply fail to start or start and fail. That is no way the fault of the BP group iteself.
Thanks for the response. I understand the concept very well but don't always use the right words. I've been out of college for too long. :)
- Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes9y
It is not BP, its the idiotic TV shows. The one that gets me is where the guy drives up in a lambo and $400 jeans he then goes into some trashed house. Makes a snarky comment and in the next shot the hosue is 50%. Then ther is an unforeseen problem, but it is overcome by the next commercial break and he is still whole. At the end of the show they summarize the deal. No carrying costs, no statement of time invested, etc etc. Show up in the lambo and collect your winnings!
I read RIch Dad Poor Dad 5 or 6 months ago and a light turned on in my head. I read several more of his books. He talks about ethics, honesty, and doing what is right. I realized that my big, fancy house is not an asset, but a huge vacuum that is constantly sucking money out of my account and hindering my retirement dreams. I became enamored with the idea of passively earning income while on vacation. The ability to deduct expenses and deprecation enthralled me. The idea of retiring early from my very rewarding W2 job enticed me. I loved learning that I can pass the rentals on to my kids and they will benefit from a stepped up tax basis making the appreciation tax free. How cool is that? I read Keller and Wheelwright and Berges and Gerber and David Allen and Brandon Turner. I have listened to 90+ BP podcasts. I will have finished all of the podcasts by mid June.
Somewhere along the way I looked into what the gurus are all about. That the gurus charge tens of thousands of dollars to newbies for coaching or mentoring is appalling to me. Gurus are helping newbies eat their seed corn. I am glad Josh and Bradon use BP to warn about the abuses of paid educators as well as providing a great alternative.
In some cases a paid mentor might be OK if the cost is reasonable. A surgeon gets paid about $800 to remove a leg when the gangrene threatens to spread throughout the body or $1500 to rid the body of colon cancer (that is inclusive of all of the care after surgery for the 90 day global period). A great lawyer can earn $400-$500 per hour. @Account Closed
- Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes9y
Originally posted by @Frank C.:
I read RIch Dad Poor Dad 5 or 6 months ago and a light turned on in my head. I read several more of his books. He talks about ethics, honesty, and doing what is right. I realized that my big, fancy house is not an asset, but a huge vacuum that is constantly sucking money out of my account and hindering my retirement dreams. I became enamored with the idea of passively earning income while on vacation. The ability to deduct expenses and deprecation enthralled me. The idea of retiring early from my very rewarding W2 job enticed me. I loved learning that I can pass the rentals on to my kids and they will benefit from a stepped up tax basis making the appreciation tax free. How cool is that? I read Keller and Wheelwright and Berges and Gerber and David Allen and Brandon Turner. I have listened to 90+ BP podcasts. I will have finished all of the podcasts by mid June.
Somewhere along the way I looked into what the gurus are all about. That the gurus charge tens of thousands of dollars to newbies for coaching or mentoring is appalling to me. Gurus are helping newbies eat their seed corn. I am glad Josh and Bradon use BP to warn about the abuses of paid educators as well as providing a great alternative.
In some cases a paid mentor might be OK if the cost is reasonable. A surgeon gets paid about $800 to remove a leg when the gangrene threatens to spread throughout the body or $1500 to rid the body of colon cancer (that is inclusive of all of the care after surgery for the 90 day global period). A great lawyer can earn $400-$500 per hour. @Account Closed, I hope you are giving your students at least 40 hours of your time for your fee of $12,000.
I am not a big fan of Chines proverbs, but I like this one I learned from Malcolm Gladwell,
"No one who can rise before dawn 360 days a year fails to make his family rich."
@Account Closed
@Frank C
40 hours. HA! You are a funny man. I spent a day with one of my students. AND
Under my instruction, he spent $250 on marketing.
In the first month, he bought a 3 bed 2.5 bath, two story built in 2013 includes stainless appliances for $100 down, No Agent Involved. The Seller could stay in the property for a month to make the transition. The Seller paid mortgage, utilities etc until they vacated. He said the Sellers hugged him at closing. I was directing him every step of the way.
I taught him to buy the house Subject To, taking over the loan of $186,000. It was closed with an attorney, about $1500. He gave the Sellers $8,000 at vacating per agreement. Payment is $1600 per month. He has had to make a payment of $1600 mortgage
He now has it on the market for $249,900 – no real estate agent, so no fees.
So, here is how the numbers work out:
$100 Down
$8,000 Walking Money for Sellers
$1,500 closing costs
$1,600 mortgage payment
$0 rehab costs
$11,200 into the deal
$186,000 mortgage he didn’t have to qualify for nor use hard money
$249,900 ARV - Selling
$186,000 Payoff
$11,200 into the deal
$ 52,700 Gross Profit
I’m not so good at math. Can someone figure cash on cash return for 90 days?
He has $11,200 into the deal and will gross about $52,000 after 90 days.
Let’s just say he hasn’t asked for his $12,000 in tuition back.
And, he has another nine months of step by step training from me.
The Before & After Pictures: Notice the dust that had to be swept. ;-) (no rehab at all)
BEFORE:
AFTER: (No Changes ;-)
BEFORE & AFTER
(No Changes ;-)
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes9y
@Account Closed , it does look though as if he spent some money as I see changes between 1st and 2nd pictures: Shutters in the first one (I like that better, so, I hope that's the after) and the window don't have grids. So, looks as if he added new windows at the least. I suspect that there would have then been also things on the inside that were changed.
@Account Closed, Just curious to know what motivates you. Why not do the deal yourself? If finding deals that turn $11k into $52K in 90 days is that easy, why don't you do that all day long and skip the teaching? What does that come out to, $5000 per hour for his time? Not a bad wage. It is substantially better than what I make and probably better than you teaching wage too.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes9y
Looking at those photos again, is that really the same house? In the first pic there is a house in the background to the right and I don't see that in the 2nd picture. And where is the garage to the left in the 2nd pic? The original builder would have built the fence in the first pic on both sides, since it's connecting 2 houses, so it couldn't have been the new owner or it would have only been built to the property line. They couldn't have built the other houses in 2 or 3 months.
The 2nd picture shows the concrete all the way from the left of the house over to the right, extending all the way to the right of the house. In the first one it doesn't.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes9y
Now that I notice that you have marked them before and after: Why are there no outlines of the shutters that were taken down? Since this is a stone facade, it couldn't have just been painted over.
Just received an email about: "35k on my first flip" :
https://www.biggerpockets.com/forums/223/topics/43...
"After 3 months of hard manual labor, financial stress, managing subs, the rehab was complete! I had 3K left to my name, 2 maxed out credit cards, 4K a month in holding costs."
You can clearly see he was busting his *** on this one. Notice how he didn't even have enough to cover another month of HM costs. Glad we're in an environment where homes fly off the lots quickly. I'm sure there are many more cases where investors are leveraged out and could be one deal away from something bad happening.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes9y
@Michaela G. Don't bother, the more we engage these folks the more SEO value their posts and names are gaining. I feel like I'm reading about folks who hold seminars on how to beat the casinos. I'd say this is just a slight step below those who 'teach' how to get rich via amway and herbalife. And these are exactly the types that cause people to send me the extreme requirements Russell posted about - OMG, he made $50k with the stroke of a pen in 90 days! $12k is totally worth it! Then we have to be the bearers of bad news.
Answer @Frank C.'s question @Account Closed - why in the world are you bothering 'educating' folks for so cheap when you could make 4x a tuition in a quick 90 day transaction?
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes9y
@Matthew Olszak , I simply don't think that it's the same house.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes9y
https://www.trulia.com/property/3162666216-1664-Br...
BTW - rent-to-own, owner finance, etc is hardly making a 50k profit in 90 days. Sounds like desperation to me. And why does your student's deal lead back to your website?
- Specialist · San Francisco, CA · Member since 2013 · 227 posts · 158 votes9y
What I like about BP is that no one is trying to "sell" you their magic system or paid guru training for the most part this website has a range of experience levels that fluctuate from time to time.
I think anyone who comes in here with unrealistic expectations will find a lot of cold water being thrown on their idea very quickly (especially from the more experienced posters).
In my opinion, BP is one of the best Real Estate Investment websites on the internet.
I hope this helps.
- Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes9y
Originally posted by @Michaela G.:
Now that I notice that you have marked them before and after: Why are there no outlines of the shutters that were taken down? Since this is a stone facade, it couldn't have just been painted over.
Thanks, I hadn't noticed but I posted them in the wrong order. The seller had done some upgrades. The other picture is one they gave us from when they first bought. But here is the actual current
listing:
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