Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
Hello all,
So I have been attending a local REIA in my area for last few months and I have seen couple of people who attend every meeting but haven't done any deal. I read some where on this forum that 90% of the real estate "investors" never actually do any transaction.
What do you guys think separates 90% majority from 10% of those who actually get things done. Is it motivation? Laziness on the part of 90%? I don't think it's intelligence, because I have seen some really smart people who fall in the 90% category.
Max -
It is simply a reflection of life in general, in my opinion. The vast majority want things to come to them with as little work as possible - to let life take care of them. Those of us who work hard realize that there are no shortcuts. I think it is simply the new norm - a mentality that we all deserve something without working for it.
I've always had the hustle mentality and can't sit still unless I'm working on something productive -- there aren't many of us out there, but we are definitely out there.
I probably wouldn't have done it if I had waited until after college. I figured my freshman year of college that most people screw up their credit in college anyway, so if I failed at investing, college would be the time to do it. Then by the time I was in my 30's I'd be out of bankruptcy and moving on. I didn't exactly do fantastic, but I never ended up in bankruptcy.
I think most people get stuck in the analysis portion, and can never pull the trigger.
Max -
It is simply a reflection of life in general, in my opinion. The vast majority want things to come to them with as little work as possible - to let life take care of them. Those of us who work hard realize that there are no shortcuts. I think it is simply the new norm - a mentality that we all deserve something without working for it.
I've always had the hustle mentality and can't sit still unless I'm working on something productive -- there aren't many of us out there, but we are definitely out there.
I agree fear is a big part of it. I guess as long as your motivation is greater than your fear, you will do it. But if your fear is greater than your motivation, then you never do any deal.
the above posts are spot on...it's all about fear...like marc, i was in college, and figured, what the hell...if i lose everything i could always go back to bartending...luckily i haven't had to yet, but i would if i had to..used to meet a lot of cute girls that way :wink:
i guess it gets harder as you age, get married, have children and need more financial security..i could live on 500 bucks a month if i had to, so that helped alleviate some fears as well
I have observed this at clubs and in the coaching program we ran for over a year. Most people are just lazy when the rubber meets the road. They don't want to put in the hustle time to get things done. In a coaching program the fear element is largely removed and the resources are available. At the end of the day you have to want to make it happen and apply yourself...something that is rare.
Analysis paralysis, fear, lack of resources, etc. all play a role too. Laziness and lack of initiative are the main ingredients though.
All of the major points have been covered by other posters. There is also another aspect to the fear. Many potential investors hear the "HORROR STORIES" of being a landlord from family, friends and co-workers. In addition to having to make a mortgage payment with no rent coming in, they hear about how tenants tear up a property, deal drugs in a rental house, tear out the cabinets and drywall, etc.... Many of these fears are difficult to overcome, mentally and emotionally. I know my father was handed a SMOKING deal when he was in his early 20's. A builder had 19 houses left, he had rented them all and the rent covered the payment. The builder offered them to my dad if he would just take over the payments, NO MONEY DOWN. But all my father saw was one vacancy ruining him totally. So he passed on the deal. But he quickly learned from his mistake and started investing.
One word: passion. Without passion, it's really hard to succeed. Once the passion is there, then the flame ignites and only then - does action occur. Hope that helps!
I think a lot of it is the pressure in this society to succeed. People are told from an early age, "You can do whatever you set your mind to!" and "If you believe it, you can achieve it..." and all that crap...
Unfortunately, there is a lot of pressure associated with that mentality -- if you don't succeed, there must be something wrong with you, huh?
So, to avoid the potential of failure, people don't take the steps needed to succeed. They read the books, go to the REIA meetings, post on the forums, etc -- all the stuff that leads up to the part where failure is possible, but not actually taking that risky step.
Now, those people who I've known to succeed (in real estate or any major endeavor, for that matter) are those who were taught a different philosophy growing up -- they were taught, "Failure is just one step on the road to success. Failure is a good thing."
Those people aren't scared to take the action steps, because they have nothing to lose. They recognize that if they fail, it doesn't mean they're a failure. And they realize that failure is just one step on the road to success.
In my opinion, that's what separates those who actually follow-through from those who sit on the sidelines watching...
I agree with pretty much everything everyone has said so far as there are many reasons. One thing I have always thought about is the many people who are not very satisfied with their jobs, their location, or their pay and never do anything about it. Most people would rather sit back and go to work every day than actually take a risk and make a change. I think it is a combination of fear, laziness, and complacency. I am with Josh on this one...I have always been a "doer". I actually did a research paper in college about this very subject and will post it if I can find it (and then you all can make fun of it)!
All great points from very experienced members. There's really no right or wrong answers, IMHO. I think for some people it's the fear and for others it's the lack of motivation.
I think what separates is the fear of failure and motivation.
J Scott described the fear of failure quite well and I agree with what he posted.
Motivation comes in different ways. Some people are motivated by proving others wrong and some are simply self motivated.
I see posts on FB and BP about how people are going to "show everyone that they are wrong". That type of motivation is unhealthy but unfortunately prevalent.
The people who are self motivated and do not care about what other think and are generally the ones that succeed. Then once they do succeed, everyone calls them lucky.
One of my favorite quotes
"It doesn’t matter how many times you fail. It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and neither should you. All you have to do is learn from them and those around you because... All that matters in business is that you get it right once. Then everyone can tell you how lucky you are." Mark Cuban.
I completely agree with all the previous posts. The only comment I have is...Thank whoever or whatever you believe in for those people!! If those people did not exist, I would not be taking advantage of the current opportunities.
I think most successful investors have learned to deal with risk. New investors face many unknowns that can create fear. I believe some tend to be more risk adverse as well which can increase the fear hurdle.
Someone that has passion, is willing to work and is driven can set aside the fear. After the first purchase each new purchase is easier.
I also agree with everything that has been said above, there are some great comments especially the one from J Scott which I think it spot on.
I can only speak from my own experience and I think my biggest fear is/was that I risk loosing everything that we as a family has built up.
I am the sole income provider for the family as we mutually agreed that my wife should stay home and take care of the kids, with that I know I have to think twice before making any investments.
I am slowly getting over that fear, my first rental property helped as it has proven to me that the criteria and systems I used to evaluate the property actually worked.
I've offered to teach well over 100 people for FREE. Not a soul has ever taken me up on it. It has to be laziness. The same applies to biggerpockets members. If your serious, I'll gladly teach you.
I've offered to teach well over 100 people for FREE. Not a soul has ever taken me up on it. It has to be laziness. The same applies to biggerpockets members. If your serious, I'll gladly teach you.
For me personally, it was fear of the unknown that held me back.
As they say, you don't know what you don't know - for me, there's nothing worse than not knowing.
As long as I know what I'm dealing with, I can play out all the scenarios and come up with a solution. Now when it comes to the unknown, that's a different story - I can't work through the scenarios if I don't know what the scenarios could be.
Until you actually do a deal, good deal or bad deal, you'll never get a handle on the unknowns.
I'm still relatively new at this, but a lot of the unknowns are now known - and I've proven to myself that I can deal with them.
Like others have said, it's easy (and enjoyable) to read books, post on forums and talk about real estate without actually doing anything with it. But it's a whole other level of commitment to invest/risk money, time and failure.
Ham and eggs. The chicken is involved, the pig is committed.
Most people wanna-be investors are chickens, most successful real investors are pigs.
Some people are too comfortable where they are now. They don't want to risk their current comfort level for more. A real paradox to me. We work for comfort but when achieved, comfort makes us lazy.
Many potential investors hear the "HORROR STORIES" of being a landlord from family, friends and co-workers. In addition to having to make a mortgage payment with no rent coming in, they hear about how tenants tear up a property, deal drugs in a rental house, tear out the cabinets and drywall, etc....
The horror stories made me uneasy for awhile. But then I read a comment on here (by MikeOH, I think), that unless you own a very large number of units you'll likely never experience most of these horror stories.
It's fear of what might happen, and fear of change. Changing your life to deal with the issues in real estate, fear of evictions, destructive tenants, vacancies, bad deals, etc.
These things will happen. It's scary the first time. But it's already happened to someone else, and if they're on BP, they'll be happy to help and be supportive. I'm grateful to Ingrid Nagy, J. Scott, MikeOH, and others for their support.
I've told friends about the eviction I had, the damage a tenant had caused, the vacancies that took 3 months to fill, blah blah. I've also told them about the positive cash flow, the tax shelters, leveraging opportunities, the building of equity (well, not at this exact moment ;) the assurance that my husband and I have monthly income regardless of our jobs.
What do all of them focus on? The bad stories. Several have lost their jobs recently. I lost a big client recently. But I have rental income every month. They have unemployment benefits that will run out. That to me is more frightening than what could happen with a rental property.
People have trouble with uncertainty. For some reason investing in real estate is hard for some to grasp, no matter how many classes they go through or books they read. with stock inviting often times people turn money over to a broker and they invest for them, that's all that's needed. With real estate you must compete against the experts yourself and people are uncertain how to do that successfully. many of the other posts here are dead on as well, there is a lot of risk involved and hard work required. For many people that is too much to handle.