What's Your #1 Stumbling Block?

Question

This is such a great message board...it's so nice to see so many New Investors soaking up as much knowledge as they can.  I've made it a goal of mine to help the many new "Wannabe Investors" quickly become investors.  So here's my question to you -

What is your biggest stumbling block(s) and challenge that you're coming across when breaking into the "Real Estate Investing World"?

Why do you think you're not making money in real estate yet?

I'm curious to see what responses I get...I'll respond to your challenges with my advice and let's see if we can mold you into a Full Time Real Estate Investor!

Joshua Dorkin · Answer

The thread has been completely destroyed now . . . wonderful! (smell the sarcasm)

I'm closing this one down, folks.

Feel free to restart the discussion on your #1 stumbling block in real estate.

Catherine Coy · Answer

[POST REMOVED BY ADMIN - IF YOU HAVE ISSUE WITH THE WAY THE FORUMS ARE RUN, PLEASE CONTACT THE MODERATORS DIRECTLY INSTEAD OF HIJACKING A THREAD]

Michael Rossi · Answer

So, in other words, they B.S. people about how "easy" this business is.  No wonder the vast majority of newbies fail in this business.  What people need is not cheerleading, but the TRUTH about the business.  A bunch of motivational nonsense will help people "venture forth", and it will also cause them to fail.

Ron Legrand "the less I do, the more I make" - enough said!

There is no clandestine editing going on.  I've been on this forum a long time and don't remember ever having one of my posts edited.  Of course, I can read simple forum rules and follow them!!!

Mike

Catherine Coy · Answer

Well, of course you're right that they all emphasize the upside.  If they didn't, no one would venture forth.  My personal mentor came to this country from India with very little money and a heavy accent.  He attended all the bootcamps he could afford.  Today he owns many income properties and also builds homes (even in this market).  I know many more real estate multi-millionaires who credit boot camps than don't for their success.  They constantly say, "You must continue learning."

Mike Cantu, for example, spent thousands and thousands on boot camps (or so he says) and he's not an information purveyor himself.

Marko Rubel spent at least a few thousand on boot camps (Ron LeGrand, to be specific) and he's a multi-millionaire (I know someone personally who knows him).  He's the genuine article, in my opinion, although he's certainly a cheerleader.

I think it's a matter of personality.  You, for example, from your posts, have a sanguine personality, and there's nothing wrong with that.  But some investors who came up from nothing are EXCITED about their history, and they love to talk about it in OPTIMISTIC, ENTHUSIASTIC terms.  Marko Rubel, for example, says numerous times during his boot camp, "This is America, folks, land of opportunity!"  You can feel his sincerity because, for him, an immigrant, it's especially true.

It's all what you focus on.  For me, personally, who has had modest success in renovating and buy/hold, I MUST force all less-than-positive feedback aside because I'm a skeptic to begin with.  Geez, if I looked at it "realistically," I'd never do anything to move myself forward.  I'm one big scaredy-cat.

[POST EDITED BY ADMIN - PLEASE REVIEW THE FORUM RULES ABOUT HOW THE SITE IS RUN.  THIS IS NOT THE PLACE TO COMPLAIN OR SHOW UP OUR MODERATORS.  IF YOU HAVE AN ISSUE, PLEASE CONTACT ME DIRECTLY.  DISRESPECT TO THE MODS IS NOT ACCEPTABLE]]

Michael Rossi · Answer

SoCalGal,

You convienently ommitted the next line of my post.  The point isn't that the "gurus" material is expensive, the point is that almost without exception they only include the "good" side of the business even though they are charging you thousands of dollars for the info.  Most of the "gurus" aren't in the real estate business in a serious way, they're in the information business.  I have heard MANY of he prominent national gurus speak at REIA conferences, etc and almost without exception they are nothing but cheerleaders.

If you pay attention to whatever you're attending this weekend, you'll find that they really don't say anything (other than the obvious) but they spend all their time cheerleading!  They'll show pictures of checks.  They'll ask RIDICULOUS questions like "would it be alright if I showed you how to get rich?".  Most significantly, they'll pitch their first level course, bootcamp, or mentoring which is meant to draw newbies in to their "system".  At the bootcamp, you'll once again be given more cheerleading with the purpose of drawing you to the next (more expensive) level of "training" with the promise that the "SECRET" of real estate success will be revealed.  The TRUTH is that there is NO SECRET.

Real estate investing is a simple business.  Like all businesses, it requires hard work.  This paid "mentoring" thing is just the latest fad to separate uneducated newbies from their money.

The truth is that you can learn everything that you will get from the expensive mentoring AND MORE right here on BiggerPockets for free.  Better yet, combine the wealth of information here with information you will get (free) from successful investors (friends) at your local REIA and you'll be 10 times farther ahead and you'll still have the money in your pocket.

By the way, I am friends with many multi-millionaires and don't know a single one that owes their success to paid mentoring.  In fact, I don't know a single one that pays for mentoring.

Mike

Catherine Coy · Answer

Almost every successful investor I've ever met owes his success to mentors he met through bootcamps.  If one is judicious about spending money for such things, one can earn the cost of same many times over through successful real estate transactions.

Also, many guru events are free or nearly so.  This weekend I'm attending a 2-day guru event for $89.  In addition to networking, I'm sure to hear 89 dollars worth of new information and tips.  Networking is so important in this business.

Michael Rossi · Answer

"Selling" a property on lease option is really not much different than simply renting it.  It is usually not possible to get much above market rent and the majority of lease-option buyers never buy the property.  It is sometimes possible to get an option premium, but by the time you find someone with crappy credit but a big pile of cash, you've lost more money in lost rents than the option premuim provides.  Another "guru" argument is that you can get the "buyer" to do the maintenance, but the reality is that this is illegal in many states and even if it is not, the tenant often can't afford to do the maintenance or screws it up when they try to do it themselves.  So, when you get the house back, it can have a bunch of deferred or improperly done maintenance.  I could go on and on, but you should do a search of lease options, there are several good threads on this issue.

Remember, almost everything you read from a "guru" is intended to get you to buy an expensive course, mentoring, or bootcampl  They only tell the positive side of the business.  You MUST learn the other side if you are to succeed in the business.  I always suggest starting at your local REIA and getting to know the successful investors in your area.  And of course, read as much as you can here on BiggerPockets.  There's a lot of good info here too!

Good Luck,

Mike

Account Closed · Answer

Hey Mike,

Thanks...seems pretty obvious, eh?

The concept of lease-option to increase rent is tried and true.

However, in your case with a condo...you did the  right thing to sell it.

Never buy a condo as a rental...the long haul for real estate is appreciation, increased rents and keeping expenses low.

Condo dues...no land...all go the other way...

Stick with single family homes in working class neighborhoods...

Good Luck!

Mike Cartmell · Answer

Great Post Rob,
I am fairly young and purchased my first condo at 20 years old.  I made about $25,000 when I sold it due to appreciation.  However, I had not seriously began to study REI before I purchased my first short sale last November.  I bought it around 85% of fair market, which is not a good rental purchase from what I understand now.  If I were to rent it, I could barely cover the mortgage but if I put it up as a lease option I can see a little more rent and profit in the end.  What are your thoughts on this? 
Thanks,
Mike

Account Closed · Answer

I've got the easiest way in the world to get started in real estate investing...and the fear factor is low...

Are you ready...it is so simple...

Move out of your home...and rent it out!

That's it!  Get started tomorrow...find an apartment to live in...rent out your own home.

What... you don't own a home?  Then buy one before you ever consider becoming a real estate investor.

What...you own a home, but you don't want to live in an apartment?  Good.

This will motivate you to buy your next home...and believe me it's a lot easier to get owner-occupied home owner loans...than investor loans.

Once you own the second home...and you've learned all about land-lording from your first home...and that is how you "learn" in this business...on the job...evaluate if you like being in the real estate business...cuz it is a business...not an investment.

You'll need "business skills" ...and using your first home as "test case" is a great way to empower your decisions...even if the decision is to forget the real estate business.

If you find you like this business...simply "rinse and repeat" the above process.  You'll be able to this a number of times before conventional financing gets difficult.  By that time, you'll have learned a number of "non-bank" methods for acquiring rental properties.

Good Luck!