What do you think is the problem with Newbie RE Investors?

56 Replies

Howdy folks,

I get few PM from new investors from all around every day to start investing in Real Estate. As a mentor, I am always open and try to start working with them. But I see few problems/issues with newbies.  

Everyone is different but I like to categories newbies in 3 ways, Organized but Worried, Pumped up but not Organized and finally Organized & Motivated.  I see whole lot of people in the first 2 categories than the last one. 

Guys I am not here complaining, don't write me off already. I am here to play devil's advocate role guys!! 

I am sure everyone want's to be successful in their life. Everyone has the same goal to be make few extra dollars to save for future and eventually retire well or may be get out of the current job.  But it's not easy making things happen while you are working 12 hours a day. I get it and I am in the same boat but I think that's not the reason for the people in the first 2 categories to fail.  It's just no proper guidance, time management and follow through on your goals. 


SET YOUR GOALS AND PRIORITIES

First thing first, Write down your goals and priorities first and put your mind towards it. I know everyone likes to have it in our head. Get it out of your head and put in writing anywhere. Whether it's white board in your bedroom or Evernote in your phone. Just put it out there and put a date on it.  Doesn't have to big para

GET YOUR GUIDANCE

Don't hesitate to ask for help. There are so many investors out there who are willing to help. Don't pay hefty fees to find a coach. I have heard horror stories some one writing $25k just to get guidance. DON'T!!!  May be Tag along with Investor buddies.  Peer pressure is great tool to get you motivated. You don't have to be alone in this roller coaster ride. Find a investor buddy and try to touch base and work together.


PLAN AND TAKE ACTION 

As they say, "Goal without an Plan is merely a Wish" and "Plan without proper action is just a Dream"

I know you might have seen this quote many times. You just have to accept the reality. Plan your goals and take ACTION, MASSIVE ACTION if possible or just smaller action every week/day. Keep at it. Do the numbers every day, I do it every day just by going to MLS. Visit the properties and make offers even though you won't get it. Just need to keep working on it.

I didn't meant to bore you but many don't do these things. They just attend few meetups and post few messages and make few connections and vanish for a while and time flies and after few years, they think about it again. 

GPA - GOALS, PLANS AND ACTIONS - What's your GPA?  Make one, Just do it and Keep at it !!!

I love the advice.  Lately I have found myself with paralysis of the analysis.  I find what I think are good deals and then start to analyze, go through worst case scenario, and in the mean time the deal already has an offer on it.  Then the other hurdle is time.  Working 12 hrs a day and trying to spend time with the family does not leave a lot of time left in the day, but success takes sacrifice. 

@Vijaianand Thirnageswaram Thank you for the morning motivation!

@Vijaianand Thirnageswaram

Great post!  

You also come across young people who think they are going to get rich instantly by being in real estate. This along with any other business you do involve A LOT of time, effort, and relationship building.  

Agreed @Vijaianand Thirnageswaram. In my 10 Step Guide I talk about those very same things. I start with Identifying your purpose, then goal setting. It is amazing to see, but several of the newbs I mentor tend to freak out and panic when they aren't hitting their goals or can't find the perfect 1st unit. They are so afraid of a slight course correction. Amazing to see. Good post. 

Originally posted by @Vijaianand Thirnageswaram:

Howdy folks,

I get few PM from new investors from all around every day to start investing in Real Estate. As a mentor, I am always open and try to start working with them. But I see few problems/issues with newbies.  

Everyone is different but I like to categories newbies in 3 ways, Organized but Worried, Pumped up but not Organized and finally Organized & Motivated.  I see whole lot of people in the first 2 categories than the last one. 

Guys I am not here complaining, don't write me off already. I am here to play devil's advocate role guys!! 

I am sure everyone want's to be successful in their life. Everyone has the same goal to be make few extra dollars to save for future and eventually retire well or may be get out of the current job.  But it's not easy making things happen while you are working 12 hours a day. I get it and I am in the same boat but I think that's not the reason for the people in the first 2 categories to fail.  It's just no proper guidance, time management and follow through on your goals. 


SET YOUR GOALS AND PRIORITIES

First thing first, Write down your goals and priorities first and put your mind towards it. I know everyone likes to have it in our head. Get it out of your head and put in writing anywhere. Whether it's white board in your bedroom or Evernote in your phone. Just put it out there and put a date on it.  Doesn't have to big para

GET YOUR GUIDANCE

Don't hesitate to ask for help. There are so many investors out there who are willing to help. Don't pay hefty fees to find a coach. I have heard horror stories some one writing $25k just to get guidance. DON'T!!!  May be Tag along with Investor buddies.  Peer pressure is great tool to get you motivated. You don't have to be alone in this roller coaster ride. Find a investor buddy and try to touch base and work together.


PLAN AND TAKE ACTION 

As they say, "Goal without an Plan is merely a Wish" and "Plan without proper action is just a Dream"

I know you might have seen this quote many times. You just have to accept the reality. Plan your goals and take ACTION, MASSIVE ACTION if possible or just smaller action every week/day. Keep at it. Do the numbers every day, I do it every day just by going to MLS. Visit the properties and make offers even though you won't get it. Just need to keep working on it.

I didn't meant to bore you but many don't do these things. They just attend few meetups and post few messages and make few connections and vanish for a while and time flies and after few years, they think about it again. 

GPA - GOALS, PLANS AND ACTIONS - What's your GPA?  Make one, Just do it and Keep at it !!!

Great Post ! 

I have seen a lot of people either have A) Shiny Object Syndrome or are B) Too rigid about their goals.  I have always found success in Try, Fail, and Adjust.  There is always a sweet spot between A and B.  I have always found success to be a function of finding that sweet spot. 

The truth is newbies have a lot more to overcome right now because the market is flooded (literally and figuratively, that's a joke as I am in Houston) with buyers and investors. Prices are elevated already and all the "teachers" are saying the deals are out there just stay up all night to do research, ignore your family and quit your job to make it happen. So we at look at our options which are mainly 1. MLS , good luck. 2. Auctions IE Tax sales and foreclosures , which are being bid up to almost to market anyway and too much risk....usually. 3. Wholesalers or networking meet ups , but sellers still do not want to throw away their cash there either.

So here is my 2 cents, MORE EDUCATION. Not much is being said of the historical 20 year market cycle and how we are already at the top of it after 10 years. When will it crash? Is now really the time to buy? Should I prepare myself for when it turns? If I buy now and the market corrects will I be okay? How do appraisals and inspections affect all of this?

Food for thought!

Well Said & Hello!

My name is Zoh. Im a Newbie investor [buy and hold strategy] and I try to avoid being categorized in groups 1 and 2. Maybe you can give me some insight on how I can improve my GPA?

GPA!

Goal - Short term (3 months)

Acquire my first property - triplex/Fourplex before March 2018.

Set this Goal January 1, 2018

As of yesterday 2/14/18 - Currently in contract for a triplex.

Buy property 2 Before end of September 2018

Goal - Long term (7 years)

Buy/Hold enough rental properties over the next 8 years to gross 25k per month

Plan -

Starting slow in year 1 and 2 to get familar with the process. Buy minimum of 4 properties by end of 2019. Then scale. Average 4-5 MFH rental properties per year by 2026

Action -

Do what I said above via

-system setting, getting the right people (agents [got an excellent one], contractors, lawyers, cpa, etc)

- Incessantly practicing how to analyze deals to get better

- Recyclying money that has been earned back into my portfolio.

Im trying to get better daily.

Any thoughts, constructive critiscism or additions are appreciated and welcomed. Thanks in advance.

#Cheers

@Ryan Terwilliger I wouldn't agree 100%. I am in Houston market and you are absolutely right about market being flooded with lots of cash buyers/investors. I don't agree that there is no deals out there. We signed on two deals last week for my new investors. I look for the deals in all places but not staying up late instead looking closely and negotiating and jump it quickly. I agree with you that many coaches saying deals out there. I am not a coach but deals are out there. You just need to work at it, knock doors, filter MLS for long DOM and so much more..

@Chizoh Uzegbu   I think you are in right track. Just keep at it and keep analyzing. 

Vijaianand

These comments were not directed at specific type of investor. The main point was that it is harder for a newbie that works and has a job than it used to be, that is all. There is so much free info on investing now it can make you feel like you are prepared when you are not even though it often times works out. Just an encouragement for newbies to get as much education as possible. 

@Chizoh Uzegbu We basically have the same goals for year 2018. I set this goal at the end of 2017 and you have already surpassed me. Thanks for that kick in the rear!! I'm gonna move things along. I think i was stuck over analyzing and fearful stage but i really need to move into gear with this! Thanks!

Good ol’ well-meaning newbie investors, so some perpetual problems are below. And the good or bad part is that they often just don’t know any better. Then they get the unenviable talk of juxtaposing motivating stories with some realities.

1.) Someone told them to think about long-term goals and then 10X them! They spend more time thinking about their goal to acquire 500 units and their “financial freedom” number than they do about finding Property 1.

2.) They have no money.

2a.) They expect that other people will eagerly and happily give them their money to invest.

2b.) Because they have no experience and no money in the deal they see all of the opportunity and little-to-no-risk.

3.) They assume there’s an easy, simple, anyone-can-do-it, 10-step, no-risk, use other people’s money, strategy.

4.) They use podcasts and books as a proxy for experience (see 2a).

5.) They hear someone who has done 100 deals talk about their best deal and assume it’s “average” or easy to come by.

6.) “Getting creative” is seldom a solution for zero money, no experience, and horrible credit.

I’m feisty this morning... 🤔

Come on @Chanise P. You can do it. Get out of the analysis paralysis and get out there and make some moves. 

@Chanise P. If you have truly done the studying needed since 2017 then its time to jump in - I personally learn by doing. If you fail get up, learn from the mistake and keep doing eventually you will get it. 

Also you need to have a purpose as @Jay Helms mentioned. I hate clocking in. Like I absolutely hate it. 

Furthermore I love hanging out with my family and traveling with my wife. I want to be able to spend more time with my kids by the time they are about to start highschool which is in about 10 years. I have to take MASSIVE action to do this. Maybe figuring out you WHY will help you get going?

#cheers

I'm a relative newbie.....own 3 SFR for about 4 years now....live in CA and cant find any deals anymore without a ton of time and networking. All my purchased have been the traditional 20% down of my own cash and conventional financing.....nothing creative....a pattern that will never allow me to expand at a reasonable rate.....

My biggest issue...... there are so many ways to do REI....so many avenues....so many opinions.....so many options..... that I get overwhelmed on what is the best plan/approach for ME

For example.....I'm in CA, so I've considered OOS, turnkey etc......tons of posts and info on here that says its a fantastic way to expand my portfolio....and just as many that say its all "smoke and mirrors" and in reality its a rip off disaster..... great..... so which one is reality...no real answer.....

My biggest goal in 2018 is to just narrow my plan down to a couple of options and focus on those....but I'm still having an issue doing that since there are so many options....

I think I fit into category #1..... I'm organized, have the $$ and ability to move forward......I'm just paralyzed with which way to expand and move forward

@Vijaianand Thirnageswaram Thanks! I've already set an appt for tomorrow to get preapproved. I already had all the paperwork. My biggest issue was the realization that closing costs can get pretty significant. I am doing an FHA loan on a multi and just didn't account for huge costs at the end.

@Chizoh Uzegbu Yeah i'm on it! My fiancee and i like to travel but with work demands can only do so once or twice a year. We will be singing a different tune in a few years!

I appreciate this post. Personally, I feel like I’m in a different sect of newbie. Currently stacking up a reserve fund to cover repairs, fees, closing cost, holding cost, etc.

I want to learn and absorb as much as possible while I’m in this preparation stage. Apart of that is learning from others mistakes so I can avoid what can be avoided. I know I will make mistakes but I don’t have to make all of them. Although I would love to dive right into another property besides my primary residence, I want to be confident in some aspects.

I do run numbers on prospects, and have been increasing my network by contacting LOs, agents, banks, and attending meet ups. So there is some action.

@Ned J. Nobody ever likes to admit this but a lot of REI decisions are driven by a mix of "want" and "gut". Some people want to own an apartment building, some people want to own vacation rentals, you can make money in both but it's a lot easier dealing with hiccups if you're in an asset class you *want* to be in. A lot of people are touting things like self-storage or mobile home parks. I know that I have no desire to own those. I don't want to visit those, I don't want to walk around a mobile home park, etc. Is there any logical, spreadsheet, ROI based opinion for that? No. Should I be more open minded? Yes. But I look at each purchase as "Do I want to own this for 30+ years?" so some degree of *want* does factor into it. So figure out the top three things you'd want to do.

As for "gut" that's basically taking all of those podcasts, readings, etc. and distilling them down to hopefully guide your decision making process.  Fly out to any new area out-of-state and drive around 5 neighborhoods.  I bet your "gut" will tell you something about each and every one them.  You might notice a Starbucks, notice chain link fences, notice a new subdivision, notice a check-cashing place, etc.  In many cases my "gut" has made the "no" decision while driving to the property before I even set foot in the door.

Odds are if you combine 4 years of your current experience you can use "want" and "gut" to narrow your options down pretty quickly.

Or I'm just a weird hippy dispensing unwarranted non-quantifiable advice...

Great post!

As a new investor I must admit I tend to be more in category 1 (Organized but Worried).  I'm going to take your advice and work on my GPA.  Thanks for sharing.

Originally posted by @Brendan Flannery :

I love the advice.  Lately I have found myself with paralysis of the analysis.  I find what I think are good deals and then start to analyze, go through worst case scenario, and in the mean time the deal already has an offer on it.  Then the other hurdle is time.  Working 12 hrs a day and trying to spend time with the family does not leave a lot of time left in the day, but success takes sacrifice. 

@Vijaianand Thirnageswaram Thank you for the morning motivation!

 one skill that I believe is important in this market  and really in all markets.. is you should be able to look at the big picture in 5 to 10 minutes and see if its worth per suing.. there simply is not more studying to do than that to get your offer in.. then the heavy due diligence is once you have an accepted offer and your in your 10 day DD period.. then you refine  and you either go forward or punt.  and when you punt you will have lost a little money but that's just the cost of doing business and if you move forward you close   

However the reality is real estate is not something that is easy to do when your undercapitalized or lack any kind of knowledge of the subject.. nor should it be.

Originally posted by @Andrew Johnson :

@Ned J. Nobody ever likes to admit this but a lot of REI decisions are driven by a mix of "want" and "gut". Some people want to own an apartment building, some people want to own vacation rentals, you can make money in both but it's a lot easier dealing with hiccups if you're in an asset class you *want* to be in. A lot of people are touting things like self-storage or mobile home parks. I know that I have no desire to own those. I don't want to visit those, I don't want to walk around a mobile home park, etc. Is there any logical, spreadsheet, ROI based opinion for that? No. Should I be more open minded? Yes. But I look at each purchase as "Do I want to own this for 30+ years?" so some degree of *want* does factor into it. So figure out the top three things you'd want to do.

As for "gut" that's basically taking all of those podcasts, readings, etc. and distilling them down to hopefully guide your decision making process.  Fly out to any new area out-of-state and drive around 5 neighborhoods.  I bet your "gut" will tell you something about each and every one them.  You might notice a Starbucks, notice chain link fences, notice a new subdivision, notice a check-cashing place, etc.  In many cases my "gut" has made the "no" decision while driving to the property before I even set foot in the door.

Odds are if you combine 4 years of your current experience you can use "want" and "gut" to narrow your options down pretty quickly.

Or I'm just a weird hippy dispensing unwarranted non-quantifiable advice...

or 10 to 20 guys standing around in front of the local liquor store that is secured like its in Iraq

Thanks for the for sharing and for the advice. Newbie here. i love when investers share the mistakes they done and give advice. thanks guys 

@Vijaianand Thirnageswaram I see a lot of Newbies that fall into the Motivated but not Organized category. Like @Andrew Johnson noted, they start off targeting 500 doors and forgetting about fundamentals. I notice on BP daily post like "I got a 40 door property under contract, What do I do now?" or some other form of a Newbie with little or no money trying to scale as many Doors in a one year span as a seasoned investor with a million in cash.

Good post @Vijaianand Thirnageswaram! I'm not a newbie anymore....but I do feel some "Freshman-itis". I think I have the SFR buy & hold processes down pretty well but now that am venturing into MFR I feel like a newbie again.

Biggest thing I think I have learned in REI is simply to go for it! We will all make mistakes. Learn from them and apply what you learned to be better. Not every deal will be a home run. But enough base hits will put runs on the board.

Originally posted by @Andrew Johnson :

Good ol’ well-meaning newbie investors, so some perpetual problems are below. And the good or bad part is that they often just don’t know any better. Then they get the unenviable talk of juxtaposing motivating stories with some realities.

1.) Someone told them to think about long-term goals and then 10X them! They spend more time thinking about their goal to acquire 500 units and their “financial freedom” number than they do about finding Property 1.

2.) They have no money.

2a.) They expect that other people will eagerly and happily give them their money to invest.

2b.) Because they have no experience and no money in the deal they see all of the opportunity and little-to-no-risk.

3.) They assume there’s an easy, simple, anyone-can-do-it, 10-step, no-risk, use other people’s money, strategy.

4.) They use podcasts and books as a proxy for experience (see 2a).

5.) They hear someone who has done 100 deals talk about their best deal and assume it’s “average” or easy to come by.

6.) “Getting creative” is seldom a solution for zero money, no experience, and horrible credit.

I’m feisty this morning... 🤔

 Truth is Truth, feisty or not.

I'd add one to your list, they've watched too much HGTV and 20 minute flips look appealing.

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