Why most real investors fail?

1. Concentration on technique (Lease Option, Foreclosure, etc.) rather than on property

Most investors new to real estate get mesmerized by a technique for acquiring control of real property and or a technique for turning a quick profit. These “techniques” often taught by "gurus" at $5,000 - $10,000 for training, workshops and tapes, emphasize no need for extended time and financial commitment (lease option, subject to) or emphasize quick turn profitability (foreclosures, flips, over financing). These are analogous to the technical or chart reading aspect of stock market investing; it doesn't matter what property you find, just apply the technique.

2. Plan on doing many deals each with a small amount of profit rather than a few deals each with substantial profit

Many investors both experienced as well as new are thrilled with a small (under $10,000) profit on each deal. Since unexpected expenses always seem to creep up when least expected in real estate investing, the actual profitability of these transactions’ ranges from half the expected profit to no profit.

3. Working in a crowded arena (single family homes) rather than an area with less competition and more opportunity (Commercial) 

From real estate investment seminars to real estate investment clubs to the proliferation of how-to real estate books for sale, one would think that the single-family home is the only property type available and with the tens of thousands of new real estate investors as well as the invent and expansion of the franchised rehab businesses, the single-family home as a real estate investment has become a very competitive and crowded field.

4. Having No Sustainable Plan

"I want to make a lot of money" is not a sustainable business plan. "I want to specialize in foreclosures, lease options, and subject to" is not a sustainable business plan. "I buy property for cash or terms" is not a sustainable business plan.

5. Trying to Do Deals with No Equity Contribution

Yes, it's possible to purchase real estate with no money. Yes, it's possible to flip properties for large profit with no investment. Yes, it's possible to option property for $100. That being said, it's infinitely easier to successfully participate in real estate transactions when you as a real estate investor have an equity contribution in the deal.

Topics: Real Estate Investment, Mistakes to avoid

Work cited: Don Konipol (https://reiclub.com/articles/why-real-estate-investors-fail)

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