If you are not investing in real estate currently, I have some hard news for you to hear… you probably won’t ever become a real estate investor.
I said it; you won’t ever become a real estate investor. Save your time and money. Quit spending time on BiggerPockets reading blogs and listening to podcasts. Quit reading the forums, quit buying real estate books and courses. It will all be a waste of time and money, because you won’t take action. Admit it to yourself, your friends and family were right, save yourself time and money and move on. Here is my reasoning..
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
1. You Don’t Know Your Why
One of the most important things to understand before you start any venture is understanding “Why.” Why do you want to be a real estate investor? If your answer is “to make money,” you will fail. Your “why” is the driving force and it has to be strong. Real estate investing is difficult, very difficult. It will try you physically, mentally, emotionally and financially. You will lose some friends, make mistakes, lose money and probably end up in court at some point. Your “why” has to be strong enough to get you through all of these challenges, otherwise you will break when faced with them.
2. You Have Not Talked To Your Significant Other
If you are in a relationship and have not talked to your significant other about real estate investing, you have a hard road ahead of you. Real estate investing is not for the faint of heart and both you and your spouse need to agree and be committed to real estate investing. Even if it is just “your” business, it will have a big impact on your life and finances as a couple. Regardless of your investing strategy, you will have to invest time and money. You may have to pick up a second job to save money, forgo that new car purchase or live in a duplex next to your tenants. Communication is key in any relationship, especially when discussing real estate investing or entrepreneurship.
3. You Want to Get Rich Quick
If you have seen the late night infomercials with cars, houses and beautiful people and want that life, you can have it, just not tomorrow. Unless you already have a lot of money, it will take time to make significant money from real estate. You have to be in it for the long haul. If done right, real estate can provide wealth and a lifestyle that few other investments can, but it takes time and sacrifice. If you want to get rich quick, keep playing the lottery.
4. You Haven’t Planned Your Business
Real estate investing is a business, plain and simple. Without spending time planning some items like your mission, business strategy and financials, you not only will not understand your targets and strategy. You may also get caught in analysis paralysis or chasing the next new investment strategy, all of which can lead to a lot of work and little action. Additionally, you most likely won’t create systems and structure to support your business operations, which will cause you to spend more time working in your business, rather than on your business.
5. You Are Not Willing To Put in The Work
If I haven’t said it yet, real estate investing is difficult. To be a real estate investor is to be an entrepreneur. Entrepreneurs can spend many years or long hours and low to no pay to build a successful business. This may mean giving up certain things that take your time so that you can spend more time working up on your real estate business.
6. You Don’t Have Skin in the Game
If you were to go to a bank for a mortgage, they will most likely only give you 80% of the cost of a house and want you to pay the oer 20% yourself. Do you know why this is? They want to get paid back and they don’t want to you to just walk away from the house. By making you spend 20%, they make sure you are committed. If you have not done something to make yourself committed to real estate investing, it is very easy not get started or give up when things get difficult.
7. You Have Not Burned The Boats
You’ve probably heard this saying before. One of the best ways to make sure you are committed to something is to “burn the boats” or not give you a way to go back. Many successful entrepreneurs attribute their success to getting laid off, not having a job and having to make sure that their business succeeded. How can you make it so that you have to succeed in real estate investing?
8. You Are Waiting For The Perfect Time
There is no “perfect time” to start real estate investing. If you are waiting for the perfect time, you will never get started. There are hundreds of ways to make money in real estate, and there is a strategy that works in every location regardless of whether we are in a up or down cycle. Most important than trying to time the market is picking the right strategy/location that make sense after running the numbers.
An Open Challenge… Prove Me Wrong
I foolishly fell into the “guru trap” and spent $15,000 on “training.” This was 6 years ago. I was not alone as 40 other people did the same thing, and several people spent double what I did. I recently came across our class list and decided to try an experiment. I reached out to the group to see who was still active in real estate since the training. Here is the response:
- 40 total people
- Out of 40, only 3 people (including myself) are still investing in real estate
See why I am telling you that you won’t be a real estate investor? 40 people each spent $15,000+ on real estate training and 6 years later only 3 people are actually investing in real estate.
It’s the same trend with our local REIA. Each month we have several new faces. They hang around for 1 or 2 meetings and then disappear. Or they hang around for a year and when I check in with them, they have yet to buy a house.
I hate to see this, so I want you to prove me wrong. Be one of those 3 people.
Find your why, create your plan and take action!