We all grew up — well, most of us — being taught that we had to get the “A” in school or we had to always do our best or we had to act a certain way to be considered “successful.” Most career paths or industries we get into have only further supported these expectations. If you don’t make the grades, you don’t get the job. If you fail at your work tasks, you get written up or lose your job. If you act inappropriately, you are likely to get fired. All of those beliefs we grew up with only get more deeply embedded within us the further we move along our paths in life.
Until now. Welcome to real estate investing, the land where most of the rules we have known and (not) loved go right out the window.
Real estate investing really does go outside the box when it comes to a lot of things we’ve been taught to believe.
If you are a real estate investor:
- It doesn’t matter if you failed every class you ever took, or even if you have a high school diploma or not. You can still be a real estate investor (and successful one at that).
- You are working for yourself so all of those threats of being fired or assumptions about how you have to act are gone because you can’t get fired (unless you fire yourself).
- You can be a raging jackass and still run a profitable real estate business (not my preferred route for people to take, but it can be done).
- Very few of the fundamentals of real estate investing were ever taught in schools, so everyone is on their own for figuring it all out (unless you have a family member or someone who is already in the industry and you’ve learned by watching them).
For you folks on the more rebellious side of life, your ears may have just perked up and you may be feeling all sorts of fired up about getting into real estate investing now! If you err on the more cautious side of life, hearing all of that may have sparked your nerves a little in thinking of getting into real estate investing.
No matter which side of the spectrum you are on, you can still get into real estate investing.
Real estate investing is a very different field than most career paths you can choose, mostly for the reasons already mentioned. It’s a different feel of an industry, and it has different expectations and “rules” than most. Now that you understand how different of an industry it really is, let’s look at the pros and cons of being in real estate investing as compared to other industries.
I’m going to start with the downsides (cons) of the industry first, so we can end on a good note with upsides (pros).
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.
Downsides to Real Estate Investing
I’ve already briefly hit on the biggest downsides, but I’ll elaborate more here. And keep in mind too that all of these downsides, depending on your preferences and styles, don’t necessarily have to be seen only as downsides. Some people actually like these things about real estate investing!
But in staying on a more factual side, I say these as downsides mostly because they do in fact make real estate investing difficult. It’s that challenge that a lot of people see as a good thing in certain areas, but for now we’ll keep these things listed as bummers to the industry.
There’s No Specified Education
This is really the biggest issue with real estate investing in my mind. We just weren’t taught this stuff in school! I know there are real estate degrees offered in some colleges, and certainly you can always get a more generic financial background in school that can be applied to investing, but straight real estate investing principles are not taught in any school I’ve ever heard of. Why do you think the guru programs can make so much money?
If there were college degrees specific to this stuff, you could spend the same money or less than you would at a guru program just getting a college degree that teaches what you need to know. So to get into this industry, you really have to exercise serious initiative to get yourself educated. And to make that harder, there are SO many resources out there now that it can really get overwhelming and confusing trying to figure out who or what to rely on for your education. The overwhelming plethora of information out there is great for access to resources, but figuring out who to listen to is tricky sometimes.
There’s a Lack of Standardization
There are few standards that must be maintained in this industry. It really does feel like a free-for-all sometimes because everyone is just doing their own thing, it’s often very difficult to know if who you are working with is legit, and there is no set process anyone has to follow to do anything, really, so everything can become very confusing very fast.
Risk is a Given
Guess what? Real estate can be a risky business. There are no guarantees in this industry, there are a gazillion ways to fail, and it can prove to be a painful road. One commonality amongst every successful real estate investor I’ve ever read about is that they have failed miserably and to the tunes of a LOT of money, but they did not stop once they failed. Failure in this industry is almost like a rite of passage to make it big!
Sure, you don’t necessarily have to plan to become a billionaire with real estate, and therefore you won’t be required to make that big of mistakes, but it goes to show that failure and mistakes are a big part of this industry. You have to be mentally ready for that! Nothing is guaranteed, and nothing is perfect. (Note: there are certainly ways to help mitigate risk once you dive into this industry and hopefully allow you to avoid the bigger-level mistakes, so be sure to get educated on any avenue you choose to pursue!)
You Might Deal With Unsavory People
It’s just reality—there are some raging jackasses in real estate! There have also been scammers. The jackasses stem from the ability to be anyone you want in this industry with little chance of punishment (worst case is usually just some lost business). The scammers stem, I think, from the fact that everyone is on their own to get educated in this industry, and therefore that leaves a wide-open door for anyone to step in and claim they know everything, and then take you for a ton of money because you have no way of knowing otherwise. Real estate is definitely not for the faint of heart when it comes to dealing with the people, but certainly there are a lot of nice folks out there too that you can get connected with. Just be on alert for the people you likely don’t want to do business with.
Upsides to Real Estate Investing
I can hear all of you rebels getting all fired up after reading those downsides because of the inherent challenge that each of those poses to an investor! Anyone who likes problem solving, dealing with people of all types, being on their own, and taking risks will love real estate investing! All of those downsides really can be turned into good things, but they do make investing harder, regardless of how much they might excite you.
Now let’s focus on the perks to this industry that you might not find in most other career paths. And, for those of you who aren’t adventure-seeking risk hounds, hopefully these will make you feel better about real estate investing and you’ll be encouraged to get into it regardless of the downsides.
There’s a Chance of Huge Rewards
Where there is risk, there are rewards. And the rewards, mostly financial, of real estate investing can be huge. And better yet, you control how big of rewards you reap! It’s not like a salaried job where you are capped at your max salary—when you are investing you can just keep going until you hit whatever goal or level you want to! The power is in your hands and there is no cap to what you can achieve. Few other industries, in my opinion, offer that.
It Offers Flexibility
Man does this word go a long ways with real estate investing. You have flexibility in everything ranging from what kind of investing you do (tons of options), to what schedule you do it on, to where you do it, to how long you do it, to how much money you make doing it, to the people you work with doing it, and you are your own boss! This kind of flexibility, in all of these areas, is pretty hard to find in most other industries.
You Get to Be Yourself
This happens in a couple of ways. For one, you really can be you (even if you are that naturally raging jackass!) and not have to conform to anyone else’s standards. I don’t see this as a free pass for being a jerk, and being a jerk really isn’t what I’m focusing on here, but rather — if you are shy you can remain shy and quiet, if you are an aggressive person you can be aggressive, if you are hilarious you can woo people with your humor… the list is endless! You don’t have to mute anything about you like you often would have to in corporate-type jobs or wherever else you might work.
The other thing about being yourself in this industry is that there are so many options for how you invest in real estate; you can really tailor what you do to be not only something you truly enjoy, but also something you are really good at. It’s kind of like rugby — whatever your strength is, there is a position on the field for you (at least if you are playing 15s!). You don’t have to be good at swinging a hammer or negotiating deals to be in real estate. There is everything from sales to marketing to online relationships to paperwork to people skills or contracts to anything! Or maybe you do like swinging hammers — then there is definitely room for that, too. No matter what your skill, there is something in real estate you can do with it.
You’ll Meet Some Pretty Great People, Too
This one deserves to be in both categories because while there are some jerks out there that you are likely to run into, I’ve also met some of the coolest people I’ve ever known through real estate investing. As soon as you have a common interest with a group of people, such as financial freedom, that puts you amongst like-minded people to a degree that you wouldn’t always meet elsewhere. There are some smart and fun folks in this industry!
It Allows You to Embrace Failure
It IS an option! And not only is it an option, it’s a sign of impending success. There is no room in this industry for expecting perfection. Maybe someone every now and then breezes through without making any big mistakes, but it’s certainly not the majority of us. When failure is an option, it takes so much pressure off!
Being able to look at any mistakes or failures as a good thing, rather than a bad or job-threatening thing, adds years to your life and is just a more enjoyable way to live. How many industries do you know allow so much freedom in the failure department?
What do you think? Is real estate investing as different from most other industries as I think it is? What are your opinions on the biggest pros and cons to real estate investing?
I want to hear your stories!