There are countless reasons why investors do not achieve success in real estate, but I have identified one factor through my numerous hours of teaching and personal experience that I believe contributes most to failure. In this article, I would like to outline several reasons that lead to failure, highlight the main obstacle, and dive into how you can avoid this impediment to success.
Here is a list of reasons I have compiled that lead to investors failure in real estate:
- Not enough reasons to invest in real estate
- No focus
- No plan
- Lack of education
- Quit too soon
- Not enough capital
- Careless due diligence
When I began investing in real estate back in 2002, the impetus for my decision to jump into real estate was advice from friends and family members of how good of an investment it was and how I should “keep” my money there. Everyone told me that real estate was the “best” investment out there and that more people became wealthy as a result of investing in real estate.
The Most Common Reason Investors Fail
It all sounded great, but I never stopped to think what my reasons were. What were my goals? What did I want the investment to achieve for me? What was my exit strategy? At this point, I had not bought into real estate, and I did not fully dedicate myself to education and creating a business. I viewed real estate as a part-time endeavor, and I had not built up a big enough “why” to succeed.
I was guilty of a few of the other items listed above, such as careless due diligence, no focus, and no plan. But my lack of reasons for investing in real estate is what caused my initial failures. Let me illustrate why.
After my first investment, I proceeded to purchase a commercial property and invested in a mobile home park. My business was doing rather well, and these investments were vehicles to park money for a future return. Things were going OK until the mobile home park fell into foreclosure and the great recession of 2008 crashed upon me, sending the commercial property into the red.
All of a sudden, my business slowed and I began to reassess my future prospects. Regulations and competition dimmed my outlook dramatically in my business, and at the flip of a switch, the reasons to invest in real estate became compelling. I needed an alternative stream of revenue to supplement and hopefully replace my business. I needed to feed my six children (you don’t want to see that weekly food bill!), and the cost of living in New York was continuing to skyrocket. Hence, my first true reason for real estate emerged! Passive income and wealth creation topped the list of reasons, and I convinced myself that real estate was the vehicle that could be used to deliver me to these two goals.
My second reason for being drawn to real estate was a bit less obvious to me at the time. I began to loathe going to work, and I began to develop this feeling of being stuck in life. It was difficult to describe, and I continued to harbor feelings of helplessness. Once I decided to attend coaching school for personal development, I realized where these feelings were emanating from.
Growth & Contribution
What was lacking in my life were feelings of growth and contribution, two major needs that are vital for humans to experience joy and fulfillment in life. Click here to learn about the six human needs. I was entering what most people refer to as a mid-life crisis. My crisis was centered around not reaching my potential and being stuck in a situation that I hated. Real estate ignited the passion inside me to create a lucrative business, yet still be able to serve others and network with fellow investors and brokers.
Once these two reasons aligned with my values and beliefs, I began to take intelligent action. I created a plan, focused on a niche, committed to education with a coach, and decided not to quit.
I met my partner Jake soon after, and things started to fall into place. It did take us almost two years to locate a deal that made sense, and we jumped in. Within five months, we purchased our second deal, and within one year, we had closed on our third deal. The second time around for me was a totally different experience.
I can only attribute my success in real estate to discovering why I wanted to invest. Once my reasons became clear, my commitment and motivation soared, and I knew what I wanted to achieve. This time, I was not taking no for an answer.
Do you know why you want to invest in real estate? Find out what your reasons are, write them down, and look at them every day. Your desire and reasons in life have to turn from a “should do it” to a “must do it.” Only then will you become committed to succeeding in this fantastic business.
What’s your purpose for investing in real estate?
Let me know with a comment!