A few weeks ago I was listening to the radio and I heard a commercial telling me that for free I can learn how to be a real estate investor in a two hour class. With almost two decades of investing in real estate under my belt I realize how impossible this claim actually is. I have learned what I know through a lifetime of learning. My real estate baby is old enough to vote this year and I am still picking up new things along the way. There is no way you can learn a drop of what you need to know in 2 hours; much less 2 free hours.
I ask my business partner, John, if he wants to go hear this line of shiitake mushrooms. He does, of course.
We sign up and are ready to roll with pen and notebook in hand just in case there is some good content. We leave with one thing written in the notebook, “Stop! We are going to get kicked out!” (My note to John.)
We see a video montage of people telling us how they got wealthy in like 16 seconds. Bought the course, became wealthy. Done. We are looking at each other barely able to hold in the barrage of rude comments we want to make. (Neither of us are quiet or PC).
A handsome, well dressed, young gentleman comes out and starts selling us on the ACTUAL class. We are sure that no real person is going to believe that they are a class away from wealth. Guess what? We are wrong!! People are practically trampling each other like its the last flat screen on Black Friday just to sign up.
We are listening to the excited buzz of conversation in the room and realize that there are are a lot of misconceptions about real estate investing. Here are the top five myths dispelled.
1. You will not get rich overnight. I see infomercials where people are saying “I made $100,000 on my first deal.” That is highly unlikely. I have been an active investor for many years and I have to say that the number of times I have had a payout over $50,000 in actual profit is something I can count on one hand. Rome wasn’t built in a day and neither will your empire.
I must add that it can happen if you are willing to make it happen. The sky is the limit when it comes to your earning potential. You will get back what you put in. Which brings me to….
2. This is not “easy” money. You have to get out there and bust your ass for it just like any other life goal. Do you want a PHD? You have to work hard to for years to obtain that goal. Do you want to be a professional athlete? You are not going to get there by sitting on the couch with a lap full of Chinese carryout.
Every investor I know gets up early and works late. They are making offers and writing contracts every day.
Don’t get me wrong, you will at some point have the option of working less to just sustain your lifestyle. That is after you have built your empire.
My father was ill for about a year before his passing. I was able to cut my workload down to roughly 10 hours a week not only for that year but for about a year after. I was able to just ride on the income from the property I already own. Finally the hustle bug bit me again and I was back at getting up between 4&5 AM and going non-stop until 11 or so. Why? This is what I love. The money is just a bonus, its the day to day that I can’t give up.
How was I able to take two years almost off completely? That leads right into….
3. There are multiple ways to invest in real estate. When most of us think of investing in real estate we think of owning rental properties and flipping houses. Guess what? Those are just the tip of the iceberg and not even the ones from which I have made the most. I personally only have 11 rental properties and did not flip a single house the year after my dad passed. The majority of my residual income is derived from homes for which I offer lease purchase options. I get monthly payments without the hassle of being a landlord.
Did you know there are multiple ways that you can make money in real estate you never own ? You can make money on buyers when you have no property available to them. Some investors are niche investors, meaning they find a style and stick with it. Others, like myself, love the vast possibilities of the multitudes of options available.
4. You do not need a lot of money to invest in real estate. This is a true statement. You can invest with just enough to form your LLC. You can invest in every possible style of real estate investing with almost zero dollars. In fact, once you have the dollars, I would not suggest using them.
5. You are only as good as your team. I experienced a major setback with two of the homes I am flipping back to back.One had a leak in the kitchen that damaged the new wood floor. The other had a waterfall flowing from the third floor to the first in a historic home. This created some serious damage to the plaster walls and wood floors. My general contractor, Brandon, was scheduled to go out of town this weekend. He sent his wife and her friend but he stayed behind to resolve my issues and keep us on schedule. This is an example of an amazing team member.
You will want to build a team of reliable professionals that you can count on and that count on you. I see a big mistake that beginners make is to bounce around looking for the best deal. I might have been able to save a few dollars with another contractor but would it have been worth being just another client? Had I used a guy for the first time to save a couple of bucks I am sure I would have been told that this will push my completion date back , and that is a reasonable answer.
You will want to assemble a team that includes your contractor(s), attorney, realtor, insurance agent, accountant, and lender(s). These will be the people that make the difference between being an investor and being a great investor.
When I am coaching and mentoring I work hard to instill these ideas into my clients. Knowing that the life you want is at your fingertips is invigorating, knowing that you will have to work for it is necessary. Having a full understanding of what investment options are available to you is key to building a business that invokes excitement in you. Having a team of professionals that have your back adds the sense of security you need to be able to sleep at night.
Happy investing my real estate junkies!!!
I was born an entrepreneur. I am pretty certain that I was peddling passies in the hospital when the nurses left the room.All of the other kids in the neighborhood were riding bikes and playing with dolls I was selling jewelry out of a catalogue and creating a back yard consignment shop. At 21 I became a real estate investor and fell in love. This was/is/ and always will be my passion. I have been madly in love with flipping, holding, and writing offers on real estate that seem crazy for 18 years. Ladies and gents I am willing to share the love of my life with you. Maybe its polyamory maybe its jut because I can’t shut up about it. Either way I will be sharing every mistake I ever made and the lesson that came from it. I love questions. Please ask away!!!