By William Bronchick, Real Estate Attorney & Real Estate Coach
The following are the top 10 reasons people use for not succeeding in real estate investing. If I offend anyone with this list, it probably means I’m right on track!
Reason #1: No Cash
The Myth: “You need money to make money”
The Truth: Find a good real estate deal, and the money will find you. Ask any seasoned investor and they will tell you that lack of funds is never an issue; lack of good deals is! If you can negotiate a good price on a house, you will find plenty of partners willing to put up the money.
Reason #2: No Time
The Myth: “I’ve got a job, a spouse, kids and little time on my hands”
The Truth: Throw out your television and you’ll have all the time you need. People spend an average of 3 hours per day in front of the tube. They spend even more time on weekends. Want to do something fun this Saturday? Load the kids in the minivan and go driving around looking for ugly houses. Make a game out of it giving a dollar to each of your kids that spot an ugly house. Tell them that each ugly house your buy means enough money to take them all to Disney World.
Reason #3: Everyone says this stuff doesn’t work
The Myth: “That late-night TV Stuff Doesn’t Work”
The Truth: You can convince yourself that anything won’t work. Henry Ford once said, “Whether you think you can or think you can’t, you are right.”
Every real estate transaction has risks; some risks are realistic, while others are remote. If you listen to the critics, the naysayers and other pessimists, you’ll convince yourself it doesn’t work. Most people that criticize money-making ideas need to do so for their own ego. After all, if it were true, what’s their excuse for not being successful? Make it a point of not taking financial advice from anyone who makes less than you do.
Reason #4: Too much competition in real estate investing
The Myth: “There are too many people buying houses to find a deal”
The Truth: There are more than enough deals to make everyone rich. At any given time there are hundreds of properties for sale in your market for each investor looking for them. In addition, a majority of people who say they are investors are just sitting on the sidelines waiting for someone to fall in their lap. Don’t be one of them – go out and make deals happen.
Reason #5: It doesn’t work in my market
The Myth: “It doesn’t work in my market.”
The Truth: It works in EVERY market. True, it may work differently in some markets than in others, but there are investors making money in every city, every day of the week. You have to learn your market – the rents, the trends, the local customs, the bankers, the title companies, etc. Then, learn the techniques and adapt them to your market. If you are in a hot market, you can sell properties faster and ride inflation. If you are in a down market, you can find lots of bargains. And, in any market, there are people with financial problems that translate into bargain properties.
Reason #6: The recession is coming
The Myth: “Certainly, the market is bad, so anything I buy will go down in value.”
The Truth: Sell cheaper or with attractive terms. When Dell wants to move computers, they drop the price. When GM wants to move cars they offer no interest financing. Be creative and do things they make your houses sell and rent faster. If the prices are falling, buy way below market and sell just below market. If rental vacancies go up, offer free satellite TV (heck, it’s $25/month). When everyone else is “dooming and glooming”, it only clears out the competition.
Reason #7: Realtors won’t cooperate with me
The Myth: “Real Estate Agents Don’t Want to Cooperate With Investors”
The Truth: The right agent can be your best friend and #1 source of business. I have one agent that brought me six deals in the past year. He knows exactly what I want and only calls me when there’s a deal. You need to educate a few agents and let them know exactly what you want. Few agents have repeat customers – you have to make them understand that you will be giving them business over and over again.
Reason #8: I have bad credit
The Myth: “I need good credit to buy houses”
The Reality: Good credit helps, but you don’t need it to make money in real estate. Lease/options, owner–financing, flipping properties, and other creative techniques will allow you to buy real estate without credit. You can always use a partner who has good credit. You can also borrow “hard money” without having good credit. In the meantime, you can work on fixing your bad credit so you can use it as an asset in the future.
Reason #9: I might lose money
The Myth: Real Estate is Very Risky
The Reality: Real estate is one of the safest investments you can buy. The stock market is beyond your control. Savings, CDs, and money market funds won’t give you enough return to make money. You have to be willing to take a calculated risk to make money. The more you educate yourself, the less risky real estate becomes. However, don’t think you need to know EVERYTHING before taking action.
Reason #10: I don’t know what to do
The Myth: I Need to Learn More Before I Start
The Reality: You probably know more than enough to get started in real estate. It takes years to learn a lot. You will never know it all. Success is an ongoing learning process. Read some books, take some seminars, and go take MASSIVE action. Then, learn some more and take a lot more action. If you are really impatient, enlist the help of others. Having a Real estate mentor or real estate coach to help you in your beginning years can prove a real asset!
Henry Ford said, “Why should I clutter my mind with general information when I have men around me who can supply any knowledge I need?” Henry Ford was a smart man because he realized that he didn’t need to know it all if he could consult with others that did. Ronald Reagan’s cabinet was said to be the team of the brightest people in politics.
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