Maybe it was the late night infomercial, the get rich quick scheme that you heard about from your neighbors friend, or a real estate investment course they purchased and vowed to study hard! Unfortunately probably 90% end up having never purchased a single property. Why is it that the numbers are so staggering?
There are a few reasons for the failures
First, not everyone has the right skill set going in. There are subtle techniques like negotiation and impeccable communication skills that typically get glossed right out of the gate. Let’s look at the 3 biggest reasons of failure and break them down.
Unrealistic expectations
Value of Relationships
Knowledge and skills
* Let’s address the first one – How to Manage Your Expectations- My advice, start with asking yourself “What does success look like to you?”
Being a great investor requires that you harness your expectations. For example, our company can buy, renovate, built, list, and sell as many homes as the next guy on paper. Being successful or making it last is not about making it in the eyes of other people its about setting the right expectations for your business and going hard after it. I see it all the time websites, blog posts, claims to fame where investors tell you all the amazing things about real estate and in reality what they accomplished was 10 years ago and is completely differently in TODAY’s market or what they are selling they HAVE NEVER ACTUALLY DONE THEMSELVES.
The single biggest reason newbies fail is because they believe it will be easier than it is. This might hurt a little but what happened to good old fashioned HARD WORK! It seems that today I see more people putting energy into finding out how to not work than actually putting in the true effort in really working and getting it done, when I look up they are still trying to figure out how to build a system of not working. Just put the time in that is needed and it will work out if you thought it through up front, setting the right expectations.
Reference: What I learned early on from 2 mentors I have a TON OF RESPECT FOR:
Mike Cantu – “The 2 fastest ways out of this business are overhead & lifestyle”.
Gary Johnston – “Farmers who wait for the perfect weather will never plant. If they watch every cloud, they never harvest.” Ecclesiastes 11:4
Valuing Relationships-
THIS IS LIKELY THE MOST IMPORTANT PART- The projects or deals will come and go but the relationships you make along the way will last forever. When I read Tony Alvarez’s book, “How I Made 7.2 Million In Seven Years“ one part stuck out to me the most, the importance of Relationships…….
I built my entire business around this part, today I’ve closed over 200 transactions with the same agent. I trust him, we know and anticipate the moves needed and I can’t even describe the benefit or growth its not only brought to my business but his. Yet 1 word “Greed” holds so many back, its the thought of cashing the commission check or squeezing as much from the deal as they can and cutting everyone else out that completely kills all relationships. If there is a secret sauce to this business, its RELATIONSHIPS.
Sometimes its just “Been there done that”-
We buy problems for a living, thats what I often tell my team, so don’t be surprised when a problem pops up. Our job is to fix it. When we buy a house it comes with 100 problems, by the end our job is to have that down to 10-15 problems, we are professional problem solvers in a sense. Having the right people around you with the right mind set that can handle this environment is likely another topic all in itself.
Many new investors just don’t have the ability to pull of the deal they are trying to do. Sometimes it’s because what they are trying is more complicated than they have been taught. Having the skills to fix problems when it doesn’t go as planned will go a long way. You can never have too much knowledge in real estate. The single best place to learn is at your local real estate investment club. Don’t get caught up though in following other newbies at the club. Find out first who is successful there and learn from those individuals.
One last thing, don’t be afraid to fail. Give it all you have, think through things and plan but once you make a firm decision give it hell!
Reference: If there’s one person that knows how to bring it all together and keep it there through many cycles, its Bruce Norris. I’ve followed his advice since I started and thank God for the information they produce, its invaluable!