The barrier of entry seems way too high

The barrier of entry seems way too high

Member since 2018 · 10 posts · 7 votes

I've been trying to get started on real estate investing for almost a year and a half now. I've been doing research on the basics, trying to learn specific markets that look promising, and even contacting agents to help me buy my first rental property. And so far, I still haven't bought anything. The pros make it sound easy. They keep bragging about how they buy everything at 30% below market value, and their CoC return is over 25%... and yet I can't find anything that cash flows. At all. I have no idea where they get their magical deals from. (Unless I look at really cheap properties, but then I hear about the nightmare tenants associated with them...) People keep telling me not to settle for a mediocre purchase. Well, I was about to "settle" for one that "only" gives 6% CoC return... only to have my agent tell me I messed up the calculations and the real rate of return is like -13%... so I can't even find a property to "settle" for! Go figure.
I also have no idea how to figure out the market rent for a property. (And the ARV for that matter, but the rent's more important.) I was told that Zillow is not reliable and I should contact a property manager. Well I tried doing that and most of them just ignored me. Even the ones that didn't just gave some vague useless advice. Actually, one of them told me that they just look at Zillow as well! Awesome.
I also keep hearing that the market is overheated right now, so I should be looking at off-market properties for below market value, using the BRRRR method, etc. Except I'm trying to buy my first house as an out of state rental. That's already a huge hurdle, if I say so myself. The last thing I want is to make it even more complicated and more likely for something to go wrong.

I'm sorry for sounding so frustrated right now. It seems more and more like real estate is some exclusive club and I'm an outsider trying to get in. Because nothing I've tried has worked, I keep getting vague cryptic advice, and I have no idea what to do anymore.

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
7y

I'm about to make you more frustrated...and far less frustrated...at the same time.

You're frustrated because you're doing it all wrong...and the biggest mistake you're making came close to making things worse.  You NEVER, EVER, settle.  The goal is NOT to acquire properties, the goal is to acquire deals...there's a big difference.  I tell people all the time, "sometimes the best deals are the ones you don't make".  So, in fact, you are probably making great deals...by NOT settling.

Also, your second biggest mistake(s), is your admitted lack of knowledge on how to analyze. You can't be a REI without that knowledge...unless you want to lose money...lots and lots of money.

Third, when you say the "pros make it sound so easy", that's because it is...for them...kind of.  The pros didn't make it easy overnight...it took time, experience, practice and knowledge to get to that point.

Now, here's what is going to make you feel better.  You can get to that point.  First, you have to stop looking for properties right now, and learn how to analyze, learn how money works (this is another way of saying different strategies), and build a plan...and "flipping 3 houses, and holding one per year" isn't a plan.

If you have any questions, contact me direct by PM.  Right now, the fact you haven't just "settled" on a property just to get one, is a good thing,...probably the best thing that happened to you.

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    7y

    I'm about to make you more frustrated...and far less frustrated...at the same time.

    You're frustrated because you're doing it all wrong...and the biggest mistake you're making came close to making things worse.  You NEVER, EVER, settle.  The goal is NOT to acquire properties, the goal is to acquire deals...there's a big difference.  I tell people all the time, "sometimes the best deals are the ones you don't make".  So, in fact, you are probably making great deals...by NOT settling.

    Also, your second biggest mistake(s), is your admitted lack of knowledge on how to analyze. You can't be a REI without that knowledge...unless you want to lose money...lots and lots of money.

    Third, when you say the "pros make it sound so easy", that's because it is...for them...kind of.  The pros didn't make it easy overnight...it took time, experience, practice and knowledge to get to that point.

    Now, here's what is going to make you feel better.  You can get to that point.  First, you have to stop looking for properties right now, and learn how to analyze, learn how money works (this is another way of saying different strategies), and build a plan...and "flipping 3 houses, and holding one per year" isn't a plan.

    If you have any questions, contact me direct by PM.  Right now, the fact you haven't just "settled" on a property just to get one, is a good thing,...probably the best thing that happened to you.

  • Member since 2016 · 13k+ posts · 12k+ votes
    7y

    You are still learning keep at it. You are not yet prepared to start actually investing. If anyone suggests that you jump in and learn as you go do not take their advice.

    We may make it sound easy but the reality is that starting is the most difficult part. 95% of those wanting to invest fail.

    Hang in there.

  • Realtor · Las Vegas, NV · Member since 2018 · 218 posts · 147 votes
    7y

    @Account Closed as well..  

  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    7y

    @Account Closed you need education.  BP has lots of success stories but there are plenty of mistakes as well.  Even the pros can tell you positive and negative stories.  It sounds to me you could use a local mentor.  When I started I needed a mentor to show me the good, the bad and the ugly.  There is great info here, but nothing beats one on one learning.  Try to find someone who can hold your hand or partner on the first deal or two so you learn and minimize your risk.

    Good Luck.

  • Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    @Account Closed

    18 months of "trying," Jason, and this is your seventh post here. You have no picture up, we have no clue where you live and are trying to operate from your profile. Your last post before this one was trying to find a property manager in Indianapolis. Before that you complained about not being able to find any properties. Three months ago we learned you were an engineer in San Jose, complaining about how to analyze a property. Your very first post was about turnkeys and again, that was three months ago, when you created your profile on November 29th.

    So what were you doing for the first 15 months?

    Take the online free video course, start going through the podcasts, buy a few books on long-distance investing, find locals in the business to spend time with and then start asking focused questions that show preparation and determination. Because right now you sound an awful lot like a dilettante. Not a newbie with the drive to learn more, to teach yourself what you need to know, but a dilettante who doesn't really WANT to learn anything other than a string of easy answers that lead straight to financial freedom with a minimum of fuss and time expenditure.

  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    BP is full of videos, blogs, and threads on how to properly analyze an investment. It's not difficult to learn and then you should practice it regularly to ensure you've got it down. You can also use the BP calculator but I recommend doing it manually with the four-square method Brandon teaches.

    If you're 15 months into this and still don't know how to analyze a property then I would say you're not cut out for this and should consider mutual funds.

    The DIY Landlord Book4.7248 Reviews
  • Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Hi Jason,

    The Pros have been doing it for a very long time.  I have been in the game for 17yrs and to be honest, at this point it's easy.  It really is and I am not saying that to rub it in because that is not who I am.  I am saying it because you need to level up your knowledge and game.  I know my market, I know what I want to buy, I know what to look for, and I know where to look, I sit back wait till something falls onto my lap and I strike like a Cobra.  Do you know those things about your business? 

    Now it was not always like this and my first 3-4yrs was really hard.  I didn't have a system, didn't know what to look for, and was essentially guessing.  This was in the middle 2000s when there was no real info on the internet.  It takes time and I feel for your frustration.  I was there and I am sure everyone who was successful was there.  If it was easy then everyone would be able to do it.  Think about that. 

    Most people give up when it is just about to take off and get easy.  That's the truth.  Here's the beautiful part.  When you finally get there and you know how hard it was and how many hours you logged.  You realize that there is essentially no competition.  The room is empty because everyone gave up.  Now you can just dominate.

  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    7y
    Originally posted by @Frank Wong:

    Hi Jason,

    The Pros have been doing it for a very long time.  I have been in the game for 17yrs and to be honest, at this point it's easy.  It really is and I am not saying that to rub it in because that is not who I am.  I am saying it because you need to level up your knowledge and game.  I know my market, I know what I want to buy, I know what to look for, and I know where to look, I sit back wait till something falls onto my lap and I strike like a Cobra.  Do you know those things about your business? 

    Now it was not always like this and my first 3-4yrs was really hard.  I didn't have a system, didn't know what to look for, and was essentially guessing.  This was in the middle 2000s when there was no real info on the internet.  It takes time and I feel for your frustration.  I was there and I am sure everyone who was successful was there.  If it was easy then everyone would be able to do it.  Think about that. 

    Most people give up when it is just about to take off and get easy.  That's the truth.  Here's the beautiful part.  When you finally get there and you know how hard it was and how many hours you logged.  You realize that there is essentially no competition.  The room is empty because everyone gave up.  Now you can just dominate.

     This post should be on the wall of most new investors...as a way of inspiring them through that early frustration they all will feel to some degree.  Well put.

  • Investor/Agent · Kansas City, MO · Member since 2017 · 291 posts · 308 votes
    7y

    @Account Closed said you shouldn't buy properties just to buy property.  Get back to work.  Things will happen for you.  Best of luck.

  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    7y

    Have you seen the Movie, "A League of Their Own"?  My favorite scene is when the star catcher's husband returns from the war, and right as the World Series is about to start, she decides to go home.

    Tom Hanks' character (the Manager), confronts her, and asks her why.  Eventually she just says, "It's just to hard".

    His answer is one of my favorite movie lines of all time.  He says, "Of course it's hard.  If it were easy everyone would do it.  It's the hard that makes it great".

    I think that just might apply to a lot of things in life...and to REI as a whole.

  • Real Estate Agent · Hoffman Estates, IL · Member since 2017 · 90 posts · 68 votes
    7y

    @Joe Villeneuve Golden nuggets there!

    @Account Closed Real Estate market is very local. Where are you looking? I wouldn't be frustrated but double down. 

    Try to switch things around. Expand your search criteria. Look for deals that you can value add in. Don't compare your COC return to others, all markets are different.

    If you need help analyzing deals, post here. Lots of veterans here who are willing to help. 

    Stay positive, goes a long way!

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