Guy on TV Said I Can be a Millionaire in a Year Even Though I'm Broke

[Joe Cummings]

Well, I'm not broke, so a billion in a year should be realistic right?

Seriously though, I'm in a position now where I can buy most houses around here cash. Shopping for something that needs work. So I'm looking for opinions, what should I do, buy property for cash?

I have my reservations about blowing a wad of money on something that is only going to bring in a lousy 1,000 - 1,500 a month. Although rehabbing it and reselling it could get my capital back with hopefully a nice margin for profit.

Really though, is the money there to risk a couple hundred grand?  If there isn't enough to pay for my time and risk, I don't want to do it. I've been in business before, and no way I want to compete with people who risk their capital and work hard to come out with a lousy 20 bucks an hour when you add up all their time.

[Rick H.]

First, let's set the record straight. TV people rarely, if ever, have any actual experience with real estate. The reason they're in TV is because the either sell stuff well directly (infomercials) or for advertisers (fix and flips shows with home improvement sponsors). 

While both are pernicious and potentislly dangerous, the former has the most impact on people because the broad audience has a high percentage of people who are dissatisfied with their present circumstances and are sold in the idea that real estate with fix that. 

On the other side, 95%+ never take any action beyond buying an intro course. This is not rhetoric. It's my observation. Sadly, the number is not much better here on BP or at real estate clubs. 

This is what happens. A certain percentage of "us" buy into the dream and, not knowing that the promoters are full of crap, actually go out and make money. Serious money. Life changing money. For me it started with a guy with a newspaper ad and my Godfather demonstrating that buying distressed real estate can be very profitable. 

Dream merchants aside, there are really two aspects of real estate:

1) The business of real estate

2) Real estate related investing.

They are not the same.

Most of the puffery on the forums is about wholesaling, which is not investing at all but rather lead generation; people who try to wedge their way between a principal and buyer for a fee. It's an unlicensed activity but legal in many states. This is how most new peopl envision themselves, by making a profit from price spread. 

Licensed it not, this is clearly being the real estate business. The test is that it requires you to do something in order to be compensated.

Investing, on the other hand, may include buying real estate, improving,, subdividing, developing, buying mortgages, liens and creditor judgments secured by real estate, but most if these require skills, capital and effort in order to succesfully create added value.

Enders (those on the coasting side of investing) want to monetize via reliable cash flows with minimal hassles. Excitement, drama and problem people are not part of the ender's daily routine so they trade some ROI for passive predictability.

Alas, the TV guys fade (mostly) into obscurity unless totally outrageous, for which there are more than a few. The irony is that, had they acted in their own advise and pursued real estate, they might not have ended up the way they seem to.