Why you won't be successful in Real Estate, despite what you know

[Rick Griffith]

    This Saturday I awoke early, and got in my car to start my 1 1/2 trip to Philadelphia. Ron LeGrand, the millionaire real estate investor was set to speak. My Real Estate education goes as far as some courses and books, no Real Estate deals. I heard this big name was going to be speaking and I was so excited to see what I could learn.

     I sat down in the conference room, and listened to numerous conversations between investors. These guys and gals were talking about convoluted real estate strategies, as I sat there bamboozled. These people seemed to have all the knowledge in the world about real estate, and I was prepared to hear them state they made thousands on their last deal. To my surprise, 95% of these investors were still holding dead end jobs trying to get by. 

    I was frustrated, because I had just listened to dozens of investors who said they've been in real estate for years. They were talking about concepts that sounded like they were part of a physics equation. If these people who've been doing real estate longer than I've been alive can't get a deal, how can I? Despite the great information Ron shared with us, I went home angry and discouraged. How? How can someone know that much about real estate and still not be successful? Maybe they're just not smart enough to do real estate, maybe I'm not smart enough to do real estate I concluded. 

    After days of rumination, I came to an insight that will affect my investing career and any other action I decide to take in my life. Knowing is not enough. You WON'T make millions off what you KNOW, you'll make MILLIONS of what you DO with what you know. See, these people knew all kinds of strategies that could set them on a path to financial freedom. But, listen closer to them and you see that none of them implement these strategies. They're stuck in "analysis paralysis". Some of them actually have done deals but a couple went bad so they just got discouraged, and decided to hit the books again. But most of these investors ended up staying there and haven't done a deal since. 

    This idea of applying what you know extends beyond real estate. You can read 100 different books but if after reading those books, 100 things haven't changed in your life then you just wasted $15+ on a book. A lot of us just get satisfaction from knowing a lot of stuff, it's never enough. I'd pick the investor who only knows 2 strategies and applies them both, rather than the investor who knows 15 and applies none. You must learn, and then take action. 

    It takes courage to get out there and do deals, regardless of how much you know. Mistakes will be made, but you'll lose more money sitting at your computer just reading about real estate every day and not going out there and doing the damn thing! Don't judge yourself as a real estate investor on how much you KNOW, judge yourself on how much you actually DO with what you know. But hey, what do I know. I'm just some 18 year old kid trying to make it big in real estate. I do know that I won't put my pride in how much I know, but rather how much I do with what I know.

Knowing is not enough; we must apply. Willing is not enough; we must do.

-Johann Wolfgang von Goethe

[Bill Gulley]

There certainly is the need to take action on what you know. Two parts to what you know, first is what you actually know about your vocation, the second part is knowing how to apply what you know into action, two different things. 

You have to first acquire the knowledge about your vocation before you can apply it. 

That's with any vocation or profession.

Say you really want to be a great auto mechanic, but you read car books and magazines and learn what the look like and all the specifications. Then you buy a Ford and tear it apart and put it back together again with your Ford manual. Great, now you did it and you start saying your an auto mechanic.

Now, you get some business cards and post on CL "I will fix your car at your place" you get a call and go over to your customer's house, and he owns a Chevy, much like your Ford, but it's different. Your Ford manual won't work on a Chevy and you have no clue how to fix it. So, you just leave.

Next call, you go over and see that this lady has a VW, what is that thing sitting on top of the intake manifold? That's no Ford! You can't fix it. You leave again saying "next"!

Well, you end up going to look at 12 different types of cars and it dawns on you, I can only fix Fords and I'm losing a lot of business by only knowing how to work on one car. It's great that you took action to make money, but you can't take action on what you don't know.

Is the answer to spend a lot of money and buy all the manuals for all the cars? Well, it might be, but that will be a big investment, not to mention years of study to read all those manuals. 

Then you talk to another mechanic he suggests you learn the theory of engines and car parts, how and why they work. That while all cars are different, the parts and how they function are similar. Hey, that's just one school, much cheaper than buying all the manuals and a heck of a lot faster to learn mechanics! 

Now, you know the fundamentals of how cars work and their parts. Now you get it, now you know why that Chevy wouldn't start. 

In that industry, you might go back to all the folks who called you and fix their cars. In real estate, that is less likely because the owners have probably sold the property, but, they might still have it, you could get lucky.

Here on BP, we call that Ford mechanic a "one trick pony" he thinks he learned real estate because he understand how to do a lease-option. That means all he can do are lease-options until he goes to another guru to learn another trick.

You can take all the action you want, but if your knowledge is limited to one or two tricks, that's all you can do. Every deal in real estate is different, but at the root of every deal, they all have the same fundamentals in common. 

When you have the right kind of knowledge the options available to you become clearer, you understand the parts involved to fix any situation. That also means the second part of your knowledge, how to take action becomes much easier. You recognize which path to take and you're not wasting your time and money going down the wrong path. 

Who do you think has the best chance of success, a mechanic who knows all the parts and what they do, or a parts changer, the guy that just keeps replacing parts until something works?  

All those I know who are or have been successful in real estate, know real estate, the fundamentals and more advanced areas they specialized in. A know nothing type might get lucky and make some great money, but they really aren't successful, they are lucky! If you are the lucky one, why not just go buy a Lotto ticket and save some time and money? Take action, go buy a Lotto ticket!

Knowledge without experience is just information (Mark Twain) Experience without knowledge is just failure (ME). 

Those people sitting in that seminar probably all had something in common, they really didn't know real estate. They were all chasing a quick way to to a deal, but had very little knowledge of how to replicate what some guru told them. 

I know exactly where you newbies are, when I was a kid, my dad would tell me; "You spend more time and effort trying to find an easier way than just doing something right the first time"! He was right and it took some maturity to see that. Some people never get it, and the easy way is rarely the right way. Are we just lazy or really misinformed or both?

Learn real estate before you try to deal in real estate. Good luck, hope you make the right choice. :)

This morning's rant brought to you by Gevalia Kaffe, 100% Arabica coffee, a rich, never bitter coffee experience, And by, Pall Mall vapor flavoring, a smooth smoking experience without the concerns of smoking.