What you wont hear any investor tell you

[Gareth Fisher]

I have been involved with flipping properties since early 2000s.   First subbing out as a carpenter for several local investors and builders.   When the market dropped out in 2008.  Everyone I knew including myself went under.   Several years back now that the market turned around I hopped back in the game!!  Full of eagerness and drive, I thought I was going to light the world on fire.   Instead I made a little, not enough to justify my moves.     In fact looking back, I think I would be much further ahead now if I would have stuck to contracting work.   I didn't lose money, but I haven't made what I would call "money"

Here is what I learned, and here is what very few investors will tell you.  The reason why is simple, most investors out there on podcasts, selling books, or on the web.  R there for exposure.   They need the exposure to bring in capital, syndicate money, expand there "circle"    

I have met a few "stand up" friends, but they also haven't made me money either.  

First off all the shows on hgtv are branding and marketing tools for the individuals on the shows.  This applies to podcasts, you tube, and almost any other forms of interactions.

Wholesalers numbers are the worst and extremely inaccurate

Most rei groups are nothing but a way to attract to stupid money

Most investors are cheap, cut corners on the contracting side in the sake of the almighty buck.   I recently seen photos of one of the largest flippers in the area who flips roughly 200 homes in my local markets.   Frame over carpet on a concrete floor with your standard non treated 2x4s.     This a basic no brainer clear violations of building codes.

90 percent of your contractors are crooks who will stab you in the back the first chance you can get.

Bankers will lend you money on properties that are complete junk, as long as the comps ck out and the appraiser comes through.    At the end of the day your portfolio is only worth what the properties will sell for.

For every investor  that makes money there are 8 or 9 that lose money and thats in a strong market.

Most diyers are complete hacks, constantly cut corners like having lead based wooden windows in there rentals exposing young children to toxins and damaging there front cortex.  

Neighborhoods full of rentals, typically go to crap, because tenants don't care and landlords don't want to dump money into properties where the tenants won't take care of them.

Big business and syndicates have taken over the most profitable areas of real estate. I remember a time where there were local builders in every town, and a man could make an honest living building homes.  Now there are tract builders, nationwide corporations that a common man just can't compete with.

I'm not sure how I'm going to move forward. I have made enough to keep me interested, learned a ton, but feel that most of the value in real estate is in the ability to money in a safe  tangible asset.   Being that were in a 13 year high, that doesn't even seem like a wise strategy at the moment.   For all you new guys, be very careful moving forward.    Real estate investing is a very difficult business.  Sorry for the rant, but I feel that all the sugar coating and *** kissing that goes on in these circles someone needs to share the other side of the story.

[Gareth Fisher]

I remember a tackle shop I used to frequent.  It could be snowing out with blizzard conditions and you could walk in there and ask how the fishing was.   They would always reply the " the bite is the best its been all year!!"

[Jill F.]

it IS hard to make a buck!!!! Seems like Deal Makers Using Opm Help Themselves more Than They Help Their "investors"

[Donald S.]

so @Gareth Fisher why are you on BP if by your own definition everything here, including the BP podcasts and books, are just branding and marketing tools designed to get exposure for those in the company and get them access to capital? 

So my friends I know that have a handful of properties and make good consistent cash flow, they're a fluke? They're just lucky? Oh or are they the ones that "cut corner on the contracting side in the sake of the almighty buck"? 

Obviously you've been burned, and that is unfortunate, but I am of the belief we make our own fortune and luck in this world. Good luck out there, sounds like you need to reevaluate why you're in real estate at all. 

[Alan Pederson]

I hear stories all the time from my handyman about DIYers and contractors that do poor work just to save a buck. We bought a house last year that needed tons of work. I had to tear out everything the previous owner did and re-do it. We thought we were going to spend $3-5k and instead spent $15k. Not all landlords are cheapskates or cut corners. The houses I own are in good areas and we spend good money to keep them looking nice. We tell our tenants that we expect them to keep them looking nice as well.

Those TV shows do make it look easy to make big money flipping houses when in reality that probably doesn't happen. My wife knows almost nothing about construction and even she calls them out when they say they can completely remodel a kitchen with new cabinets and counters for only a few thousand dollars. She knows the cost to tile a bathroom or replace a counter because she's with me when I buy the stuff. She is amazed at how much things cost. I work with guys that want to flip houses but they have no construction experience. I've told them the real cost of materials, time, and labor involved that you don't see on TV.

[Steve Vaughan]

I get what you're saying. Kinda funny when you listen to a lot of podcasts and they just interview each other. This one has a program, that one a book, the other a secret SEO plan or a lender or another syndicator. 

I have no angle or interest so I turn em all down when asked to be a guest.

I'm glad I got started before HGTV, BP, podcasts, Amazon or any of that. Nobody was doing it and my expectation was to sacrifice, work hard and grind for decades to hopefully have an extra dozen houses or so paid off at retirement. Now the success stories and 10x rules make you feel like a loser if you don't have a dozen or 100 a year.

Learning from a fire hydrant of concepts and ideas isn't always best. I checked out 1 book at a time, sometimes the only one on RE available at that library. Master something as opposed to knowing a little about everything. Squirrel! Just read about how that gal is killing it wrapping lease option mortgages inside a triple syndicated lending STR flip!

Thanks for the reality check even if on the dramatic side. It's not all roses and cashing fat checks.

[David S.]

These examples are extremes.  Extremes on the negative side. There are good contractors, landlords, tenants, etc.  Not everyone cuts corners.  I find that cutting corners damages your reputation and will cost more in the long run because rework would be necessary.  You will find many folks who want to do the right thing.

Take a break from investing and come back to it when you are ready.  Everyone gets burned out.  I can tell you that many investors spin our wheels for months and even for years with little or no progress.  However, by persevering, there is a time when you can build some momentum.  For example, I have had some long dry spells on deal flow only to find myself with way too many that I can handle come through at one time.  And as you grow your network, it exposes you to better deals, contractors, mentors (unpaid), etc.

[Gareth Fisher]

Originally posted by @Donald S.:

so @Gareth Fisher why are you on BP if by your own definition everything here, including the BP podcasts and books, are just branding and marketing tools designed to get exposure for those in the company and get them access to capital? 

So my friends I know that have a handful of properties and make good consistent cash flow, they're a fluke? They're just lucky? Oh or are they the ones that "cut corner on the contracting side in the sake of the almighty buck"? 

Obviously you've been burned, and that is unfortunate, but I am of the belief we make our own fortune and luck in this world. Good luck out there, sounds like you need to reevaluate why you're in real estate at all. 

I'm not saying that it isn't possible to do well in real estate.  I still believe it is the safest surest place to stash money.   My point is that almost every public figure is blowing a whole lot of smoke.   Very few people talk about the risk, or the thousands of investors that have gone belly up and walked away.  There are more pitfalls, and traps in real estate then I have seen in any other business then I have been involved.  I see big banks hiding mold and lead issues, I see project managers expecting top dollar finishes at low end prices.  I know of realtors who blow more smoke then Cheech and Chong on 420.

I'm not saying it's impossible.  I'm just saying no one talks about all the pitfalls, all the crap that goes on, the lawsuits, the unpaid invoices.   

I haven't gotten burnt too bad.  I have been able to do "ok"  I have gotten extremely lucky imo.  It has helped I have years of experience doing the work.  Most don't have that.  

My problem is that no one is telling these new guys all of the problems and hardships that come with real estate investing.  That its an old boys game, where the new guys are often taking the losses.   Even cardone has said that.  It's the little guys that are going to get smashed when the market turns.   Well I'm sticking up for the little guy.  My parents raised me if it's too good to be true it probably is....

The bottom line is this more investors will lose money then the ones that will make.  There are multiple reasons for that. I personally just think this topic doesn't get talked about enough.

[Shiloh Lundahl]

@Gareth Fisher you write that more investors will lose money than will make money. Is this statement backed by research or does it just feel true to you?

I guess I look at investing a little like playing basketball. The first time I shoot a basketball, if it doesn’t go in, am I a failure? I don’t think so. I learn to make adjustments to the way I shoot until I can make into in the basket. With more practice I can start to make it more often than I miss. And if it becomes really important to me then I get a coach to help me improve even further.

I have heard repeatedly on the podcasts that a lot of people lose money on their first deal. I lost money on my second deal. I have written about that and the lessons learned. I also wrote about how I lost 70k between two deals when I partnered with someone who was managing the projects poorly. I wrote about that experience as well. 

I believe that experience and knowledge can can help someone be a better investor and help them lessen their losses. I also believe strongly in getting a mentor or a coach who is better at recognizing when something is a deal and when it isn’t a deal and who can point out potential pitfall.

I like an analogy that Robert Kiyosaki uses about risk. He says that flying a plane is risky if you don’t know what you are doing. But if you know what your are doing, and have experience, it lessens the risk.

[Jay Hinrichs]

your post as it relates to guru's sell how to is pretty accurate in your own way.

we are in a new age.. this is how folks in the business perpetuate your business because the new crop coming up watchs those pod cast  Myself I have never watched one and have not even listened to or watched my own.. I know what I have done LOL @Steve Vaughan  of Course Steve is my hero up there in gods country.. most investors if they followed Steve plan would be in very good shape over time.. and his point is its over time .. what we see now is 10X  so if you cant 10X or get 120 doors in 18 months some how you failed.. or the other one is I want to quit my day job and being a landlord is the BEST way to do that.. for some maybe for other probably not.. landlording is a tough gig for a lot of us..

in the day or my day you got your real estate license and worked in the business then figured out what to do which avenue to go down.. the wholesaling is propagated totally by the guru's selling the how to.

the guy with the lambo and Rolls just shows pictures of checks and his cars  LOL..  And when in fact NOTHING is harder than to make money at wholesaling .. and in some markets pert near impossible and most will just throw their money down the tubes.

As for contracting I agree that is the tough one...

I personally have pretty much moved from bigger rehab type stuff to only funding rentals.. and or building new construction.. big fix and flip you really need to be hands on that's were we see a lot of money lost..

[Anthony Gayden]

Gareth Fisher

Sales is everything in business. I had to learn to weed out the sales pitches and focus on the info.

Investing is not easy. This is nothing like any tv show. For a small landlord like me, it is a slow process over many years. There is still a lot of opportunities for little guys. Don't give up hope.

[Mike Dymski]

People don't put the

 on their Facebook page or dating sites...

[Gareth Fisher]

Originally posted by @Jay Hinrichs:

your post as it relates to guru's sell how to is pretty accurate in your own way.

we are in a new age.. this is how folks in the business perpetuate your business because the new crop coming up watchs those pod cast  Myself I have never watched one and have not even listened to or watched my own.. I know what I have done LOL @Steve Vaughan  of Course Steve is my hero up there in gods country.. most investors if they followed Steve plan would be in very good shape over time.. and his point is its over time .. what we see now is 10X  so if you cant 10X or get 120 doors in 18 months some how you failed.. or the other one is I want to quit my day job and being a landlord is the BEST way to do that.. for some maybe for other probably not.. landlording is a tough gig for a lot of us..

in the day or my day you got your real estate license and worked in the business then figured out what to do which avenue to go down.. the wholesaling is propagated totally by the guru's selling the how to.

the guy with the lambo and Rolls just shows pictures of checks and his cars  LOL..  And when in fact NOTHING is harder than to make money at wholesaling .. and in some markets pert near impossible and most will just throw their money down the tubes.

As for contracting I agree that is the tough one...

I personally have pretty much moved from bigger rehab type stuff to only funding rentals.. and or building new construction.. big fix and flip you really need to be hands on that's were we see a lot of money lost..

Yes!!! TY!!! The game is tough, it's challenging, and very difficult.  The money is made on little wins over time!!!  The dream of a get rich scheme continues allure people into losing big money!!!  Start small and slow.  Keep your exposure and risk minimal.  I guess the real issue is no one wants to hear that story.  There is a whole lot more glamour in the idea of making millions over night.  It's a pitch that is old as time.

[Chinmay J.]

Originally posted by @Gareth Fisher:

I have been involved with flipping properties since early 2000s.   First subbing out as a carpenter for several local investors and builders.   When the market dropped out in 2008.  Everyone I knew including myself went under.   Several years back now that the market turned around I hopped back in the game!!  Full of eagerness and drive, I thought I was going to light the world on fire.   Instead I made a little, not enough to justify my moves.     In fact looking back, I think I would be much further ahead now if I would have stuck to contracting work.   I didn't lose money, but I haven't made what I would call "money"

Here is what I learned, and here is what very few investors will tell you.  The reason why is simple, most investors out there on podcasts, selling books, or on the web.  R there for exposure.   They need the exposure to bring in capital, syndicate money, expand there "circle"    

I have met a few "stand up" friends, but they also haven't made me money either.  

First off all the shows on hgtv are branding and marketing tools for the individuals on the shows.  This applies to podcasts, you tube, and almost any other forms of interactions.

Wholesalers numbers are the worst and extremely inaccurate

Most rei groups are nothing but a way to attract to stupid money

Most investors are cheap, cut corners on the contracting side in the sake of the almighty buck.   I recently seen photos of one of the largest flippers in the area who flips roughly 200 homes in my local markets.   Frame over carpet on a concrete floor with your standard non treated 2x4s.     This a basic no brainer clear violations of building codes.

90 percent of your contractors are crooks who will stab you in the back the first chance you can get.

Bankers will lend you money on properties that are complete junk, as long as the comps ck out and the appraiser comes through.    At the end of the day your portfolio is only worth what the properties will sell for.

For every investor  that makes money there are 8 or 9 that lose money and thats in a strong market.

Most diyers are complete hacks, constantly cut corners like having lead based wooden windows in there rentals exposing young children to toxins and damaging there front cortex.  

Neighborhoods full of rentals, typically go to crap, because tenants don't care and landlords don't want to dump money into properties where the tenants won't take care of them.

Big business and syndicates have taken over the most profitable areas of real estate. I remember a time where there were local builders in every town, and a man could make an honest living building homes.  Now there are tract builders, nationwide corporations that a common man just can't compete with.

I'm not sure how I'm going to move forward. I have made enough to keep me interested, learned a ton, but feel that most of the value in real estate is in the ability to money in a safe  tangible asset.   Being that were in a 13 year high, that doesn't even seem like a wise strategy at the moment.   For all you new guys, be very careful moving forward.    Real estate investing is a very difficult business.  Sorry for the rant, but I feel that all the sugar coating and *** kissing that goes on in these circles someone needs to share the other side of the story.

 What's the purpose of this post other than b1tcha$$ whining...? From the feel of it, it sounds like you might have already popped in a cyanide pill. Hope you didn't leave a big mess for others to clean up. 

I never got in this thing to be rich overnight, but got in here to slowly accumulate wealth. For my get rich quick fantasy, I go across the street to the gas station and get a lottery ticket. 

[Jay Hinrichs]

@Chinmay J.  or I suppose you probably bought bit coins when they first came out..

[Chinmay J.]

Originally posted by @Jay Hinrichs:

@Chinmay J.  or I suppose you probably bought bit coins when they first came out..

 Nope. No interest in cryptocurrency. I am pretty conservative investor. I don't waste money on fads. Even in stock market, most of my investments are blue chip dividend paying stocks and mutual funds. I don't even do option trading that much. Maybe just a little bit here and there for fun. 

[Jonathan Twombly]

@Gareth Fisher  Thanks very much for this post.  Real estate is not easy, but there is an entire industry devoted to making it seem like it is.  That industry is very powerful and very good at propagandizing the ignorant.  I constantly tell people that real estate is hard, and get so much pushback from the people who have no actual experience and want to keep up the fantasy that it is easy money - or want to keep up the image of real estate as easy so they can sell something.  

I do podcasts and I also coach people who seek out my help.  And I don't sugarcoat things.  I tell them straight up that you won't succeed in this business if you come to it with nothing.  If you have no business skills, no networking skills, no money of your own, no network of people with money, and no desire to work hard with no results for a long period of time, you will find it extremely difficult to succeed in this business - because even if you have all those things, it's still tough to succeed.

Do I turn people off this way?  I'm sure I do.  But it's the truth.  Real estate is a business, and succeeding in business requires real effort, money and time.

[Jay Hinrichs]

@Jonathan Twombly  the real estate how to seminar circuit is all founded or based off of he MLM s that came before them.. same companies run the back ends and fulfillments.. the presentations are exactly the same from the freebie first meeting to the step up feeder meeting to the spend the big bucks..

Very well choreographed and Fulfillment companies ( 95%) based in Utah are VERY good at what they do  its HUGE MONEY for those guys.. as in 50 million dollar jet money.. :) 

[Jonathan Twombly]

Originally posted by @Jay Hinrichs:

@Jonathan Twombly  the real estate how to seminar circuit is all founded or based off of he MLM s that came before them.. same companies run the back ends and fulfillments.. the presentations are exactly the same from the freebie first meeting to the step up feeder meeting to the spend the big bucks..

Very well choreographed and Fulfillment companies ( 95%) based in Utah are VERY good at what they do  its HUGE MONEY for those guys.. as in 50 million dollar jet money.. :) 

That makes a lot of sense.  I've never been able to understand how some of these outfits can get $40K out of someone for coaching when $40K would be the downpayment for their first property - and usually the mark doesn't even have the $40K in cash and has to finance it with credit cards, ensuring that they will never be able to qualify for a mortgage on their first deal.  These companies don't actually care about their customers. What you said explains a lot.

[Jay Hinrichs]

@Jonathan Twombly  I have done a lot of business over the years financing deals for guru students.

so I can paint a broad brush. you would be surprised at how many are actually real estate professionals that go to those or other successful folks that just cut checks.

the taking a dreamer ( real estate not the other kind) and maneuver them into massive credit card debt I don't agree with..

but then I don't agree with many on BP who all want to take out HELOCs and borrow to their eye balls to buy rentals either.  I don't think they understand the risk and that the reward unless your buying in areas that WILL appreciate is pretty high.. but that's just me.

I have to always harken back on HP and Hewlit and Packard starting their company with 15k on credit in a garage in Palo Alto not far from were I used to live.. so it can happen.

so when you go to a bus tour event that those folks paid 40k to go to .. and Rich Dad is as tough on these people as anyone..  you can just know that out of the 200 buying units in their 10 maybe  15 will actually better their position.. a bunch will end up like you state in massive credit card debt chasing a dream that is basically not real if you have no liquidity to speak of.. and the others will just kind of go either way or.. the ones that stroke the check just say well that's not for me.

That is one reason many of these Guru campaigns have rental home providers at their events.. folks sit through that and say well shoot I really don't think I can do this.. but hey I am going to buy something so I think I will buy a rental home at least and be a buy and holder..  Its pretty amazing what gets sold at these events other than just straight education.

[Alexander Felice]

What a negative viewpoint.

So the guy who admitted to not being overly successful in RE comes in to say how everyone else is the problem, and it's a secret only HE knows!?!?  Consider me both skeptical, and dismissive.

This business isn't as bad or as hard as you say, but everything is much harder when you have a defeatist attitude.

[Joe Splitrock]

@Steve Vaughan you are so right, lately on podcasts it seems they are all interviewing each other. The interviews are filled with shameless drops for their blog or their book. It is just educational advertisement.

"Tell me what you recommend Jack" response "go to my blog and click on the links (advertising)". Or "join my mastermind group". Or "sign up for my premium service". Or "fund my next project". Or "buy my new book".

I get that people need to make money, but you start to see that people make more money telling you how they made money, then the money they actually made in real estate. 

People lose credibility when you find out they got funding through their blog or podcast connections. What they should be saying is, start a blog and podcast. 

I started in this business prior to much of this hype. Rich Dad Poor Dad turned me on to investing and I purchased a book called, How to Buy and Manager Rental Properties. 

The book was written by two real estate gurus who at the time traveled the country teaching real estate seminars. The lesson learned is although the medium has changed, there will always be guru who make their money teaching. Even BP for all it's anti-guru propaganda, has ironically become the guru.

@Gareth Fisher my true real estate education didn't happen until I jumped in feet first. Each problem became a learning experience. For everyone that goes from nothing to riches, there are 99 people that lost big in real estate. 

[Omar Khan]

If you never 10x your goals and have a gazillion doors under management, how else will you satisfy your social media followers? :)

[William Hochstedler]

@Gareth Fisher

Thanks for the post.

I think the corollary of your argument is that we are so conditioned to hear the success stories to motivate us to go out and do things or buy stuff that there is little room for the harsh reality of business being anything but an endless string of success stories. 

I can't tell you how many times I've sat down with potential clients and told given them realistic expectations only to see them leave my office to spend thousands on a guru or a spit and polish rehab.

I feel like the dumbest guy on the block because pump-and-dump competitors are making a LOT more money than me.  There are some very big flippers who are covering up all the problems with shoddy work and corner cutting.  At certain price points in my market, these are selling just as briskly and for the same dollars as proper rehabs.  

Furthermore, less than 10% of the people I see hustling in this market and going to all the networking events were doing this in 2006.   Those folks that started in 2010 have never seen a bad day in this industry.

I'd be interested to hear what someone like @Jay Hinrichs first few years were like in this business.  We see what he's been able to do and forget that it took decades of real work to get there.

I can't help but think of Julian Robertson who sent back all of his investors' money during the dotCom bubble because he just couldn't compete with the hype.  And then there's Warren Buffett who said, "Only when the tide goes out do you discover who's been swimming naked."

We wish for some comeuppance, but it is rare.  That's why it's so great to have veterans like Jay and @Steve Vaughan here on BP to remind us that it can be done the ethical way too.

[Jay Hinrichs]

@William Hochstedler  in other words a rising tide raises all ships.. there is no question that we have a completely new crop and many have not lived or worked through a major down turn.

and many as you see on here complain that prices are too high because they bought in the absolute best buying environment in the last 100 years short of the other great depression back in the 30s.

[Justin Reed]

It's nice to see positive and negative view points, as long as the OP is being honest about their feelings... I've been lucky... I know of plenty bad flippers and contractors that do shady work. I also am fortunate enough to work with very honest contractors and flippers that have integrity. We all have the same 24 hours each day. Find the good seeds and grow with them.