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.

[Eric James]

Originally posted by @Brett White:

The guy is kinda right though, I think the OP has lost drive in real estate /building business, AKA Go where the money is!! you have to have a lot of drive to get into real estate, and wanting to risk a lot for X Reward.

I do think it's funny how everyone and there mom wants to be a house flipper, I saw on my Facebook the other day guys I went to high school with are "Trying" to flip houses now.

It's deffentily a tough game and you have to be very,very well rounded in knowledge

Yes. I have to think it may be all the TV shows on flippers that has gotten people to jump into flipping, and of course most will get badly burned. I still enjoy watching some of the TV shows, just to look for all the things that are unrealistic in them. It has amazed me that people consider paying thousands of dollars to gurus, or purchasing out of state properties they haven't seen with people they don't know.  My opinion is RE can be a good way to invest, but you have to take your time and learn what you are doing, and also continue learning as you go.

[Ola Dantis]

@Gareth Fisher When we speak, we should be extremely careful about how our words can impact the world. Unfortunately, this post could have crushed an 18-year old's dream of becoming the next Josh Dorkin or Brandon Turner. Though I respect certain aspect of your perspective, the illustration of cutting corners and serving the "almighty money" sound like what you may see in plenty other industries in America, no, in the world! 

The philosophy of "it is really HARD TO MAKE MONEY" isn't real-estate specific, in my opinion, that is just businesses all over the world (80% of businesses fail in their first year) - and they are not failing because their brand and marketing game was not on point. If it was easy to make money in anything, don't you think everyone would be a trillionaire?!!! 

To another point, one FACT will remain true for centuries to come, humans will always need REAL ESTATE. See below Maslow's Hierarchy of Needs:  

Undisputedly, Humans will always need to fulfil their Physiological needs, which include a home. 

Now, one could argue that only BIG corporations would build, manage, and sell all the REAL ESTATE in the U.S., a scary proposition. However, I can not imagine the bandwidth of such a behemoth. 

Consequently, there is always going to be room for the small players such as investors, agents (who are now evolving into a more advisory role), brokers, lenders, and, yes, sadly, the gurus and marketers too. 

In conclusion, our duty as human beings is to try to educate others human beings (real estate investors or otherwise) on how to discern marketing content from the real world applicable content, and not get engrossed by the savviness of these gurus or corner-cutting investors you refer to. Human beings have been duped by unscrupulous tricksters for many centuries. 

But to spew negativity in a world, where we need hope (not sugar coating), frankly, only attracts other negative people. 

Hope this helps. Goodluck. Thanks! - Ola  

[Nick Rutkowski]

What seems like the end of days for some is an opportunity for others. Thanks for your experience, it’s true not everyone is a winner. For those of you who are new and reading this - use this as an example of what could happen if you don’t succeed.

[Todd Dexheimer]

Flipping is a hard business and not investing. Owning cash flowing/income producing real estate is investing, but flipping is a business. When I decided to do it, i knew it would be hard, but then again I never watched HGTV and didn't use a guru. The reason that I considered what I did a success was that I used it as a means to buy rental properties and to learn from. I also ran it like a business. 

[Nicole A.]

Originally posted by :

@Bill F.

Lastly, the things that make REI so challenging and rewarding are not often preached, even on BP. How many podcasts/Forum posts have you heard about 0-20 doors in 18 months or How I wholesaled my way to $100k? Now how many have you heard talking about cash reserves per property, when to walk away from a deal, debt pay down strategies or any of the other less exciting portions of REI? We all love to talk about making money and closing the deal, but capital preservation is just as important as capital generation.

 To clarify, there are podcasts and such with topics such as paying down debt, budgeting, and even when to walk away from a deal. Yes, many titles make it sound easy, and many times, the video/article is over simplified, but there are plenty of more in depth ones too. BP even has a series of podcasts they started that focuses more on personal finance; it's called "The Money Show".

It's easy to remember all the glorified success stories, especially with "click baity" titles. But I personally see tons of talk--even here on BP--about the realities such as reminding others to not forget things like vacancy, capex, etc when analyzing their deal. 

[Max T.]

I've been a full time public school teacher for 10 years and investing for about 8. I'm not cash rich but my properties pay for themselves and then a little bit more. I've been hit hard by some big expenses but so far always turn a modest profit. I've picked good areas that have appreciated. I haven't been through a market downturn yet, so I'm reluctant to say that I'm fully "successful," but if things continue more or less as they have been I should be hitting the million $ mark in net worth within the next 3 years.

[Kevin Cardona]

I’m still working on obtaining funds for my first investment and the only property I own is my own residence so you can practically call me “right out of the womb” new guy. As the new guy, all I got from this diary entry is “I want to make some quick money. I don’t have a plan or a real reason as to why I’m doing this but the market looks great.” So I guess I can thank you for reassuring me how important a plan is.

[JD Martin]

Originally posted by @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.

 In virtually ALL investments more investors will lose money than will make money. If that wasn't the case everything would expand exponentially, all the time, or investment rates would only creep at the rate of the growth of the economy. This isn't unique to real estate by any stretch of the imagination. If you buy Apple at $100, you can only make money if you sell it at $101 (leave out dividends). There will be a lot of people that will need/want/have to sell at $99. *Eventually* a solid company, with excellent growth, will even out the dips and humps, but very few people are in it for the long haul, which is the very definition of flipping  - picking something up at a distressed price - probably where the seller is losing money - and taking advantage of that situation to make the money for yourself, in a very short period of time. 

Virtually all of the long-term buy & hold people I know have made a boatload of money over the long haul. Everyone & everything you noted is people in it for instant gains. 

[JD Martin]

Originally posted by @Shiloh Lundahl:

The title of this thread is “What you won’t hear any investor tell you.” Then you go on to say that investors only share their success stories. I don’t think that is accurate. At least I have shared many stories that haven’t gone well for me.  Here is a post I shared last week where I sold a house on seller financing and had to evict the buyer a year later and they destroyed the house. https://www.biggerpockets.com/forums/522/topics/530857-seller-finance-fail-foreclosure-eviction-try-again

This is one thing I really love about real estate... all of the stories. Real estate is anything but boring.

 I agree with this. The beginning of my podcast interview here on BP was the amount of money I lost (6 figures) on my first real foray into real estate, other than just buying a couple of houses for living in. 

[JD Martin]

Originally posted by @Ola Dantis:

@Gareth Fisher When we speak, we should be extremely careful about how our words can impact the world. Unfortunately, this post could have crushed an 18-year old's dream of becoming the next Josh Dorkin or Brandon Turner. Though I respect certain aspect of your perspective, the illustration of cutting corners and serving the "almighty money" sound like what you may see in plenty other industries in America, no, in the world! 

But to spew negativity in a world, where we need hope (not sugar coating), frankly, only attracts other negative people. 

Hope this helps. Goodluck. Thanks! - Ola  

Absolutely! Your attitude is everything. If you believe 90% of all contractors will stab you in the back, that's absolutely what will happen. I've worked with a lot of contractors, and most of them were pretty good people who wanted to do the right thing. Contrast that with my neighbor, who took 2 years to build his house and had nothing but negative things to say about everyone he hired. He ran off as many good contractors as he attracted bad ones because he has a bad attitude. 

Whenever I have lost money or had something not go the way I had planned, I can almost always dig back to the root of the problem and find myself there. No one can take advantage of you if you don't let them. No one can force you to spend money. No one can force you to sell a property to them at a discount, or force you to use their overpriced services. Claiming everyone is a bum is really a tactic used to avoid personal reflection, or used as a way of couching "Yeah, I made some mistakes, BUT this guy...". 

The obstacle is the way.  

[Carol Desantis]

@Gareth Fisher

Thank you for posting this!!

Everyone thinks that after a couple of courses, a couple of meetups and a couple of books that they are ready to take the dive in. Many do so with no real financial, accounting, tax or legal background & those individuals are the ones that get taken advantage of. Real Estate is not for everyone, and can be extremely difficult to be truly successful in. Before investing ones own money, or others money, one should acquire some real experience in business ownership to see what it takes to effectively run & manage one. Real Estate is a business, not a hobby! There is a reason that so many businesses fail and thats because people choose to only see things with their blinders on. It takes trials, tribulations,set backs and perseverance to understand what it takes to create something successful & long lasting.

[John Franczyk]

At least 80% of all small businesses fail within 18 months of opening their doors. That statistic likely holds in the world of real estate investing.

I spent 4 years developing my business model, and after a lot of false starts it's beginning to bear fruit. I believe the difference is now that I have a plan and a series of defined processes that are objective and repeatable. I'm not just randomly searching the MLS or casting around for a random property here or there. I think that a lot of flippers (including one person I occasionally partner with) see a low-priced project house in their neighborhood and decide that if the HGTV yahoos can do it, then so can they. There was even an episode of Modern Family a few years ago that had a flipping story line based on a house that one of the characters just happened to get under contract.

I'm still scrambling but I feel a lot more confident that I'll be able to create a business around real estate investing than I did when after I spent $100 to attend a Rich Dad weekend conference in 2014 that sparked my interest in this. I went to a few other guru presentations is 2014 and 2015, but didn't hear much talk about business processes. What I learned is that the gurus have their own businesses processes that involve selling education and consulting services to wannabe investors. Maybe some of them do real estate, but I got the impression that more of them found it easier to tell people how to do real estate. 

I believe that if you treat real estate investing like a business, you'll be more likely to wind up in the 20% success column than in the 80% failure column.

[Michaela G.]

This post is all about the glass being half empty or half full. Clearly the OP looks at it as half empty. 

Yes, real estate is work and I've seen so many people wanting to take it easy and only get their potential 'deals' from wholesaler lists and make no effort to find their own deals. Then they walk around, saying 'there're no deals!'. At least it makes them feel as if they're doing something and think they're a real estate investor, when they're not. 

It's the attitude that makes the difference and going into it with a 'glass being half empty' will guarantee that it's never going to get filled. 

[JD Martin]

Originally posted by @Account Closed:

@Gareth Fisher

Spot on! BP is nothing more than a place to brag about accomplishments with the "hey, look at me!" syndrome left over from childhood, or for me, more entertaining than watching the news!  

 I don't think this is a fair read of the site; nevertheless, perception is reality, and if you have nothing more entertaining to do than come here and read braggadocio, maybe you need some better hobbies :)

[Michaela G.]

Originally posted by @Account Closed:

@Gareth Fisher

Spot on! BP is nothing more than a place to brag about accomplishments with the "hey, look at me!" syndrome left over from childhood, or for me, more entertaining than watching the news!  

Since there are hundreds of new posts here every day and nobody can read them all, maybe it's your choice of posts that you read, instead of all of the posts that are written? 

[Greg Parker]

@Account Closed Good quote.  I lived in a tent in a state park one summer because of a couple of screw-ups.  But, the fishing was great!

[Michaela G.]

@Account Closed , negative attitude is different from being realistic.

Negative attitude is: All or most contractors are bad or cut corners

Realistic attitude is: Yeah, there are a lot of contractors that don't do a great job, but there are princes out there and I'll find one and will try to avoid kissing too many toads, but I'll probably end up with a few sloppy kisses. 

Negative attitude is: You can't make money in real estate investing

Realistic attitude is: It's not easy to make a lot of money in REI, but I will absorb enough knowledge from all sides and find the right type of investing that works for me.

Negative attitude is: Everyone I knew lost their shirt when the market crashed

Realistic attitude is: Maybe I didn't hang out with the right people and need to get out of my comfort zone and network with people that aren't on the same level as I. 

etc....etc....etc

[Bill F.]

@Nicole A. I agree with you that content on the, shall we say, less exciting aspects of the Real Estate Investing business does exist on BP and I have been fortunate to be a part of some of of those conversations. However, lets take the Trending Topics on the right side of the page. Yesterday there was a post with a title like "From 0 to $1M dollars" and its not unusual to look there and see at two of the five trending topics dealing with how someone make a lot of money, flipped a house for $50k, or had some massive success. All of those are wonderful things to share, but their utility wanes after a point. 

Sure I can watch all of Tom Brady's Super Bowl wins, but will that make me a great QB? No. At some point you need to move on from the results of successful people and learn about the actions and methods they use. At times we overplay the cheerleader role and not enough of the tough love/realist.  We saw that when proverbially tide went out a few months ago and Rentolution's Payment processor failed.

[Nicole A.]

Yup, I hear you on that, @Bill F.. Those topics become trending because it seems more people tend to respond to them. People sadly don't respond nearly as much to more realistic, "boring" topics.

[Michaela G.]

Kyle...just because you want to name negativity differenrly does not make it so. 

I didn't lose my shirt in the market crash and i know other investors who also didn't. so again it comes down who you choose to surround yourself with.

[Mike Dymski]

Originally posted by @Account Closed:

@Gareth Fisher

Spot on! BP is nothing more than a place to brag about accomplishments with the "hey, look at me!" syndrome left over from childhood, or for me, more entertaining than watching the news!  

Kyle, there's so much more. Most of us are learning and many of us are doing business together. I'm on my lunch break right now, eating a hoagie, exchanging emails with an active BP member about a possible JV.

Do you have to sift through a bunch of nonsense to get to the good stuff?  Sure.  It's no different than any educational exercise or networking activity...you do it consistently, add value to others, and gather the golden nuggets among the stuff that does not matter.  Or, you hate on it.

[Michaela G.]

..."...whether you think you can or think you can't...you're right either way"

Happy investing....or not!

[JD Martin]

Originally posted by @Account Closed:

@Michaela G.

That's the point I am making. There is no such thing as negative, positive, or reality. It all depends on one's individual paradigm. If you do not know/understand paradigm concepts, then buy a book and read.

@Mike Dymski

BP constantly highlights successes. I would love to see failures highlighted.  Any pilots in BP? If so, then they will understand the following example: The FAA does not highlight success stories. Why? No one cares if the plane lands successfully. They do, however, highlight failures. Why? So everyone else can learn what the poor guy did to crash his airplane into the dirt. 

If BP highlighted two failures for every one success, we'd have something to learn from and in my academic opinion, something to learn from. Instead, BP and everyone as a member, supports braggadocios tendencies. What I have not seen here, and perhaps I am wrong, but I do not see any highlights written from humble individuals.  

I do not share how many units we have under management or how many projects are underway or what financials. I never will because it's not my style. Assuming any of my comments are anything more than an objective observation is a mistake and if you can't agree that mistakes cost money, then you're bound to live in a card box box under the freeway.

1. Sure, and we might all be just a dream in a giant's head. 

2. Anybody who's reading FAA literature is probably a pilot, airplane mechanic, or similar. People who are getting ready to board planes that don't know anything about flying planes don't read FAA literature, because they wouldn't fly otherwise. If BP had a 66% gloom and doom-to-zoom ratio, the only people left here in short order would be experienced real estate professionals that don't have as much to learn about getting started. Go read why @Joshua Dorkin started this site in the first place. He didn't start it for you. He started it for the guy who knows nothing. Like the guy who's getting ready to fly to Los Angeles. Imagine if everyone getting on a plane was handed a "Things you should know could happen on this flight" brochure, complete with explicit examples of plane catastrophes. Yes, the guy who knows nothing should be told how to use his seat as a life preserver and how to use the oxygen masks, but it would be counterproductive to tell him you should be aware that these things do crash from time to time and everyone on board is incinerated or dismembered. 

3. Posts from "humble" individuals - well, that's something of a paradox, because quiet, reserved people are not likely to be on a public internet board in the first place, sharing their experiences. There are humble people on this board, that are very successful. @Steve Vaughn ; @Joe Splitrock ; @Jay Hinrichs ; @Joshua D. are just a few I can name right off the top of my head, plus a number who have posted in this thread already. Also, I wouldn't label you as humble, because humble people don't yell out in a public forum that the forum is full of nothing but braggarts and charlatans. 

4. I wouldn't assume any of your comments are objective observations. Every person is bound by their own biases to some degree, which is going to make virtually anything you say have some degree of subjectivity. In fact, that's the nexus of this thread - that the OP's subjectively biased point of view is not in line with the majority of experiences of others here. 

[Jay Hinrichs]

@Account Closed  well you asked if there are any pilots I am one... and have owned numerous aircraft that I have flown for about 40 years now... wanted to be an airline pilot but that never happened so I had to pay for my fun.

but its not all about the Aftermath articles.. if you go to COPA ( our Cirrus owners and pilots forum) there is all sorts of great and positive banter.. but yes when we have a fatal the thread is 300 to 500 post long and that is with 3000 members :)  But you talk about a site with uber networking.. as owner operators tend to be high achievers or successful business folks  of course doctors Lawyers CPA builders developers etc.. its fun to watch them go from buying a 500k cirrus to BRAGGING like you said about the 5 million dollar jet they just bought.. you can take it as bragging or you can take it as hey that's great I too want to do well and be able to acquire my own jet I know its been a goal of mine.. not yet reached and probably wont simply because I am now getting up in age that to owner fly a jet is probably not in my best interest mortality wise.. :)

But your right you don't have all the folks get on her who do poorly in real estate people just don't talk about it the same.. the closest we have come is the Morris/oceanpointe threads of some really really bad operators it took a lot of guts for those folks to get on BP and say hey I fell for the videos and the freedom number sent in 60k in cash and now all I have is a home never rehabbed and vacant.. although in my personal opinion it more than a civil matter.

[Jay Hinrichs]

@JD Martin    @Steve Vaughan  Steve is one that so  so many of the younger investors starting out should really listen to.. I love his story  his work ethic and how he is setting up the rest of his portfolio ( which frankly is somewhat contrarian to a lot of what is preached on this site)

But JD its not all been wine and Roses for me  LOL.... as @Account Closed mentioned 08 and that time period I made it through but just by the skin of my teeth and I am the first to admit it.. but that does not mean I forgot everything I learned leading up to that.

what it taught me to be much more like Steve Vaughan in my thought process.. plus when you get older you just get more conservative..

My big thing and it will always be is investors not really understanding whats involved in being a successful landlord and not understanding the risks related to certain assets class's in certain parts of the country.  its not all the same..