The Five Truisms About Real Estate That Are Actually NOT True

[Don Konipol]

The Five Truisms About Real Estate That Are Actually NOT True

5. Real estate is a PEOPLE business, not a PROPERTY business. Well, maybe In residential, SOME of the time. BUT, guess what? It’s about the PROPERTY. You’re buying, trading, or selling a physical asset. A HARD asset. That’s the attraction. That’s what appreciates at or above inflation. That’s what provides cash flow. The people paying you $10,000 per month to rent your property are doing so because they need or want the use of the property, not because you’re a “people” person.

4. I’ll be successful because my mentor is providing all the knowledge I’ll need to work the system. Hey, knowledge is one of the three foundations you need to be successful in real estate investing. BUT, it has to be the RIGHT knowledge. Gurus teach a method, a strategy or a tactic. Even IF (BIG if) their method can be successfully utilized, without the right knowledge/ education you won’t be able to utilize it profitably, at least not for the long run. The knowledge needed is real estate principles, real estate law, and real estate finance. With this as a foundation you can appreciate and understand strategies, tactics, and operating methodology.

3. You can find good (great) deals on MLS, Loopnet, CREXI, etc. No deals are advertised as great deals way below market. If they are advertised this way then there is something wrong someone is trying to hide. Good deals (great deals) are WORKED - negotiated, bartered, set up creatively, and necessitate understanding the opposite parties motivations, desires, needs, pressures, etc. ALL "listings" are overpriced. The experienced superior investor will be able to quickly determine which few of the many have the potential to be turned into good (great) purchases.

2. You don’t need money. If you have the deal money will find you. Maybe, BUT, the money will also want the lions share of the profits. Here’s the reality; the once every two or three or four years a GREAT deal falls in my lap, I (fortunately) have enough capital in reserve to purchase the property immediately for cash. The same deal falling onto the lap of an investor without cash or access to quick credit, would at best end up giving up half the profits and at worst get a small “finder” fee.

1. Investing in a $10,000,000 property is the same as investing in a $100,000 property - it’s just more 0s. This is so totally incorrect that I’ve placed it as number 1. A $10,000,000 property is inherently more complicated, needs a multiple of different skills to operate, has financing infinitely more complex than the $100,000 property. Further, probably 35 million people in the U.S have the necessary knowledge and skill to manage a $100,000 property; maybe 3500 have the ability to manage a $10,000,000 property.

Here’s what it takes for success as a real estate investor : knowledge, experience, capital. You can do it with 2 of the 3; a select few might be able to do it with 1 of the 3. But the surest way to success is to have all three as assets.