Top Ten Things Someone Should Know Before Becoming a RE Investor
So here is some unfiltered truth for new investors!
1. Expensive courses are usually a waste of time- avoid anyone wanting big $ for education. You can learn more from a mentor directly.
2. Mentorship is just about the only way you can avoid costly mistakes in this industry up front. Find a mentor that does what you want to do.
3. You will lose money. Never assume you will have a perfect track record. Mistakes will happen/unknown things will be found.
4. Assume everyone is lying to you when you are buying ahouse. It's the old adage of the, "Fox guarding the hen house". Rely on your mentor to get to the truth of every deal.
5. Never quit your day job to become an investor right away. You will go broke and hungry. It takes a long time to make enough income to replace a good w2 job.
6. You will more than likely never retire using REI Income unless you start with a lot of money up front, keep your day job and ease into it over time (decades). Anyone selling early retirement dreams has not done the honest math in this market. If you disagree... prove me wrong.
7. Most RE Agents do not know what they are doing in regard to REI.
8. You cannot collect passive income and be happy with no work. There is no such thing as passive income without work which makes it "active income" instead of "passive income". There will always be issues if you are going to flip, rent, wholesale real estate. Get used to it.
9. You can buy a property with no money down. That is technically true that you can avoid a down payment but you cannot avoid closing costs, vacancy costs, make ready/rehab costs. If you think you are out of pocket $0 dollars think again.
10. REI is very hard and time consuming. You can make or lose money very easily. You can waste weeks and months without finding a deal. BEWARE of the black holes that suck up your time and resources.
Hopefully this does not come across as pessimistic. It is reality. You can be successful but it will take time, energy, resources and mentorship.
Comments (1)
I for the most part agree with you, and I am a new investor.
1. Not quite true, but I would agree generally you are right. Sometimes 'expensive' courses might have quite a bit of good content. Robert Kiyasaki said the same thing, however sometimes those courses can be not worth the cost, due diligence as to who the instructor is should reveal how useful something may be.
2. Definitely true, mentors are quite useful. Perhaps as a new investor I should go locate one and take your advice.
3. Also true, investors will lose money and should be prepared for it. I will also have to keep this in mind and hopefully avoid pitfalls if I can.
4. This I disagree with, be skeptical but don't immediately assume anything. Assume the numbers are rough estimates until the truth is discovered but don't assume anyone is telling the truth or lying, simply find out for yourself.
5. Also true, only quit your job IF your investment income is consistent or growing and is currently enough to support your lifestyle and be free to continue investing.
6. There are plenty of examples around BP of young millionaires who started with nothing. Most of us will take time to build a large asset base, but some have the willpower to succeed quickly and profitably. Ask around for these investors, I see them posting from time to time and also see some of them on YouTube.
7. I disagree with this, RE agents must be knowledgeable else they won't be RE agents for long. They might not have expertise in the niche of REI you work in but don't assume no one knows better than you. That might have you miss connections and not learn a new trick or two because of such arrogance.
8. Agree with REI, disagree with there is no passive income. REI requires some time, sure. However there are passive investing out there that require even less or next to nothing in regards to time input. Dividend stocks for instance, once you locate a suitable but-and-hold company, you would merely have to check up every quarter or two to see if that company's financials still prove sound. Otherwise it's hands off. Even with this currently volatile stock market strong dividend stocks are continuing their dividend and will likely continue providing it.
9. I agree with your analysis, it's technically true when you include all overall costs. Sometimes you can use OPM when it comes to hard money loans and whatnot, but you are still liable for those costs. You may take the loan but bills will continue to be due. Once you look back at the balance sheet you can tell if you gained more money than you spent and thus used 'no money out of pocket.' That can only occur at the end of a project tho, I think.
10. I would agree from a new investor standpoint, but a seasoned investor will disagree. I have heard others say it has a learning curve, but it's relatively easy once you have the required knowledge and skills.
Samuel Pentowski, over 4 years ago