How I Lost Nearly $30000 in Real Estate On a Deal!!!

How I Lost Nearly $30000 in Real Estate On a Deal (That Involved NO Real Estate!)

This is my cautionary tale for all newbie investors. I was fresh and eager when I finally got the real estate bug. Years before I had heard about it, but didn't really understand it. I had seen some people who claimed to be in real estate or well off because of real estate but couldn't comprehend that reality. I grew up in lower-middle-class circumstances where the prevailing thought was to go to college and get a CITY job. The idea was that a city job meant "security". As I got older I saw the folly of that, at least for me.

The going to college and getting a good city job was part of my social/parental conditioning. My parents meant well, they just didn't know any better. The mental conditioning components of college I think played a huge role in my financial loss. I think the idea of having to go to college in order to learn something of worth that will enhance your financial capabilities has an embedded belief in there that says "I have to pay a substantial amount of money to learn anything of worth." Often times, when people get something for free, they don't value it. No matter how valuable it really is, the can't see it. Look at the mega-rich who leave their empires to their kids and they squander it or a teenager who is lucky enough to have their parents give them a car and they treat it like a rolling trash repository. I bet if that kid had to work 10 hours a day in the hot sun and save up for it, it would be an entirely different story.

The cost of college is so astronomical, at least in the US, and many people are doing tremendous sacrifice for this education that they think their future is practically non-existent without, it's hard to escape this belief. College is great and I want to go back, but not all valuable education is transmitted in the model of pay this huge amount of money and you will get this "very specific, yet lacking direct application, non-contextual information that has a pre-defined delivery end date".

I was also accustomed to paying money for education/seminars. I do personal development seminars often, specifically Tony Robbins. Even though his stuff can be very costly, it extremely experiential and transformative. His live event experience is something you can't get from a book. It's the difference between looking at a picture of a rollercoaster ride versus being on the ride. I've done his trainings and similar ones for years, but I never actually paid for any live event focused on finances and financial education.

So in 2014 I decided to go on my financial education journey. I knew it was time to really focus on real estate. I'm the kind of person who is either standing still or going a million miles an hour. I'm very bad at moderation. So when I picked up Rich Dad's "Retire Rich Retire Young", I was hooked. I read it twice. I immediately looked for other books and events to go to. Facebook is funny because magically, Real Estate Guru courses suddenly started popping up on my timeline when I started researching real estate investing.

I signed up for this gurus course. It doesn't matter which one because all the Big Box national trainings, in my opinion, are profit machines for the owners and aren't worth it, unless you are the owner. The free half-day was eye opening. I signed up for the 3-day intensive which was $2000. That event was unbelievable! If I had to say anything good about it, I would say, due to the presentation skills level of the snake oil salesman of a presenter we had, he totally changed my entire financial context. He opened me up to a world I didn't realize existed. Nevertheless, all the stuff he spoke about was discussed at length, in much more detail on Bigger Pockets Podcasts, Forums and Blogs.

The snake oil salesman, and his snake oil sidekicks along with the pressures of herd mentality, social proof and fear of opportunity loss caused me to make an irrational investment of $26,000.

One of the big reasons that this stomach curdling event took place, I believe, aside from my pure financial ignorance at the time, is the belief I had that "in order to receive information that is truly valuable, you have to pay through the nose." I heard about Bigger Pockets at the time, but I thought "It's free. How good could it be?"

After purchasing this program which was supposed to offer coaching and constant local training in my market, All I wound up getting was 3 auto-responder emails from my coach who at the time of signing up, suggested I liquidate my 401K to get the $42,000 Platinum package instead of what I purchased. The training was an utter joke. In short, useless.

Now, I had my period of mourning. I'm good now. We'll get through it. After realizing that huge error I was on warpath to get my self financially educated with no or low money down. Or at least no more than the cost of a Meetup. Since then, I've been going to about two meetups a week. Networking like crazy. Doing Direct Mail campaigns. Negotiating with sellers. The race has begun.

The truth is, the most valuable education you can acquire is not paid for with money. It's paid for with time and effort. That's the only cost. (except for regulated professions, but even there you can find creatively legal ways around paying for anything.)

I highly recommend instead of going to some guru do the following:

1- Self-Educate (or self-medicate depending on your perspective. Learning something of value brings a cure to a severe case of mediocrity) - Read books, blogs, forums, audiobooks, conversations, tri-fold brochures. Anything that will advance your education. Then verify it by...

2 - Meeting real people - going to meetups and REIA's. If I read a concept somewhere or a piece of information, I find the smartest guy in the REIA and run it past him. This allows me to:

#A - seem informed. I don't seem like a quiet background newbie who will be missing in three months.

#B - build a relationship. Instead of going to someone and saying will you be my mentor, they will see how eager and focused you are over time and offer to assist.

#C - Build a team. After a while, you will eventually start learning a lot and you can see who you can help and those people can become part of your team. It also allows you to weed out those who are clearly there not to contribute or be a team player for anyone but themselves. Typically, the 10% bad investors that give the 90% good investors a bad name don't tend to be consistent in going to meetups in my opinion. The few that do, people know about, and they will say, "Hey yeah, Bob, he screwed me over on a deal last year. Be careful." This helps with your personal BS meter when talking to guys like Bob. But they only tell you about Bob once you've built rapport and proven you are in it for the long haul.

3 - Rinse and Repeat - You can't go to a REIA once or read about a specific aspect of Investing once and get all the possible benefit. Repetition is the mother of skill. You need to read the same book, same blog, same audio over and over. I say three to six times. I go to REIA presentations and I take meticulous notes that I go over at least six times before I'm done with it. I spend on average four to six hours a day immersed in real estate education, and I work a demanding 9-5 job in sales that requires my full attention. Here's a tip, erase TV, cut down internet entertainment to 15 to 30 minutes a day, and stay up an hour or two extra at night. A piece of cake. That's what I do!

Last but not least, take massive immediate action. Especially with Wholesaling since the barrier to entry is so low and risk nearly zero. Go For It!! Do some marketing. Get some leads. Learn to value repairs and after repair values. Partner with an experienced Wholesaler who you feel comfortable with and give him the darn 50% of the deal. The education is worth it. You give him 50% of your first two deals he works with you on, so you can get 100% of your next twenty. And because you gave him that 50% you shave a potential 2 - 3 years off of your learning curve, so instead of making a total of twenty deals in 7 years, his guidance allowed you to do 20 deals in one year.

And finally, ultimately, you have to ask yourself "How bad do you want it." You need a big enough why. For many coming from less than desirable backgrounds socially and economically speaking, you will need to push through some personal, social and peer group induced barriers. The "Why" is what allows you to break through, what is for many, is crippling fear. If you don't have a WHY bigger than "I need a little more cash." Then you are starting a race on an overweight horse with broken legs.

My why is "Because without becoming an investor I will rythe in poverty for the rest of my years being "the guy with potential that never did", and my financial failure was a testament that I never truly had control of my own life, and upon not being able to work at age 80 due to poor health homelessness becomes a real daily consideration."

Who has a stronger WHY? Who are you willing to bet has a higher likelihood of success?

Without a strong enough "WHY" when you encounter your failures you will bow down in defeat. And this is a road that has more potholes of failures ahead for you than New York after a historically bad winter. Without the failures, we don't get a chance to grow into the ultimate investor that we always knew we were. Failures are the gift of growth, use them as such. I heard a podcast on here of Nathan Brooks who went through a bankruptcy due to a real estate decision. That's terrible, but you know what, you couldn't buy those emotional/psychological muscles he has with all the money in the world. They can only be earned. The next time a nearly bad situation happens to him, he's a lot less likely to let fear grip him and make the wrong choice. He's already been down to the bottom of cannon and come back up. He knows his way around.

I hope this helps some newbies out there. If it saves one person from buying a guru course, this was time well spent.