​The #1 Reason Why Investors Fail

Ask five different real estate investors what they think is the biggest reason why investors fail, and you’ll get five different answers. You might hear things like, “They didn’t have enough money,” or “They got into a bad deal,” or even “They are a complete idiot!”.

While all of these are perfectly valid answers, there is one common theme that underlies them all, and that’s the real reason why people fail at real estate investing. Are you ready to learn what it is? It’s really pretty simple.

The #1 reason why investors fail is because they didn’t educate themselves enough.

Seriously guys, education is everything. Success in real estate investing all comes back to how hard you’ve worked to learn about it and all its various facets. All the other reasons that people may cite as the cause of failure stems from a lack of education in some area. Whether it’s money management, selecting a profitable investment property, choosing the right partner, or anything else you can think of, it all comes back to YOU and how much time you’ve spent educating yourself.

Don’t believe me? Let’s break down some of those reasons I mentioned at the beginning of this post.

Reason #1: They didn’t have enough money.

Obviously, you’ve got to have some money to make an investment in real estate. You can’t get into it with zero dollars in the bank, even if you’re partnering with someone who does have the cash. You’re going to have to put something in the game, and your charm alone isn’t going to cut it. But how much does a person really need?

That’s an interesting question, and it’s one that doesn’t have a right or wrong answer. You could have $1,000 or $50,000, and failure is still an option in both scenarios - IF you haven’t taken the time to educate yourself on how to invest. If you’ve done your due diligence, however, it shouldn’t matter how much money you have, because your decisions and subsequent management of your investment will be rooted in smart choices based on solid education.

Reason #2: They got into a bad deal.

This one actually makes me laugh. Investors who use this excuse fail to see one very important fact: no one forced them to make the investment. They chose to. I know, I know. Sometimes bad luck happens, and it’s no one’s fault (i.e., lightning strikes and the house catches on fire). But I’m not talking about those situations; I’m talking about knowingly investing in a property that just doesn’t make sense. These are instances where investors let their emotions drive their decisions, or they don’t trust the numbers, even though the numbers are basically screaming, “This won’t work!” Those are the situations I’m referring to. Getting involved in a bad investment (natural disasters and other bad luck situations aside) is no one’s fault but the investor’s, and 9.9 times out of 10, it’s because there is a lack of education and that investor didn’t perform their due diligence.

Reason #3: They are a complete idiot!

All I have to say about this one is that complete idiots obviously don’t see the value of education, so failure is inevitable.

So now that we’ve gotten down to the bare bones of failure in real estate investing and its one, true cause, how is one supposed to go about learning all there is to know? Again, simple. You become a human sponge. You absorb knowledge wherever you can - talking to other investors, reading real estate articles, participating in online forums with other investors, attending seminars, and taking classes. Go forth and learn.

Also, understand that this is all going to take time. The smartest investors know that their education in real estate is a lifelong journey - they’re ALWAYS going to be learning, and that’s a good thing. Being a successful investor isn’t a skill that’s picked up in a few weeks, months, or even years. It takes focused concentration on learning all you can, as well as hands-on experience. You’ve got to actually make an investment (and better yet, multiple investments) to understand the process and figure out what works for you and what doesn’t. You also have to keep in mind that your situation is unique from anyone else’s. What works for them won’t necessarily be right for you.

Remember, you have to build the foundation before you can build the empire. That foundation is built by absorbing as much knowledge as you can, and if you skimp on education, your chances of failure increase exponentially.