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Updated 1 day ago,

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8,548
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5,166
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Drew Sygit
Property Manager
Agent
#1 Tenant Screening Contributor
  • Property Manager
  • Royal Oak, MI
5,166
Votes |
8,548
Posts

Why are Newbies Using Invalid Investment Assumptions from 5+ Years Ago?

Drew Sygit
Property Manager
Agent
#1 Tenant Screening Contributor
  • Property Manager
  • Royal Oak, MI
Posted

Take a look at this graph:

What do you see?

What RECENT "buy" opportunities do you see in the overall market?

When do you think it was more difficult to find a "deal" on real estate, in 2011 or 2019?
How about today?

It's pretty easy to see that real estate proces peaked around 2007-2008 and then crashed during the Great Recession.
Around 2011-2012 prices started to recover and got back to their pre-Crash highs around 2015-2016, but really 2018-2019 when adjusted.

So, why are newbies reading books written BEFORE 2019 and thinking that you can still successfully invest using the EXACT advice in these relatively "old" books?

Yes, some of the basic principles in ANY book can still be applied to any time.
Napoleon Hill's book, "Think and Grow Rich" written in 1937, is still a good read for it's basic ideas.
Yet, you have to adapt those ideas to the modern world!

Too many newbies seem to think they can blindly follow "old" advice in today's real estate market and be successful.
Many, basically get taken advantage of by those in the industry that have an incentive to keep newbies blind to new realties, just to keep their good times rolling.

What many newbies have figured out is that they can't make the numbers work on rental purchases in their states - like California, Arizona, New York, New Jersey, Washington, etc.

What they have NOT figured out is that if they go to cheaper markets, they aren't being shown Class A rentals to buy.
Most are being encouraged to buy Class B-minus rentals and below, but no one corrects them about their mistake of using Class A assumptions on these rentals:

When a newbie gets smacked with reality via their losses, they then can only suck it up until time improves their mistake or dump at a loss.

So, my question is, why can't we all do better and grow our industry with integrity?

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