Are you seeking real estate investment advice for the right reasons?
Posted by John Reed on
After receiving thousands of calls, letters, faxes, and emails over the years, I have concluded that a great many real-estate investors, especially beginners, are seeking real estate investment advice for the wrong reasons. The right reason is to gain useful knowledge before you make your next important real estate decision.
Procrastination
In fact, large numbers of investors are using the gathering of real estate investment information to procrastinate. Going to seminars, reading books, listening to podcasts, and so forth are much easier than signing your name on the dotted line of a $300,000 offer.
Buying real estate is scary. Anyone who has done it can tell you that. I was scared every time I ever bought a property, with good reason, it turned out. I lost $750,000 on two 1983 purchases.
When I was looking for my first property, I found something major wrong with every property I looked at. But after six months of looking, I said to myself, “What’s going on here? I have looked at dozens and dozens of properties and bought nothing. Seems to me that if I cannot find a decent purchase in that many properties and that many months, I never will.” So I decided to go back and relook at the properties I had rejected and buy the best one of that bunch.
That led me to buy 16 Harvard Avenue in Collingswood, NJ, my first duplex in April of 1969. I "seventupled" my money in that property in six years. Actually, I did little to make that happen. The whole market went up about the same. I was just lucky to have bought in the right place at the right time. What had been that property’s major "flaw" when I rejected it? It was next to the main street and its commercial properties. In particular, it was next to an insurance office. Indeed, I sold it for all cash to the savings and loan which was next to the insurance office. The S&L needed my property to build a drive-through window. So that which I almost rejected the property for turned out to be the key property strength when I sold it.
Let me define "real estate investor" to you: a real estate investor is someone who has his name on a deed to a property other than his home. A real estate investor is NOT someone who goes to real estate investment seminars, or buys real estate investment books or courses, or hires a real estate investment “mentor.”
Analysis paralysis
Beware of "analysis paralysis." You can spend so much time analyzing a decision that analysis itself becomes a substitute for action. You can gather so much data that it overwhelms you, like trying to drink from a fire hose, and prevents you from making a decision.
Many real estate gurus well know that real estate investment is scary, but they use that knowledge to prey on you. They promise that they will erase your fears, that they will hold your hand as you proceed, thereby making sure that you make no mistakes. That’s a lie. If you are not afraid when you invest in real estate, you are experiencing nothing more than the bliss of ignorance—a dangerous investing mode.
No one can assure that you that you will avoid all big mistakes. Everybody makes mistakes, especially in real estate. If a guru says or implies otherwise, he or she is lying. They will take your money, lead you down the primrose path, then point to the fine print when your investment goes wrong. They are not interested much in the success of your investments, only in the success of their sales pitch.
Not very many books
If you want to pursue a particular real estate niche, you ought to read whatever good information is available about it. I am often amused by the ridiculous notions investors have about how much good information is out there. Other than my books, there are only about a half dozen worth reading—on ALL real estate investment topics. For example, people call me and ask me to recommend a, “good book on foreclosures in Florida.” There are hardly any good books on foreclosures period. I know of no single-state foreclosure book in Florida or anywhere else. Another person will ask me to recommend a good exchange attorney in the Raleigh-Durham area. When I finish laughing, I tell them there is probably not a single exchange attorney in all the Carolinas, let alone a good one.
Every now and then someone will tell me he is not subscribing to my newsletter because of some deficiency he perceives in my approach or background or whatever. I always ask, “So what newsletter will you be subscribing to?” I ask this because I know there are only a handful of us writing such newsletters. One guy said he was going to switch from my newsletter to “Robert Bruss's property management letter.” Is that so? Bob, who is now deceased, told me he has no such letter. He did have a newsletter on California Real Estate Law (800-736-1736) and one called Real Estate Newsletter. I recommended both, but they were both legal in their orientation. Bruss was a lawyer as well as an investor. They were not a substitute for my newsletter, which covers a broad array of real estate investment topics.
In fact, this guy was BSing me. Maybe he cannot afford my newsletter. Maybe he assumed there were many others to pick from. In fact, you get to pick from about five nationwide.
When it comes to books, there are no books at all on many real estate investment topics. And in many areas, there are no good books at all. For the typical real estate niche, there is one good book if you are lucky. Only a handful of real estate niches have seminars that are worth taking. I recommend no expensive seminars, “mentors,” or book-CD courses. Many of you seem to have adopted a plan of reading a dozen or so books and taking a handful of seminars and hiring a “mentor” on the real estate niche of your choosing, before you make your first purchase. This is a joke. That many worthwhile books and courses do not exist, never did, and likely never will.
When you announce that you are on a search for many information sources on notes or tax liens, or whatever, you set yourself up to be taken advantage of by unscrupulous gurus. They know the books are not there. But they also know that you don't know that, and they know that a fool and his money are soon parted.
Do it
The correct approach is to read a book or two, if any decent books exist on the niche you plan to pursue. Take a local real estate course if there is one on the subject you desire, although you will probably find no such course. Generally, the niche you want is covered by the legal profession's books and courses, although they approach it from a lawyer's perspective rather than an investor's perspective. But a lawyer's perspective is better than none.
Mainly, what you need to do is just do it. Research your local market on your own without books or courses or mentors, then start buying properties and learn as fast as you can from your own experience and that of the other people you encounter in your local market. Quit using research as an excuse for procrastinating. Quit searching for certainty in an uncertain world. If you cannot sign on the dotted line because you are afraid, either get over it on your own or get out of the business.
Procrastination
In fact, large numbers of investors are using the gathering of real estate investment information to procrastinate. Going to seminars, reading books, listening to podcasts, and so forth are much easier than signing your name on the dotted line of a $300,000 offer.
Buying real estate is scary. Anyone who has done it can tell you that. I was scared every time I ever bought a property, with good reason, it turned out. I lost $750,000 on two 1983 purchases.
When I was looking for my first property, I found something major wrong with every property I looked at. But after six months of looking, I said to myself, “What’s going on here? I have looked at dozens and dozens of properties and bought nothing. Seems to me that if I cannot find a decent purchase in that many properties and that many months, I never will.” So I decided to go back and relook at the properties I had rejected and buy the best one of that bunch.
That led me to buy 16 Harvard Avenue in Collingswood, NJ, my first duplex in April of 1969. I "seventupled" my money in that property in six years. Actually, I did little to make that happen. The whole market went up about the same. I was just lucky to have bought in the right place at the right time. What had been that property’s major "flaw" when I rejected it? It was next to the main street and its commercial properties. In particular, it was next to an insurance office. Indeed, I sold it for all cash to the savings and loan which was next to the insurance office. The S&L needed my property to build a drive-through window. So that which I almost rejected the property for turned out to be the key property strength when I sold it.
Let me define "real estate investor" to you: a real estate investor is someone who has his name on a deed to a property other than his home. A real estate investor is NOT someone who goes to real estate investment seminars, or buys real estate investment books or courses, or hires a real estate investment “mentor.”
Analysis paralysis
Beware of "analysis paralysis." You can spend so much time analyzing a decision that analysis itself becomes a substitute for action. You can gather so much data that it overwhelms you, like trying to drink from a fire hose, and prevents you from making a decision.
Many real estate gurus well know that real estate investment is scary, but they use that knowledge to prey on you. They promise that they will erase your fears, that they will hold your hand as you proceed, thereby making sure that you make no mistakes. That’s a lie. If you are not afraid when you invest in real estate, you are experiencing nothing more than the bliss of ignorance—a dangerous investing mode.
No one can assure that you that you will avoid all big mistakes. Everybody makes mistakes, especially in real estate. If a guru says or implies otherwise, he or she is lying. They will take your money, lead you down the primrose path, then point to the fine print when your investment goes wrong. They are not interested much in the success of your investments, only in the success of their sales pitch.
Not very many books
If you want to pursue a particular real estate niche, you ought to read whatever good information is available about it. I am often amused by the ridiculous notions investors have about how much good information is out there. Other than my books, there are only about a half dozen worth reading—on ALL real estate investment topics. For example, people call me and ask me to recommend a, “good book on foreclosures in Florida.” There are hardly any good books on foreclosures period. I know of no single-state foreclosure book in Florida or anywhere else. Another person will ask me to recommend a good exchange attorney in the Raleigh-Durham area. When I finish laughing, I tell them there is probably not a single exchange attorney in all the Carolinas, let alone a good one.
Every now and then someone will tell me he is not subscribing to my newsletter because of some deficiency he perceives in my approach or background or whatever. I always ask, “So what newsletter will you be subscribing to?” I ask this because I know there are only a handful of us writing such newsletters. One guy said he was going to switch from my newsletter to “Robert Bruss's property management letter.” Is that so? Bob, who is now deceased, told me he has no such letter. He did have a newsletter on California Real Estate Law (800-736-1736) and one called Real Estate Newsletter. I recommended both, but they were both legal in their orientation. Bruss was a lawyer as well as an investor. They were not a substitute for my newsletter, which covers a broad array of real estate investment topics.
In fact, this guy was BSing me. Maybe he cannot afford my newsletter. Maybe he assumed there were many others to pick from. In fact, you get to pick from about five nationwide.
When it comes to books, there are no books at all on many real estate investment topics. And in many areas, there are no good books at all. For the typical real estate niche, there is one good book if you are lucky. Only a handful of real estate niches have seminars that are worth taking. I recommend no expensive seminars, “mentors,” or book-CD courses. Many of you seem to have adopted a plan of reading a dozen or so books and taking a handful of seminars and hiring a “mentor” on the real estate niche of your choosing, before you make your first purchase. This is a joke. That many worthwhile books and courses do not exist, never did, and likely never will.
When you announce that you are on a search for many information sources on notes or tax liens, or whatever, you set yourself up to be taken advantage of by unscrupulous gurus. They know the books are not there. But they also know that you don't know that, and they know that a fool and his money are soon parted.
Do it
The correct approach is to read a book or two, if any decent books exist on the niche you plan to pursue. Take a local real estate course if there is one on the subject you desire, although you will probably find no such course. Generally, the niche you want is covered by the legal profession's books and courses, although they approach it from a lawyer's perspective rather than an investor's perspective. But a lawyer's perspective is better than none.
Mainly, what you need to do is just do it. Research your local market on your own without books or courses or mentors, then start buying properties and learn as fast as you can from your own experience and that of the other people you encounter in your local market. Quit using research as an excuse for procrastinating. Quit searching for certainty in an uncertain world. If you cannot sign on the dotted line because you are afraid, either get over it on your own or get out of the business.
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