Real estate didn't work for me - Posted by Too embarassed

Com’on guys, let’s face it… - Posted by phil

Posted by phil on February 11, 2006 at 11:20:21:

…some folks just aren’t cut out for Successful Real Estate Investing or even Success period.

Someone has to fry the burgers and clean the restrooms. Some has to mop up isle #5. Someone has to do the payroll. You get it?

And you know what, that’s OK. You don’t have to be a “Success” at CRE or MLM or Business etc. to be a Success to yourself and your family.

What happened to the days of being just a good father and husband regardless of your financial position in life.

I’m I saying just give up? NO, I’m saying don’t be too hard on yourself. If you want to be in Real Estate then be in Real Estate. Whats wrong with buying a rental every year for 10 to 20 years with little more than your credit?

Geez in 10 to 20 years you can retire. That’s better than 90% of all Americans do.

Don’t hang your head, find a niche and stick with it and IT will Work For You!

Re: Real estate didn’t work for me - Posted by whyK-CA

Posted by whyK-CA on February 11, 2006 at 10:49:06:

I think your advice to someone just starting out, ?move to THE best location? is a very good advice, if you have that option. You don?t hear people say that much, but I think this should be given serious consideration. Of course, like you and I, some of us don?t have that option.

Re: Real estate didn’t work for me - Posted by Cindy (OR)

Posted by Cindy (OR) on February 11, 2006 at 10:11:22:

Join your local Real Estate Investing Club. Work with your “competitors”, not against them. Make it your goal to help someone else and you will receive far more than you imagined.

Re: Real estate didn’t work for me - Posted by rehabber7

Posted by rehabber7 on February 11, 2006 at 09:55:30:

I’ve been at this for three years now, with only about $5000 profit so far. I made many, many, many offers in the first two years, but no money. Learned a lot and had fun. First rehab cleared about $4300 and I’m receiving $50/month on a second that I carried back. Not the kind of profit that the gurus crow about, but it’s still money. And, I learned a lot. I now have three rehabs that are back on the market and ready to sell. We’ll have to wait and see what I clear on these. My business is not growing as fast as I would like, but I enjoy it and I am making some money. I enjoy it much more than my day job as an engineer (by the way, I wasted 5 years obtaining a Master’s degree in engineering and professional registration). I have found that the REI competition is very intense in my market. I have learned that I need one or more of the following when compared to the competition:

  1. An advantage.
  2. Work harder.
  3. Work smarter (do something different compared to the competition).
    I think this would be true in just about any business. My advantage is that I do have some money and good credit. I don’t have the time to work harder, and I’m looking for that different thing. So, for now I am content with my moderate amount of sucess. The key for me is that I enjoy it. Good Luck!

If at first you don’t succeed… - Posted by Potash

Posted by Potash on February 11, 2006 at 09:54:32:

…write a book or become a mentor.

I’m in the same boat, BUT… - Posted by Newbie(IL)

Posted by Newbie(IL) on February 11, 2006 at 09:15:54:

I hear your frustration and your pain and I’m practically in the same boat as you, as I’ve been reading about Real Estate, buying courses, etc…

You know what my problem is, though? Is that I’ve never followed through on the information. I plan on learning the neighborhoods, door knock pre-foreclosures, drive for dollars, spotting vacant houses, but guess what? Coming back from 9-5 job I just loose the desire or stamina.

I’m suspecting that you are in the same boat.

It is natural for us to have this idea that Real Estate is an easy money and all you need is to find that perfect area, with sellers lined up to sell at a discount and buyers lined up to buy at full market value.

Guess what? Like Alexis McGee says on her website, it is never easy to buy AND sell at the same time. It’s either a buyer’s market or a seller’s market and no teacher will tell you what market you are in. It’s up to you to find out.

Let me ask you, how many houses did you look at last week? Better yet, how many offers did you make? You can’t buy the house without making an offer. You can’t buy by just looking.

Secondly, you seem to think that if you only had the money, things would be great. That’s a false premise. If you received 200K and bought 10 20K homes with the same cashflow, guess where you’d be? In the same place you are in now, except 200K lighter.

Thirdly, it does not matter whether you have the money or not, if you have a deal, money will always be there. Find a home worth 20K for 8-10K and I guarantee, there will be people willing to lend you the money.

Fourthly, did you check out the competition in your area? What are THEY doing that’s different from you?

Hope this helps, but ultimatelly your success and your failure depends on YOUR efforts, not your market or cirumstances.

Re: Real estate didn’t work for me - Posted by Mike-OH

Posted by Mike-OH on February 11, 2006 at 09:11:36:

There is a way to make money in RE in your market, and obviously you should know what that is by now. In a very hot market, you make money with the appreciation during the flip and buying below market. In a weaker market, you can make good money with rentals. The key to understand your market which I don’t think you do.

The next BIG point and where most people go broke in any business is that they don’t have proper cash flow to sustain their business. To be successful, rentals can NOT be a forced savings plan. To be successful, you can’t only get $1,000 per flip (that’s ridiculous). You are correct that you either need money, a sound contract, or the deed to flip correctly. Everything is more difficult if you don’t have money or credit!

The vast majority of people that try any business will not succeed. If you have determined that real estate isn’t working for you, then I’d move on.

Finally, real estate investing isn’t what you see on TV. It isn’t work 2 hours a week and get rich in a year - again ridiculous! To be successful at anything, work hard 8-12 hours a day for a few years and get your business established. Even after that, you still have to work hard. How many hours a day do you think Donald Trump works?

So, the secret to success is:

  1. have money or credit
  2. know your market
  3. work hard - very hard
  4. you must generate proper cash flow to sustain your business

Good Luck,

Mike

Re: Real estate didn’t work for me - Posted by Doug (ON)

Posted by Doug (ON) on February 11, 2006 at 09:10:30:

First, let me just say that I’ve had similar feelings at times.

You mention spending tens of thousands of dollars on courses. But you say nothing about marketing. Have you spent tens of thousands on bandit signs, direct mail, and newspaper ads too? If not, that’s one of your problems right there. Buying courses doesn’t make you money, the only way to make money is to talk to sellers and make offers!

You don’t have $20k? Here’s how I did it: Drink water instead of StarBucks. Walk instead of drive. Rent a room instead of a house. Before you know it you’ll have the savings to buy those junkers for cash.

You seem to be fixated on flipping junkers. But surely after all those courses you know there’s more than one way to skin a cat? What about taking over payments? Lease/Options? Fix it up yourself?

You said “there are a lot more new houses than potential investment properties”. I’ve got news for you: New houses ARE investment properties! The turn over in newer subdivisions is at least 10-20 times greater than established neighborhoods and most of those people have no equity. Take over their payments.

That’s just a few ideas for now. I’m sure you’ll get tons more. If there’s one thing this forum loves it’s to encourage and/or beat up on on discouraged investors.

. No one is making a fortune in re? huh? - Posted by michaela-FL

Posted by michaela-FL on February 15, 2006 at 17:52:43:

EQ,
you’re so full of it. Just because you don’t seem to
be able to make anything work and spend all your time
coming on this site explaining on how all these different
real estate technics don’t work doesn’t mean others aren’t more successful.

Michaela

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Re: Sorry, Difference of Opinion… - Posted by Ed Garcia

Posted by Ed Garcia on February 13, 2006 at 12:43:29:

Crassus,

I?d like to introduce myself. My name is Ed Garcia and I host the Real-estate forum on this site. Most people think I teach Real-estate financing and how to get lines of credit to buy RE, but the truth of the matter is, I teach Real-estate investing as a business.

I?ve been around this forum for about 8 years now giving advice and helping people. I also do a workshop called the Lenders Workshop or ?How to Get Lenders Fighting To Give You Money?. To attend my workshop you have to already have done investment real-estate, be a mortgage broker, real-estate broker, banker or of professional status. I tell you this so that you can see that I don?t prey on newbie?s or folks who will never have a chance to benefit from the workshop.

Now that I?ve given you a little history of who I am and what I do, I?ll give you the reason I?m answering your post. I don?t agree with your limited Real-estate experience.

A Prudent Real-estate Investor, can make money in both an up and down market.

It doesn?t take any talent to buy at market or 10% below market. The first 10% of a deal doesn?t even count. It is adsorbed by price negotiation and sales commission.

I?m a native Californian and I can tell you first hand that most people who called themselves Real-estate investors in California didn?t have a clue. You could be a Saint Bernard Dog in California and buy property over market value and make money. The reason is the market dictated it.

Again, I?d like to reiterate, people who buy property are not necessarily true real-estate investors. I have a high school friend who made 31/2 million dollars in Real-estate in California and can?t spell cap rate.

The problem with buying on appreciation is you have only one exit strategy, sell before the market goes down.

Yes I know there are guys out there who use a slide rule and try to predict the market when penciling their deals. Guys who play the margin have no room for error. Some of them do OK, some of them bite the bullet.

The foundation of my teaching is to MAKE YOUR MONEY on the BUY and CASH FLOW.

The reason being is in the event of a Market change, you have Cash-flow to wither the storm. You now have multiple exit strategies as well. You now have the ability to sustain a down market.

Now you?ve addressed what I?m saying in you post when you said,

I know appreciation is a dirty word in some creative real estate forums and the only valid way to invest is supposed to be the conceptually fool-proof way-buying below market and flipping or keeping for cash-flow but these methods, although they work for a good many people and are theoretically safer-after all you can’t be absolutely sure of future appreciation- aren’t always easy or feasible in a particular market and especially market cycle.

Not so. What you?re really trying to say is that they?re not easy to find. That?s my next point. Good deals usually aren?t easy to find.

Prudent Investors either recognize them or create them. They recognize them by finding properties with up-side and create them when negotiating them.

The most basic fundamental of upside recognized on this forum is buying a fixer upper house and flipping it.

The most basic fundamental of negotiating is terms and conditions or seller carry-back.

Crassus, at my workshop, Many of my students have attended other workshops where they have learned a technique, system, method such as lease/options, short sales. Land contracts, etc. Great, the problem is many of them either get tunnel vision and locked into the system they?ve just learned because of lack of experience or don?t know when or how to use it.
If I had the time, I?d give you my assessment or opinion of where I think the California markets going as well as the various markets that I deal with through out the country thanks to working with my students which are nationwide.

However that?s wasn?t the reason for my post. The reason is to explain that most people think they know how to deal in a down market however when it happens going along with the theory of buy low, sell high, then the complaint will be that there are no buyers.
I think for the most part investors have a problem buying in a Hot Market, therefore I?m enclosing an article I wrote a while back for California Investors that hopefully explains my attitude and mentality of Prudent REI.

My post is not intended as an attack, but a difference of opinion of a REI who?s been a REI since 1973 and has owned his own mortgage company since 1980.

HOT MARKET and PRECEPTION:

The one thing that working with people on the Internet has taught me is the differences in the market across the country. For me it is also an eye opener. At first I felt just like any other investors in a HOT MARKET because, I was PRODUCT of my ENVIRONMENT.

It was difficult for me to find deals and because of that, after a while you start to fade and give up, because if you?re having trouble finding a deal, and keep hearing that there are no deals out there, after a while you find yourself buying into it.

The things you don?t do in a HOT MARKET, is stop making money on your buy or give up cash flow. I can?t tell you how many people are satisfied just doing a deal to do a deal at break even, and assume that they?re going to make their money with future appreciation. Pass, that?s not the way to do it.

First of all let me say that I own property outside of my own state and am not afraid of investing in another state. For me it would have to be a respectable size deal, not a house, because of management intensiveness. The deal has to make me enough money that it will justify paying for my occasional visit to oversee it in addition to a good return.

I?ve got to tell you that I got an eye opener at my very first workshop. That?s right, old Garcia learn from his own workshop. On Saturday nights we have an open floor discussion, and each investor can present the deal that they?re doing or any deal they?re having a problem with. That was when I first realized that every investor sees a deal differently. Different size deals, different market, different ways that they would structure their deals, different thinking. For example if you have an investor that was taught the business by doing lease/options. Every time he would see a deal, he would see it through the eyes of a guy who does lease/options and he would try to structure it to do a lease/option. I immediately saw the light and how each investor was trapped by there own limited knowledge or technique.

Now not to make an investor who does lease/options look dumb. If you do a lot of lease/options, you become good at it, even masterful and now your confidence is where you project and the sellers in turn will have confidence to do a deal with you. So this is just one example of what I?m talking about.

We would discuss different ways the same deal could be done and then someone from Missouri, who is drinking a beer, would raise his hand and give you a way to do the deal that was so simple, that you realized that you missed the obvious.

We obviously would talk about the different markets and come to realize that if you were going to be successful in this business and RE investing is a business, you would have to be able to survive in the different markets.

Now for the part of the post you really want me to address, HOT MARKET. How do you handle a hot market? How do you do deals and make money in a HOT MARKET.

I haven?t had a salaried job since 1972. So you can see that I?m a serious investor and don?t play. When I was learning this business the guys that knew it would never give you any information in a million years, in fear that the next time that they see you, you?ll be bidding against them. We didn?t have Creonline and the various courses and information that is being provided. It was us and the street.

I must tell you that a HOT MARKET is going to be particularly hard on a part time investor. The reason is obvious, because they work and have a family to spend time with; they?re not in a position to spend quality time in the street knowing everything that is going on in their market. They haven?t the time to network, canvas, build a reputation as an investor, or spend the time needed to search or find deals. They?ll usually dependent on a Realtor and those of us that are full time we know what we think about dealing with Realtors.

PERCEPTION or ATTITUDE of a real-estate investor is the key to their success. Not knowledge, Not Market Place. If you have the right attitude you?ll gain the knowledge, and you?ll learn how to survive the various markets.

Lets talk about PERCEPTION and ATTITUDE:

Two-shoe salesman from competing companies in the early 1900’s were told they were going to the continent of Africa to open up a new market for their respective companies. They were to go with a few samples, and while there drumming up business, a steamer would be dispatched with an entire inventory to deliver on the orders.

The first salesman got off the plane, looked around and immediately telegraphed this company.

“Turn back the shipment! There is NO market here. NOBODY wears shoes!”

The second salesman got off the plane and looked around and immediately telegraphed his office.
"Double the shipment immediately! TONS of potential business here! NOBODY WEARS SHOES!!!

Lets talk about PERCEPTION and Donald Trump. Most people see things for what they are. Donald Trump sees thing for what they could be. When you?re in a hot market you need to take the Donald Trump perception or attitude and CHANGE THE RULES.

Don?t buy the way the market dictates, but create a market with in a market.

Now for those of you who will tell me that you can do FLIPS or LEASE/OPTIONS in any market, I?m aware of that but the profits are minimal and you have to do a lot of them and in doing so you now have a job.

Look for other properties that you can make money with that others are passing buy or don?t have the vision to see the up-side potential of.

Example:

Buy a lot and build a house.

Buy land and subdivide it into lots.

Buy a house that is zoned for units and build units.

Buy apartments and convert them into condos.

Find small homes such as a 2-bedroom house in a high dollar area, that could be renovated or a tear down to rebuild to accommodate the comparable larger housing.

Look for opportunities such as apartments with below market rents that will give the apartments upside, increasing the income and in turn increasing the value because when purchasing commercial property you?re buying an income stream.

I could go on with this but I?m sure you?re getting my drift. You need to open your eyes and stop accepting the fact that there are no deals. Don?t listen to realtors, as I said before were all product of our environment and realtors make their living in retail sales, so to find a deal through them will be difficult. When they see how you want to buy, they?ll tell you that you?re unrealistic.

Well this post is 5 pages long and if it helps just one person reading it, it?s done its job.

Thank you,

Ed Garcia

Rant Part 2 - Posted by Crassus

Posted by Crassus on February 12, 2006 at 12:52:08:

I also want to say that you shouldn’t put all your investment money in real estate. Many predict that a RE market crash may cause even slow markets to depreciate. I disagree-I think the bubble markets will indeed experience big price drops but the stagnant markets will improve but I could be wrong.

Don’t buy the put your eggs in one basket and watch that basket talk. This only applies to investments if they are your main occupation and you’re an expert in your particular market area. For most of us, who are amateurs deluding ourselves to be experts and have other methods of earning our daily bread, diversification is the way to go.
Again, concentrate on making as much money you can in your job or ,even better, your own business so you have more money to invest in a diversified portfolio of VALUE market real estate, stocks-US and particularly Asian markets, maybe gold, etc.

Re: Real estate didn’t work for me - Posted by Doug (ON)

Posted by Doug (ON) on February 11, 2006 at 21:46:54:

It’s amazing isn’t it? My market has been booming for the last 6 years in a row and I’ve said the same thing many times: “There just aren’t enough motivated sellers around here!” Then suddenly one lands right in my lap.

I read somewhere that you can examine 100 white swans and never prove that black swans do not exist. But all it takes is ONE black swan to prove they do exist.

Re: Don’t worry, you’ll get a 2nd chance … - Posted by Tim

Posted by Tim on February 11, 2006 at 21:48:41:

You’d be better off buying properties at a huge discount. Sell anytime and make great profit. Repeat this step all year round.

Tim

Parking in the driveway because the garage is full - Posted by John Behle

Posted by John Behle on February 11, 2006 at 18:47:37:

I used to joke with people in my seminars about people that had spent that kind of money on courses and how they had to park on the street because their garage was full of home study courses. It’s surprising how many people said that that was actually the case.

It’s all about the application of good principles. Too many people are scared to start or take a risk. It’s always about learning more. The education drug. And when they learn one subject, they go on to another. That way they are always learning and yet never quite ready to start - and take a risk. A friend of mine used to talk alot about “guts” in his seminar and gave out a bumper sticker with his course that said “I have guts” and I remember he had another for those that worked with agents that said “My Realtor has guts”. I loved the book years ago titled “goals, guts and greatness”.

I like the statement “If you think education is expensive, try experience”. Education is crucial, but there can also come a point where it is a crutch or excuse. That depends on the person. The answer isn’t more education, it is getting to the roots of their fears, etc. so they can move on.

The ultimate hammer guys - Posted by Doug (ON)

Posted by Doug (ON) on February 11, 2006 at 17:20:57:

There are quite a few authors out there who pitch the “tranaction engineer” approach you describe. It’s not my thing though, never could make the “101 ways to peel a banana” to work for me. A few basic techniques is all I can get my head around at the same time.

But I do have a question I hope you can answer. If the answer is to have a full toolbox. Then why do realtors–the ultimate one hammer fits all–control 95% of the real estate market?

Lots of sellers need a better solution than to simply lower the price, but that’s what they do because that’s all the “professionals” know.

Re: Real estate didn’t work for me - Posted by Too

Posted by Too on February 11, 2006 at 14:52:53:

Hi Ed,

We’ve spoken before and you can feel free to email me if you like to find out who this is.

I’m a very hard headed person and pretty much refuse to give up. I just can’t find something in the real estate arena that works for me. Flipping to build a cash reserve has been the plan all along. I guess after five years it’s time to realize it’s not going to work that way. With a cash reserve and having the confidence to know that I can raise cash when needed, the plan was then to take it to the next level.

Having read what you’ve written I believe you prefer commercial property for cashflow over SFH’s. I agree with you completely. I’d rather own a single apartment building with 50 units than 50 SFH’s scattered all over the place. But, SFH is what I know.

I can’t say for sure what I’m going to do now. Lately I’ve just been concentrating on my business. Despite what JP said, I’ve been in business for myself twice as long (3 years) as he has. And in a saturated and competitive service business. The business is doing just fine but it’s not throwing off enough cash yet to make me feel comfortable about accumulating rental property.

Ed, if I had to guess, I’d say I’ll probably keep working on business until it is throwing out extra cash. Then I might feel more comfortable about investing in property to hold for cashflow. I don’t think I can count on turning property to provide cash when needed. I’m just afraid tomorrow will never come.

Thanks for stopping by my post.

Re: Real estate didn’t work for me - Posted by Too

Posted by Too on February 11, 2006 at 14:51:32:

Hi Ed,

We’ve spoken before and you can feel free to email me if you like to find out who this is.

I’m a very hard headed person and pretty much refuse to give up. I just can’t find something in the real estate arena that works for me. Flipping to build a cash reserve has been the plan all along. I guess after five years it’s time to realize it’s not going to work that way. With a cash reserve and having the confidence to know that I can raise cash when needed, the plan was then to take it to the next level.

Having read what you’ve written I believe you prefer commercial property for cashflow over SFH’s. I agree with you completely. I’d rather own a single apartment building with 50 units than 50 SFH’s scattered all over the place. But, SFH is what I know.

I can’t say for sure what I’m going to do now. Lately I’ve just been concentrating on my business. Despite what JP said, I’ve been in business for myself twice as long (3 years) as he has. And in a saturated and competitive service business. The business is doing just fine but it’s not throwing off enough cash yet to make me feel comfortable about accumulating rental property.

Ed, if I had to guess, I’d say I’ll probably keep working on business until it is throwing out extra cash. Then I might feel more comfortable about investing in property to hold for cashflow. I don’t think I can count on turning property to provide cash when needed. I’m just afraid tomorrow will never come.

Thanks for stopping by my post.