Many people start investing in real estate the right way. But lots of people get into the business sort of on a whim, just to see what will happen. Rarely do people go into any other business like this, but real estate seems to be the exception to the rule. Let me explain by telling a story of how a couple I knew got involved. They had a small factory, which was producing some money for them, and they worked hard every day hoping that they would eventually make real money.
They believed that by continuing their business and working hard every day they would achieve their goal, but along the way to reaching this goal over a 10 to 15 year period, they would run across people that were multi millionaires. Now these multi millionaires didn’t work, they ran around barefoot on the beach, dressed casually and did whatever they wanted. How did they do this? What allowed them to have the money they needed to do this?
When the couple asked how these guys made their millions, they were always told, just buy and sell houses. It doesn’t matter whether the economy is like, whether its in a slump, whether financial conditions are right, or whether the real estate market is on the rise, or not. Dean Graziosi will tell you that buying real estate is right at any time.
For a long time this couple just continued with their business, figuring that they would achieve that financial freedom sooner or later, after all they had been in business for almost 15 years, had all these employees, and the factory itself. Until one day after meeting another couple that didn’t do anything again, they decided to follow the advice “buy and sell houses,” and so, decided to buy a house.
Because they weren’t very convinced they started their real estate investing process off by doing all the wrong things. They called up their local real estate agent, told him they wanted to invest and asked him to find them a piece of property.
The agent saw a great opportunity to get rid of a home that was located near their offices, and had been on his list for quite some time. Actually up until then the property had been un-sellable for cosmetic reasons, and because of its location.
The couple thought the property would do, it was the first home they looked at, it was close to the factory, and seemed a simple transaction. They paid asking price for it, didn’t bother to negotiate, and left it at that. As I said before, according to what Dean Grazziosi teaches, they did everything completely reversed, as if they expected to fail at this new endeavour.
Lucky for them, fate stepped in and property value increased in the area, and they ended up making 20% of the value of the home after just two years. (Remember they did everything the “wrong way”).
In the end, even when they did everything the wrong way, they found out that they could make more from real estate investing than from working the whole year, every day, the whole day long.
This story is not “one of a kind.” Many people that are in the real estate investing world got there on a whim. They didn’t really plan the investment, didn’t look for the best type of investment, or the area they were investing in. This is probably something they would have never done had they been thinking about any other type of investment, and sometimes this type of real estate investing works, and often it doesn’t.
The point is, most of these people would never dream of going into any other business transaction this way. They would never dream of handing over $100,000 for a business that they knew nothing about, nor had investigated, studied and analyzed the transaction. Yet, often they are willing to do just that when they go into a real estate transaction. If they are lucky, they make money. More often than not, they have problems with this type of transaction, and then complain about how real estate investing is not profitable. In my opinion, there are not many profitable business transactions, that can be done on a whim.
Most businesses require experience, knowledge, studying, research, and the same holds true for the real estate market. Real estate investing does have advantages. You don’t have to wear a suit, deal with difficult customers, go to an office every day, deal with troublesome employees. You can wear your pj´s to work, you do have more free time, but every investment needs to be thought about, and real estate trends need to be read. You do need to learn about your market.