Truth or comfort? Which do you prefer? Several years ago, someone I respected very much asked this question to a group of real estate investors. We were surprised. Why should we have to choose? Real estate was going well, so we had the comfort of great investments and the truth that making money through real estate was easy. That is when he let us in on a little secret.
He saw the real estate bubble for what it was. He could see that a crash was coming. He told us the truth about investing in real estate. He explained that the wave we were riding was temporary. That although many people had made money in real estate with little work, the ride was nearly over. The truth about investing was that there are good times and bad times. Then he taught us a few things to help us hang on.
For those of us who listened and chose truth over comfort, his tips helped us more easily navigate through some difficult times. Those who didn’t listen got hit hard. In fact, many of those who chose comfort and refused to listen to the truth, lost everything.
Since then, this is the question I ask everyone who wants to go into real estate investing. I love seeing someone excited to get started. Nonetheless, everyone needs to understand that real estate investing is work, not a get-rich-quick scheme. Done right you can retire earlier and find financial freedom, but it takes work.
People prefer to hear comfortable things about investing. Search engine results will give you comfortable headlines such as:
“How to Strike it Rich”
“Gen Y couple reinvested their way from $15k to $10m”
Many real estate investing gurus and mentors will lure in investors with get-rich-quick ideas, telling people that they will be able to quit their day job and watch the money roll in. Although this is completely possible, you are going to have to work for it.
Who wouldn’t want to believe these comfortable messages? In fact, many would-be investors get excited about the prospect of making it big with little effort.
The problem is, that this is not the truth.
Don’t get me wrong. Real estate investing is fantastic. It can give you freedom, flexibility and financial security. You can create a residual income. In fact, you can make darn good money. You may be able to pay for your child’s college education or quit your day job. You cannot, however, do these things without putting in the necessary work.
The truth, as I see it, is that people spend more time planning their vacation than they do their financial future. What if, instead, you chose to focus on your future? What would your financial future look like if you owned one rental property free and clear? How might that impact you on a day-to-day basis? Now consider owning two properties. Or 10. Or a hundred.
Getting Started Is Hard
I look back on my first investment property, realizing how difficult it was to get started. I didn’t know where to buy. I didn’t know what to buy. I didn’t know how to find good deals. I didn’t know where to go for financing. I didn’t know how to make an offer on a property. I didn’t know how to determine rehab costs. I didn’t know where to find good contractors.
“But,” you say, “I watch HGTV every single day. I know how to buy and sell property.” Another truth you may not want to hear is that TV shows and real life are always different. Rarely do you see the big mistakes on TV. Rarely do you see the real timeframes for projects. Rarely do you see a blown budget turn into a huge mistake.
I’m not saying these things to discourage you from investing in real estate. I just want you to understand the truth. I want you to understand what you are getting into.
Get the Right Knowledge
The best way to understand the truth behind real estate investing is to get a good, solid base of understanding. You will find your best knowledge from those who have been investing. I suggest you find:
- Books and DVDs
- A strong mentor or mentors (I like this one)
Over the last 20 years, I’ve purchased hundreds of properties across the United States and completed more than 10,000 loans. Although starting was difficult, I look back now and realize how much easier it has gotten. The same will be true for you as long as you go in with your eyes open.
So, which do you choose? Truth or comfort? My hope is that you choose truth and then meet your goals through real estate investing so later you can have comfort. Maybe the comfort part is your call to action. If that’s what it takes, great. Just don’t be afraid of the work. It’s worth it.
About the Author
John Trautman is an author, entrepreneur, longtime real estate investor and founder and CEO of the Real Estate Knowledge Institute. Through REKI he teaches and inspires aspiring real estate investors who have an interest in everything from home flipping to buying and selling rental properties to earning passive income through various real estate investments. Contact him at firstname.lastname@example.org or 206-255-2858.