Nearly half of all new investors never make it past their first year. The reason for this is not a lack of knowledge or even deals, but because they think the business is easier than it really is. The overstock of real estate flipping shows on TV paints a rosy picture of exactly what the investing business is. If you watch these shows, it would appear that all you need to do is find a property you like, put some work in and wait 45 days for a buyer to come along. Anyone who is in the business knows this is far from the truth. More importantly, real estate investing is not a “get rich quick” scheme. It requires a lot of hard work and dedication.
There are pitfalls in almost every area of the business. Even under optimum conditions with the best case scenario, it still takes months to buy and sell a house. Wholesaling can be done much quicker, but that will not produce the returns many new investors are seeking. When all is said and done, after all of the expenses and obligations are paid for, the bottom line on every deal may leave new investors less than thrilled. They think they will hit a home run on every deal, but the reality is that most part real estate investing is about hitting singles and doubles and waiting for the right opportunity to take a big swing.
The returns on each deal may be less than expected and the work much more than they bargained for. This is how the investing business is done. If you think you are going to come right in and within six months have a dozen closings and a net worth of a million dollars, you are not grounded in reality. The real estate business can be very lucrative, but like any other business, it takes time and hard work to develop. If you do not see the immediate results it can be easy to think the business is not for you or you don’t have the passion it takes to be successful.
Overnight successes usually take years to happen. Many investors have been in the business for years until they find a niche or a contact that helps their business grow. The thought of making more on one deal than they would for a year in their previous job is appealing, but that is not the norm. The reality is that you may have to pound the pavement or spend the time to conduct a mail campaign. You may deal with 10 homeowners just to walk away with one possible deal. They don’t show you this on TV, but this is where you get your business. Even after you get to this point, you still have to deal with rehab costs, budgeting and buyer issues before you get to the closing. There is tremendous opportunity with investing, but it does not come without plenty of hard work and perseverance.
If you have a true passion for real estate, you can be successful in a much shorter period of time, but even that will not be in the first 30 days. There is no magic formula or get rich quick scheme in real estate. Investing has and always will be about hard work and education, in spite of what you may see on TV.