We always talk about the best ways to invest in real estate and having been in the real estate world in years, Steven and I have had our fair share of horror stories. Here are the 2 worst ways to start investing in real estate:
1. The flip
2. Getting in a 30-year rental property
If you don't buy a property right, you are starting real estate wrong.
Today's a really useful topic 'cause we're talking about the worst ways to invest in real estate. Listen, you hear me talk all the time about the best ways and the ideal ways and the best strategies and the formulas for success, but you know what the reality is? I meet so many people that are dogging it and they're making choices that are hurting them financially.
So today I'm gonna be sharing with you the top two worst ways that I see most investors get started. That end shortly with quick regrets. Today we're talking about the worst way to start investing in real estate.
Steven, we have heard our share of horror stories over the years, working with a variety of men and women everywhere who jumped into real estate and had a really souring experience right outta the gate. And they quickly became what we call don't wanters, Steven Wisa don't want her, Don't want her as someone who don't want do it anymore. And they don't want their real estate anymore. They don't want the real estate. Save me, save Me. Throw me a laugh line.
You know, I, I think most people, the biggest problem is they jump into real estate without a plan. And we talk about plans a lot here. Uh, having a plan is super critical and crucial in, in having success in real estate. But if you see, you've got your aunt, your uncle, your your good friend over there that's done in real estate, they've had some success.
And so because you see them doing all these things, you just kind of, you know, close your eyes, pinch your nose, and you jump in the water. Right? Um, that's a, that's a horrible plan. That's not a plan. Yeah.
And so because you do that, you get into a space where oftentimes you have no idea what you're doing. You don't know what your goals are. Um, you, you start getting bombarded with the pains that real estate can offer. 'cause by the way, can real estate hurt sometimes to they real?
That's German for it hurts. Yes. Sometimes, sometimes Real estate can hurt. And, and the reality is, if you don't have a proper plan in place, then when that hurt comes along, when it smarts Just a little bit, It's going to, it's gonna stop your tracks. So, and you're gonna become a don't want, We're gonna become, we, today we're gonna be talking about the two worst ways to start investing in real estate. And the first one we wanna start with is the flip. Oh, Yeah.
There's a lot of people attracted to the flip. Now, by the way, we're not saying flips are bad, but flips require a level, some knowhow, , they require some knowhow, some experiences helpful. And so a lot of people will jump into a flip and what they haven't properly run the numbers they haven't thought through everything.
And often real estate on paper ends up being very different than how it turns out in real life. And so what I've seen happen many times with a flip is someone jumps in on a deal that has less margin or less to gain than what they had thought or what they had hoped for.
Or number two, they hadn't appropriately planned on how much the property would take, $10,000 of repairs turn into $30,000 of repairs, or they got into the project and all of a sudden they start peeling up the, the flooring and the walls and start realizing, oh my gosh, there's way more problems here.
Or they start going overkill on doing way too much work. A flip is a great way to to, to sink the family farm right outta the gate. And it doesn't mean don't do it, but it does mean that this is one of the worst ways that you can start your investing career is going in with no experience.
Right. Into a flip, Steven, if someone did wanna do a flip and wanna do it correctly, what advice would you give 'em? I mean, if you wanna do a flip and you want to do it right, I would say number one, find someone who's had experience doing flips. And how much experience, by the way, Uh, I mean, you know, we, we say this all the time, but unless you've done probably a hundred or more of a specific type of real estate, the chances are is
you've got the door wide open for some massive failure.
So I would find someone who's done a lot of flips, someone who's done a hundred or more flips, they understand how it's done, they understand the ins and outs, and that that doesn't mean that there aren't gonna be, uh, little things that may come up. Uh, but it does mean that they're gonna be able to really prepare you for what is going to happen, right?
Because with, with real estate, it's not about, if it's about when it's gonna happen, And I would say a lot of flips that are at the price of the home median or lower in your area, a good flip is usually going to make a 10, 20, $30,000 profit. It can sound like a lot of money, but you can lose 10 or $20,000 really fast on having miscalculated the after repair market value of the property or how much the property really needed or some unknowns when you got into the deal.
So that's one of the things for you to be aware of. Okay? The second worst mistake that investors make hands down is they get into a 30 year rental property and become a landlord on a deal with no equity. That becomes high maintenance.
And that is a fast road to don't want, is when You Actually start getting phone calls for the broken toilet and fix this, and my door is squeaking. You have not set yourself up very well and you'll start quickly realizing, oh my gosh, what's the deal? Why is everyone saying that real estate is such a, like, this is a nightmare?
I'll tell you what I want, what I want right now is for in the comments below, for anyone that's watching this, if you've had a bad, I'm a landlord and I hate it, uh, experience, don't want this in, in, in the, in the comments below, we want to hear your experiences and your stories because Teach us share with everyone what you've been learning.
Because the reality is, is most people or almost everybody that gets into real estate, who becomes a landlord at some point in their career decides, I don't want to be a landlord anymore. I don't know anyone who says, oh, I just love being a landlord. No, people love what real estate can do for them.
People love the returns. Yeah. They love, they love the, the equity and the growth and the cash flows. They don't necessarily love the problems that come along with being a landlord. Yeah. Now being a landlord is not necessarily all that bad. This is when it goes wrong. When we talk about the worst way to start investing on a 30 year project of I'll buy a home 30 years from now, it's paid off.
This sounds smart, right? There's one of two mistakes that generally get made. Number one, there's not enough cash flow. Yeah. So When the property has maintenance, when it has needs, you're starting to pull money outta your pocket that hurts. Or every single time the tenant calls with wanting more, wanting this or wanting that, you just, you're gonna, you're gonna start hating it because when money's tight and you have to fix the incinerator under the sink or the whatever it is, that becomes it, it it's like nails on a chalkboard. Yeah.
The Other problem that people make with this worst way of getting started with that and become a don't want landlord is that they don't buy the property with the equity. Here's what that means. I bought a property, someone said, I see this all the time. Hey, um, I, I watched some videos.
I heard that I should get into real estate, so I bought a home that terrifies me. That usually means a person said, Hey, I found a home that was worth 200,000. I paid 200,000 for it. I rented it. And what you're gonna do is, first of all, if you get in a bad pinch where you need to sell that house, I'm sorry, but the 6% you pay in realtor fees to sell a home, plus the closing costs, plus any motivated drop sale, you can buy something for 200,000. And if you wanna sell it for even just 200,000, you might be walking away with 15 or $20,000 out of pocket.
So because you don't have that safety margin that Warren Buffett talks about, that margin of safety, that's another thing that will really get you in trouble because you only have one option. Then it's like, either take a $20,000 hit that a lot of people can't, and it means, well now I have to hang onto this property and I have to do the maintenance and I hate this half to property that I no longer want.
So if you don't buy your, this is really what we're saying, if you don't buy property, right? That is a quick way to, to start off in the worst way possible and say, real estate sucks. Real estate doesn't work. I don't know what all these people are really talking about, but I do wanna, Steven, throw in a little bonus for everyone right now. Yeah. Which is what would happen if you took the benefit of a flip, which is good money up front, and you were to combine it with landlord, and what if there was a perfect hybrid?
We would call that our lease. We would call that our lease option system. In fact, if you go ahead and click the link up here and actually, you know, go through and see some of the different services that we offer, we'll share with you what we believe as opposed to the worst way of starting.
We're gonna share with you the most intelligent way that you can get started, which is, how do I get paid up front from my real estate? How do I hold it for a short period of time? How do I maximize my cash flow on it? How do I walk away from all landlord iss on it? And then how do I eventually sell it and trade up for a lot more real estate to gimme the same benefits?
Well, those would be the best ways that you can get started in real estate. So click up here and get started. Have you had a bad real estate experience? Did I just describe your story or have you found other ways of how to not invest in real estate? Comment below, share that wisdom with us. But also, if you want to know the fastest track, the most accelerated track for getting where you want to go, click the link, get in touch with me and my team and let us enlighten you on some of the options that will give you your shortest path to success.