German Llanos
A few weeks after a tremendous amount of traveling, I couldn’t sleep very well so I started zipping the remote at 3 a.m. and I was amazed/annoyed!!! There were a bunch of guys talking about these “Magic Real Estate courses” with zero money down, no credit, and no income necessary to buy, rent, sell or flip showing all these amazing homes, cars, beautiful women, beaches, boats, all the “things that we dream about”. You just need to pull out your credit card and call now!!!
It came to my attention since I do Real Estate for a living. I bought a couple of those courses to see the “magic formulas” and I found out that there was a lot of marketing and not as much substance. The advertisement alone looks to me misleading: “you can buy even if your credit score is horrible, if you filed bankruptcy or if you do not have a job” It reminded me of the factors that caused the Real Estate bubble and of the “car salesmen” of Real Estate who are a disgrace to the profession. It reminds me of a happy family that is being cheated and disappointed by a “consultant” who has no idea of reliable advice.
So is anyone ready to deal with vacancies, evictions, liability issues and housing repairs with no money down and no reserves? Is anyone ready to find good financing, deal with appraisal issues and markets that go upside down?… A housewife who barely has a high school diploma or a guy who can barely handle arithmetic is ready to handle million dollar deals. Sorry, but I am little bit skeptical. Licensed Realtors and Mortgage Loan Officers, many of whom have college educations, got many people in trouble with loans that they couldn’t afford. I think it might be irresponsible to suggest Real Estate as an easy business for many people. Even if they tell you “Yes, but there is a 1-800 number and you can ask everything there to dedicated specialists”… oh really? Someone in some town of Arizona is going to tell me how to deal with problems in Waukegan, Illinois or in Hialeah, Florida?
The people who read my blog are people that I love: friends or clients. I do not want them or you to get ripped off. In the same way that there are no magical pills to make you lose weight, there is no secret $199 mail course that can teach you how to be a millionaire in 30 minutes. Let’s get real please!
Here are some points that you should consider when investing in Real Estate:
-Do you homework: understand all the specs of every single deal, since all are different!!! Crunch the numbers, study the market, statistics, trends, demographics, etc. Do not let computer software tell you an undisputable truth.
-Be on top of things. One of these gurus said that “collection is automatic”. Really? So if I put “any tenants” I do not need to worry that they won’t pay and that the income will flow from their checking account to yours. Again, Really? I wonder if he understands the word “lay off”, bad character or unemployment. Also, I did not hear anything regarding building reserves to cushion your vacancies or evictions or foreclosures.
Build a healthy portfolio of income generating properties takes time. It does not happen automatically or overnight.
-Be your own property manager “hands on” to get to know the business. If you never handled these matters you need to learn the trade like an apprentice. You cannot hire a Property Manager if you do not know what it is involved. Like all of the midnight TV guys… he might rip you off.
-Get a specialist who you trust and who has a verifiable success record in Real Estate Investment. You do not need to use me, but you need someone to walk you through the first deals so you can ride the bike alone on your own. If you get bankrupt on the first or second deal, there will not be many more to come.
Real Estate Investment is great. You can make a lot of money, but it is not for everyone. You need to be “hands on”, detail oriented, cost cautious, knowledgeable and hard working. I know these infomercial guys hate “hard work” (that is why they sell courses on TV) but there is no other magic way. You need to work hard and learn the trade before you will actually switch into automatic pilot. Four years ago in the middle of the Real Estate Forum I was called an “Old timer” and “Risk Adverse Old School Investor” by a bunch of South Florida’s fancy investors. Yes, I proudly am. Guess what??? My Real Estate portfolio in this current crisis has a positive cash flow… 2 out of 4 of those guys filed for bankruptcy last year, the other 2 are in serious trouble. Like Anthony Robbins says: “Massive Success is the best revenge”.
I would love to get a phone call from you to talk about Real Estate. I hope you are doing well with your investments and do not forget to have fun with them.
Have a great and profitable week!
German
Pssst…. Have you seen interest rates recently? I have an updated to the hour chart below on the right side of the blog, if you want to take the pulse to the 30 years-fixed.