I started investing in real estate when I was 31 years old and experiencing the first real growth in my disposable income since I had started working full-time. I had started my own grocery arbitrage business, and it was growing like gangbusters.
I was in bad need of a mentor at that time. I was in need of a lot of education, but true to my personality, I chose to attack the problem of “what to do with my money” with the same fast forward drive with which I had attacked every company I had started.
Looking back, I’m not so sure I would change anything per se. But there are definitely three lessons I wish I had learned sooner in my life. If I had learned these lessons at a younger age — or even simply earlier in my learning curve for real estate investing — my own portfolio might look very different from what it does today.
3 Important Real Estate Investing Lessons Learned
1. Testimonials Can Be Fake
I get a TON of emails from all kinds of real estate companies.
Admittedly, I click on every offer for free e-books, new websites, promotional offerings, newsletters and podcasts that I come across because I want to see what is out there and what is trending. I will write an article at some point about all of the absolute junk that is being peddled today, but that is for another day.
Right now, I want to focus on what happens everyday to investors; in fact, it happened again this morning to me. I was solicited with an email for a new “ultimate guide” for How To Build Financial Wealth With Real Estate… blah, blah, blah.” I write “blah, blah, blah” because the link led to a landing page that looked perfect: clean, smooth lines, all the right words, just like every other same old, same old landing page you see today.
Related: The Top 8 Mistakes Made By Rookie Landlords
Why does that matter?
Because there are companies out there that build hundreds of landing pages everyday for companies. They are hired to do projects, and they use perfect-looking templates that appear just like every other landing page. They use the same e-book with a slightly different title, and the info inside is often re-tread material put through a spinner.
You may be wondering how I can make such a blanket statement (or you may be nodding your head in agreement).
I looked at the testimonials! The photos are perfect: smiling with straight teeth and perfect hair. I clicked on a link this morning from an email that promised to show me the path to my financial freedom, and I landed on a page that, as I said, looked perfect and had two smiling faces with glowing testimonials about the company. With two simple mouse clicks, anyone can expose a liar who relies on fake testimonials to sell their company or product.
You right-click on the photo, and a box with about six options comes up. One of those options comes up as “Search Google for this image.” Click on that option and see what comes up. I found the same two pictures on skincare product ads, teeth whitening ads, and the guy’s photo even came up on Stock Photos as “Smiling, Happy Guy.” It made me laugh.
Early on in my real estate career, I was naive, and I just never imagined faking testimonials. I could not imagine someone thinking it was a good idea to post fake names, fake pictures and fake words about their company. Thanks to Google Image searches, using fake pictures is no longer a good option, and it is an easy way for an investor to root out the kind of person/company to avoid in business.
2. Cash Flow Is Not The Same As Income
One of the biggest fallacies that I faced as a young real estate investor was that cash flow was king.
It was a common mantra amongst wholesale property sellers and self-proclaimed mentors. When I began to attend local REIA meetings in Denver in the early 2000’s, that phrase was used dozens of times at every meeting and by every fast-talking, easy-buck artist in the room looking for newbies to work over.
It sounds kind of harsh, but that was the reality. There were only four kinds of people in the room — and I had no idea at the time. Out of 100 people, there were one or two who had good intentions and would help anyone who needed it. The rest of the room was divided into three groups:
1. People who couldn’t care less about anyone else because they were successful and only came to the meetings in the hopes of finding one person or one idea that could help them.
2. People who have no idea what they are doing, what is being said or how to get started (newbies). They look like deer in the headlights and have no idea that sharks in the room can pick them out the second they walk through the door.
3. The sharks. The ones who know exactly what to say and how to say it to make a quick buck off of the newbies.
I was picked out of the room quickly (I have never told anyone this story) by a couple who could smell the “I have no idea what I am doing” coming off me like a pheromone! They worked me over during a short three-week period for almost $10,000.
How did they do it?
They helped me do my first deal. Did they actually help me? No. I did all of the marketing for my first deal, negotiated the first deal and closed the first deal. But they were with me on my two trips to the property and the two trips to meet the buyer. They encouraged me that I could get more for my deal and that I just needed to learn how to talk.
I listened to them talk all about cash flow and how …read more