"Creative Real Estate Investing May Be Bad For Your Long Term Success"
What do creative real estate investing and U2 have in common?
Check this out...
I was reading something from Perry Marshall the other day that made me laugh out loud. Perry is a marketing guy and he comes up with some fantastic content. I'm going to use a similar analogy here shared and tie it to real estate investing here...
Have you ever noticed how some things just stand the test of time?
For example, a great rock song from U2 fifteen years ago is just as good or even better today. You've learned to appreciate the song and it just has a pureness to it.
Even the real hard stuff like AC/DC Thunderstuck gets your juices flowing today even more today than when you first heard it.
On the flip side notice how the latest Britney song or Backstreet beat or New Kid lyrics are white hot when they first come out. They end up on every radio station all the time. You even find yourself tapping the steering wheel to the beat.
But then it fades, and it fades fast.
A year later if that song comes on you almost cringe. You can't believe you actually like that song.
Has this ever happened to you?
Well the same thing happens in a person's journey along the real estate investing path.
Let's map it out and tie creative real estate investing into this...
1. You decide you are fed up with your 9-5 job and you need to get out quick.
2. You see an American TV infomercial on at 2a.m. because you're dreading Monday morning and you can't sleep. You ask yourself if this creative real estate investing stuff is your ticket out of the rat race. But then you ask, can it work for Canadians too?
3. You hit the local Chapters book store on your lunch break and pick up a book about real estate investing. Maybe it's Rick Dad Poor Dad or The Millionaire Next Door or The Wealthy Barber. The ideas seem sound so you start looking around for anyone doing it.
4. You begin to notice a lot of weekend book camps and investor meetings with some guy at the front giving a hard pitch for you to part ways with $10,000 to get some creative real estate investing training. You actually debate doing it but something deep inside you is screaming. It just doesn't feel right.
5. You think back at those books you read and realize that there's definitely some truth to real estate investing. But who can help you?
6. And that's where it usually ends. An endless loop of you going to countless investor meetings where a lot of creative real estate investing hype is happening but no real results. A lot of "lucrative" deals are discussed but no details are given unless you pass through the gates that require thousands of bucks as an entrance fee.
7. You begin to get frustrated and either give up or strike out on your own trying to do a "flip" because it looks so sexy on TV. If the guys on TLC and A&E can do it so can you, right?
8. You hit a couple of road bumps with the mortgage and the contractors. You don't have anyone to turn to and all of a sudden your dream of becoming Mr. or Ms. Donald Trump II fades as fast as those lyrics to that Britney song.
Yeah, been there!
It took us a long time to understand some basic principles in real estate investing.
Perhaps they can benefit you so let me share:
Principle #1: Real estate investing is very different than "flipping" or "rehabbing" or "very wacky creative real estate investing". One is a very sophisticated process, the other is speculation. One is creating a long term asset base that will feed you for years. The other is creating a job for yourself.
Principle #2: Positive cash flow investments are always better than negative cash flow investments. Always. No matter how "lucrative" the opportunity is or how "up and coming" an area is.
Principle #3: The team of people associated with the investment are more important than the investment itself. Always. Period. End of story.
Principle #4: A long term view is mandatory. The poor think day to day, the middle class think month to month, the rich think decade to decade (check out Keith Cameron Smith's book on Amazon.com before it goes out of print).
Principle #5: The numbers don't lie. But the interpretation of the numbers is equally important.
When you stick with the basics of real estate investing everything else sort of melts away.
Basics like fundamentally good neighborhoods and fundamentally good properties are the building blocks of a great portfolio.
It can be tough but always try to peel the curtain back and look beyond the hype.
The team of people you associate yourself with is more important than "the deal". Remember that. And look to build your own team of experts in your community.
The other day we had someone run into our office with an opportunity that we had to buy immediately in order to make $5,000. And if we didn't "act fast" he was going to present this deal to someone else.
A few questions about the numbers and the team of people involved scared him off. We've never seen him again. Maybe he's running his own creative real estate investing class now, who knows!
And maybe he'll be back, but just like that New Kid song that I can't remember from the 90's.....I bet we never hear from him again!
Until next time...be a Renegade!
Return from this Creative Real Estate Investing page to the Real Estate Investing Guide here.
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