Maybe you had big dreams about becoming a real estate investor, using other people’s money to leverage BIG deals, create a passive income and build a high net worth. You were going to live the good life, own big houses, luxury cars, travel around the world and basically do whatever you want without worrying about money.
In the mid-2000s, these dreams were coming true for many. There were stories every day about people making BIGprofits in real estate. Houses were appreciating like crazy, and you had to get a piece of the action before it was too late.
Then the housing market crashed started crashing, those properties you bought are now worth half of what you owe on them, they have been for sale for a year with no inquiries, unemployment is up and tenants stop paying their rent. Maybe you now have a foreclosure or two on your credit report, and maybe it was a big mistake to get into real estate in the first place. Maybe you should forget about those dreams and just be happy you have a job. Or……
Maybe you should get back in the game.
If you did buy an investment property then you learned quite a bit. You would have started by getting lots of information on how to buy investment properties, getting a mortgage, finding a realtor, going to a closing, being a landlord, etc. So this means you have a pretty solid base of education in the real estate industry. If you have been through the process start to finish then you also have experience in the real estate industry. If you then have experiences where you defaulted, ruined your credit or lost a lot of money, you have the most valuable experience of all, failure.
Say you bought a house for $300K and now it is getting foreclosed on. That is a $300K lesson learned in real estate. How many real estate courses can you buy for $300K?
My point is that if you do not use any of the valuable education or experience you have acquired, then that is just stupid, right? You must learn from your mistakes, Excessive Cash always follows education and experience.
So dust yourself off, get creative, realize that the real estate game has changed and follow these rules.
- buy for appreciation
- think a mortgage is the only way to buy a property
- think you will sell in 3 months
- have a negative cash flow
- buy at market value (it is going to depreciate)
- be in a hurry
- have an exit strategy
- a cashflow analysis
- utilize the internet and realtors to find the properties for you
- submit low offers
- be patient
- realize that there are other places to invest
- find private investors who would love to have a 8% secured return