4 Signs Real Estate Investing is Right (Or Wrong) For You
Thinking of getting into Real Estate Investing? Here are 4 pointers to know if you’re cut out for it (or not).
Real estate investing is popular. Maybe more popular than it’s ever been. No doubt, it’s in large part due to more people looking to start side hustles, work independently, or achieve financial freedom.
Don’t get me wrong, real estate has always been a major source of wealth for people. But the internet has made making money easier, and more accessible than ever. If you’re a Gary Vee fan, you’ve heard this before. He urges his listeners to do everything from start marketing services, to flip garage sale items for profit.
The point is, there are lots of ways to make money or start businesses. So how can you know that real estate investment, specifically, is the right business for you? Because like anything, it’s not for everyone. So if you’re in “research mode” right now, and you stumbled on the Real Estate Investing community here to learn more about it – this article is for you.
It’s important to note: the goal of this article is not to discourage you from achieving your goals. Far from it. It’s an attempt to give you a realistic look, through the eyes of both established, and up and coming investors, so that you have a realistic and sober view of what you’re jumping into.
If you’re really committed to real estate, this article won’t discourage you. It will arm you with resolve, and prepare you for what to expect. If you’re on the fence, or if you’re someone who isn’t disciplined, doesn’t have certain work values, or just doesn’t know what it’s actually like, this might help you make a more informed decision or decide to pursue a different route that’s more in line with your skills or wirings.
If you don’t need a steady paycheck, it might be for you.
If you’ve done any level of research, this should be fairly obvious, but getting into real estate investment is absolutely starting your own business. You might not be inclined to think of it that way, but it is. Now, if all you’re looking to do is treat it as a side hustle while you work a steady job, that’s great.
But most people get into investment because they ultimately want to work for themselves, and have it be able to completely sustain their income full time. If that’s the case, then you will need to get comfortable with the idea of not having a steady paycheck.
I know that might sound strange, or super obvious, but even if, at the moment, real estate is making you good money, once you take the leap there’s a wary feeling that comes with owning your own business. It’s a realization that if you don’t keep working at it, and if the market doesn’t keep doing well, the money stops.
If you’ve only been a 9 to 5 employee all your life, you know that while you work hard, ultimately it’s not on you to bring money in. You come in, do your job, get paid, and leave. When you own your own business, you can come in, work hard, do everything right, and the money still may not come in. There’s marketing strategy involved. Problem solving. Critical thinking. Jared, who runs The Friendly Homebuyer, advises, “if the idea of a steady paycheck doesn't excite you, and you love working with people, real estate investing may be for you.”
So if you’re someone who feels like they always need the security of a steady paycheck (and I should say, there’s absolutely nothing wrong with that!), then real estate for you may always be a side hustle, or their may be easier ways to make a little side cash in addition to your full time job.
If you’re willing to work hard, and keep learning, REI might be for you.
Being successful in real estate investment requires a willingness to work hard (really hard), and to keep learning. This is especially true if you’re entering without much knowledge. One of the greatest things about investment is it’s low barrier of entry. That’s also the reason it has such a high failure rate.
But if you’re willing to put in the time, and continue learning, it might just be for you. Heath runs Elevated Home Buyers as a solo investor who buys, fixes, and flips homes all by himself. He says, “I believe anybody can be in real estate investing if they have the correct outlook. Put aside the “money making” connotation and be willing to work very hard, learn through your mistakes, and give yourself time to grow in the field without lofty expectations.”
Again, lots of people (sometimes carelessly) jump into real estate simply for the promise of money. It’s not unlike all the people that went out to dig for gold in California during the gold rush. It won’t just happen to you, and it’s not easy. So to succeed, you’ll need to take Heath’s advice and be willing to work really hard, and give yourself time to learn and grow.
Blaine is a real estate agent and investor where he runs Awesome Wholesaler LLC. He agrees, “if you stop learning, you will most likely fail. If your not driven and self motivated, if you don't burn with a fire and passion for this stuff, if you don't eat, sleep, drink, and shower listening to a podcast, then investing may not be for you.”
If you’re willing to persevere, REI might be for you.
“In real estate, there truly is no limit to what you can achieve, but it is not easy,” said Matt, owner of Omaha Homes for Cash, “it’s my belief that the one single characteristic that will give a person a great chance at success in real estate is perseverance. If you never give up, no matter what happens, then you will never truly fail. Eventually, perseverance will always win. If you are a person that lets the little things bother you or you have a hard time thinking clearly through, and overcoming adversity, then real estate will be very difficult for you. There will be setbacks and there will be adversity. You must be able to keep pushing forward.”
In other words, if you’re someone who views real estate as an easy, low-work way to make money, you’re in for a rude awakening. There will be problems and unforeseen issues – you might need to consider refinancing, home repairs and more , and you’ve got to have the ability to persevere through them in order to succeed.
If you’re the kind of person who gives up when something gets hard, real estate probably isn’t for you.
If you know why you’re doing this, and have the right expectations, it might be for you.
Entering into real estate investment is entering into a world of difficulty and uncertainty.
One of the things that helps you endure and come out successful on the other side, is having a very clear reason why you’re doing it in the first place. As I’ve said, there are a lot of ways to make money, so why are you choosing this industry?
Mike, investor and owner of SellMyHomeCleveland, drives this point home. He suggests that the most important way a person can know if real estate investment is for them is, “to have a clear purpose for their investing,” he goes on, “because real estate investing is filled with difficulties and unknowns, having a clear “why” for investing is important. Are you investing to leave a legacy for your kids? Are you investing to achieve a financial goal? Are you hoping to give yourself a better future? What's your “why?” A person will tend to quit without a clear purpose for real estate investing.”
Finally, he warns about the expectation of fast money, without patience and work: “One of the clear signs that a person won't do well in real estate investing is if they want to make money fast. You can make fast money in real estate, but I find the ones who have long-term success are patient. With real estate, time is on your side. There's always another deal down the road, so there is no need to rush. If you can solve problems, and be calm when things do not go well, a person has a chance to do well in real estate investing. Unexpected problems and challenges always come up in real estate. Be a problem-solver and look for solutions.”
Summing it all up.
Given everything we’ve just seen, here are some signs that you have the right mindset and disposition for investing:
- You’re comfortable without a steady paycheck
- You’re willing to keep learning and always grow
- You persevere through trials and difficulties
- You’re patient, and don’t expect instant success
- You’re willing to endure and go through difficulty
- You have a good “why” for getting into it
- You’re focused on helping homeowners solve their problems
Then real estate investing just might be for you. And if it is, I wish you the best.