I was reminded last week that we don’t live it the same world as everybody else.
Everybody at work knows that I invest in houses. I was on a business trip last week with one of my employees. As he and I were riding to the meeting he said he could not figure out how you can make money buying houses for $100k-$150k and renting them out. I said you can’t that is why I would buy that house for $50k. I also have to get my money back out of it. That means I have to get loans to buy and fix up the house so I end up with a house worth $100k for $50-$60k and none of my own money in it. I looked over at him and the look on his face was like he had seen a ghost. He said you can’t buy a house for ½ price. I said it is done everyday. He just could not believe that it could be done. He has a serious retail mindset. He could not see past 5% maybe 10% max off on any purchase. It is like we live in Bizarro world…or maybe they are the ones living in Bizarro world.
This is what I call the “HERD MENTALITY” These people buy into the BS they are fed by so called “EXPERTS” who in reality are CLUELESS!!
Look at the money spent every DAY on ADVERTISING by the big REALTY COMPANIES in this country. They constantly RE-INFORCE the idea that you need an “EXPERT” to guide you through a real estate purchase. People buy into this because it’s SOLD to them EVERYDAY.
Anyone out there doing it any other way must be NUTS!!!
The scary part???
You could have taken this guy to a CLOSING with you and he STILL wouldn’t believe what he saw with his own eyes. Add to this the utter LAZINESS of the average American and you have a “LOSER COCKTAIL” that these people drink everyday as they chase their PAY CHECK while running on their “JOB TREADMILL!”
During the conversation I was trying to make him understand that I don’t let people sell me things. I buy things. He couldn’t see any difference in the 2 approaches. I told him the difference is in who does the action. The retail mentality the action is on the seller trying to get you to buy what he has to offer. In our mentality the action is on the buyer. We go out looking for what we want to buy and at what price.
I hear the later when I talk to people who want to get into real estate a lot. They fall in love with a house and look at it and drive by it and talk about it and fawn over it for weeks. Or they get a house left to them by their deceased great aunt and they want to turn it into some enterprise. One house does not make an enterprise. You have to have a bunch of them. That means you can’t make one offer and wait. You have to go after house after house after house until you get an accepted offer. I have had up to 10 offers out at a time and when I got an acceptance had no idea which house it was, but I knew that it was going to make money because they all fit the model.
I will meet with pretty much anybody that asks me to tell them how I do what I do. I met with this one guy who asked me to meet with him at a Starbucks so that he could put together a strategy to get into real estate. He came with the MLS listing on this house. I didn’t even look at his sheet. I asked him what was the model for the type of houses he was looking for. He had no clue. The model outlines the minimum house you will buy. You look at the return you want the area of town, the type of tenant you want to attract, etc. This is what dictates what houses you buy not what is offered to you by some realtor. You only search for houses that match that model. You can’t buy any houses until you have that model. Once you have that model you find out that nobody is going to sell you a house that meets that model. You have to go out and find those houses to buy. That is the difference between a retail mentality where you take a look at what is offered to you and pick one and what we do. We decide what we want to buy then go out and find it.
You are a smart guy BlueMoon06. You and I think a lot alike. Hell, I don’t pay retail for the clothes I wear … more or less my income producing assets. Yet I wear designer shirts! LOL.
In Texas, where appreciation is kept down to a minimum due to our large amounts of land and high property taxes, the best way to get rich in real estate IS to buy cheap…whether you are a buy & hold guy, or a buy & sell guy.
Keep getting rich down there in Houston my friend!!!
Some people just don’t appreciate the fact that it takes money to earn money. Especially in something as pricey as real estate investment, you’re going to need to make major investments before getting your reward.