5 Things I Wish Someone Had Told Me Earlier about Real Estate Investing… (Part 3 of 5)

by Vena Jones-Cox

3. There’s no one best way to invest in real estate.

Most new investors have a “guru”, a teacher to whom they look not only for advice, but for a world view that helps to direct and focus the newbie on a particular strategy. These gurus can take the form of a professional teacher/instructor, a mentor, or, as was the case in my early career, a family member.

One of the major attractions of gurus is their certainty that their particular strategy is the be-all and end-all of real estate investing.

My father was a good example of this: he had a cookie cutter that involved buying low-end homes for cash, lease optioning them, and then ultimately refinancing packages of 5-10 at a time to get more cash to buy more houses. No property, no matter what type, condition, or area ever got any other treatment.

And like most gurus, he was willing to defend the death the idea that other strategies were less profitable, more difficult to execute, and generally inferior to his particular favorite.

The guru is a compelling figure to the new investor precisely because he (or she!) is so focused and certain of himself. Following a particular guru can be extremely valuable for the overwhelmed newbie since it allows him to really, really learn how a particular technique works.

The downside of guru-worship is that it limits the new investor’s experience. Most gurus—and not just those who have seminars to sell—advocate one or two strategies to the EXCLUSION of all others. As a result, their followers tend to have a narrow viewpoint in terms of what a “good” deal is, and therefore to pass up a lot of profit opportunities.

Once I’d quit working for my father, the “pay cash for houses” option dried up and I was forced to learn some new strategies for putting food on the table. Wholesaling properties for quick cash became a prime focus of my business, and quickly became a huge profit center.

One day about 2 years ago, I went back through my files of offers I’d made when “Buy and Lease Option” was the only thing I knew, and discovered that I’d walked away from over $100,000 in wholesaling profits during the time I was stuck in that mindset.

Many, many properties that didn’t fit my dad’s “cookie cutter” would have been great little flips, but I simply couldn’t see them. And never mind all the times I hung up on a seller with an expensive, pretty house for sale, because I couldn’t get it for 70 cents on the dollar…

Reprinted from the Real Deal, a monthly newsletter for Real Life Real Estate Investors with permission of Vena Jones-Cox. Get a free 3-month trial subscription by clicking here. One per household, please.