3 Fatal Flaws That Guarantee You’ll Fail As A Real Estate Investor (Part 1)
Take a moment to answer this question: When I say the term “real estate investing”, what do you think of?
Go ahead - take a second to think about it right now.
For most people, that term conjures thoughts of landlords fighting with bad tenants - or images of doing fixer-upper projects on old houses. You might even think about buying foreclosure properties as they’re auctioned from the courthouse steps.
And of course, you think of the late-night infomercials that promise to teach you to buy property with no money down.
All of those topics are a part of real estate investing, and you’ll probably choose to study one or more of them very closely. In fact, I’ll teach you about those things on this website. But the undeniable fact is this:
Truly successful real estate investors focus on people more than they focus on real estate. The professionals know that nobody makes any money until a problem is solved, so they spend their time seeking out people with real estate problems and only then do they use their real estate knowledge to create profits.
What do real estate “wanna-be’s” do? They spend all of their time reading the latest manual or studying courses, but they spend virtually no time trying to find the people who would benefit from their skills. Newbies focus on “strategy”, not on “people” or “circumstances”.
The simple fact is this: Newbies think that their knowledge of the “latest greatest” real estate strategies will translate directly into profit. But the most successful investors know that profit is created only when Opportunity meets Specialized Knowledge.
So how do the pro’s find these opportunities for profit? Let’s take a look at that right now.
Fatal Flaw #1: Newbies Don’t Know How Or Where To Find Great Opportunities For Real Estate Deals
For the first 18 months of my experience as a real estate entrepreneur, I was a dismal failure. I spent a lot of time reading books and listening to tapes about creative real estate strategies, but I made no money at all.
Not a penny.
Not only did I fail to make money. I actually lost my own house to foreclosure. That was painful beyond belief, but I brought it on myself because I focused exclusively on being a master of real estate strategies, rather than a master of finding people whose circumstances matched my knowledge.
But then, as if by magic, things began to happen for me. Deals started to appear that I’d never seen before. Finding the fabled “motivated seller” was suddenly much easier than in the past. And that led to deals where I actually made real, spendable cash. It was truly amazing!
What was the difference?
Instead of focusing on learning every detail of the technical strategies of creative real estate investing, I began to focus on finding great deals through some simple marketing strategies. Marketing is the process of reducing down the entire population of the world into a small subset of people with whom you can do business.
Marketing requires you to answer these questions:
1. Who is your “ideal” prospect? If you’re trying to find homes to buy, your ideal prospect would have certain characteristics, such as:
- The prospect is a home owner
- The prospect is “motivated” to sell their property
- The home is in a certain geographic area
- The home is in a certain price range
- The home is in (excellent, good, fair, poor) condition
There are a lot more variables to fully defining your ideal prospect, and you might even have different ideal prospects depending on which strategies you’re using. But the point is simple: You must know who you want to do business with.
Example - “My ideal prospect is a home owner who is motivated to sell their property as soon as possible. The home should be in average or better condition and should be located in the 30281 zip code. The home’s value should be in the range of $100,000 to $195,000.”
2. What are you going to offer to your prospect that will motivate him/her to do business with you?
Another way to state this is: What is your “message”? What is the reason you’ll offer for someone to do business with you?
Your message must be simple and should convey a very clear benefit to your prospect. Some of the most commonly used “messages” among real estate entrepreneurs are:
- I Buy Houses
- Sell Your House in X Days
- Fast Cash For Your Home
- Stop Foreclosure
- Cash For Homes
Important Note: These are all very common marketing messages, but not all of them are particularly good messages.
Here’s a Better Example - “I offer immediate debt relief to home owners by buying houses in 7 days or less.”
3. How will you physically communicate your message to your ideal prospect?
Will you use
- Newspaper ads
- Road-side signs
- Cold Calling
- Direct Mail
- The Internet
- T.V. commercials
The list of available communications media is literally endless. Your job is to use a few (not just one!) of those types of media to communicate your message to your ideal prospect.
To summarize - marketing means that you’re communicating a desirable message to a suitable prospect, at a time when that prospect needs what you’re offering.
Why is marketing so important?
Isn’t it true that all home-buying strategies are totally worthless unless you’ve got a relationship with a home owner who is willing to sell using your strategy?
And isn’t it true that unless you have a qualified buyer, it doesn’t matter if you know 70 different ways to sell a house - you still won’t sell your house? Of course that’s true.
That’s why marketing is so important…and why most new real estate investors fail so miserably. Instead of focusing on the people that they can help, they focus on the technical strategies that they’ll use.
And here’s the hard truth of the matter: Nobody cares about how great your strategies are. All that people care about is what you can do to help them.
So your job is to:
- Identify your ideal prospect
- Create an offer that motivates your prospect to do business with you
- Make your prospect aware of your offer
Important note: That was a very short discussion of marketing and prospecting, both of which are very big topics. We’ll discuss these topics quite a bit more in future posts, so stay tuned!
(Check out Real Estate Investing Fatal Flaw #2 here.)
Here's What Serious Investors Are Reading:
- Wholesale Real Estate Investing - How To Do It Nationwide
- Bush Administration Paves The Way For Investors…
- Correcting A Misconception
SECURE & CONFIDENTIAL
Bryan,
As usual your focused and right on!
Thanks so much, MJ! Let me know if there’s anything in particular that would help you inf the future! — Bryan Ellis
Hi Bryan,
Thank you for your link.
I always enjoy reading your articles on real estate investing or real estate internet marketing! They’re easy to understand and very informative for a guy like me who is not a seasoned R.E. investor such as yourself.
Thanks so much, Art! Let me know if there are any specific topics you’d like to hear more about in the future! — Bryan Ellis
Do you think it be wise to buy into a coach to personally train me to do the real estate.
I want to invest and buy foreclosures and Short Sales.
Mel - I think coaching can be a really great thing, if you choose a coach wisely. Make sure you’re dealing with someone whose opinion and experience you really trust. And don’t go with somebody who is the “latest and greatest” at whatever it is they’re pushing. Go with someone who has been around for a long time. Believe it or not, some of the best “coaches” are people who have vast experience in the business but who are not extremely involved in real estate investing right now, because these people are able to give you objective advice based on legitimate experience without their judgment being clouded by pressure brought on by current market circumstances. Good judgment is the best quality to seek out in a coach. — Bryan Ellis
Bryan:
Your article spoke directly to me and I thank you. I’m so tired to listening to “new” strategies that “work” instead of just getting down to business as your article did. Your grassroots information solidified my suspicions as to why I’m having trouble getting my investing business going. I’m in the same spot you were. Thank you.
Thank you for your very kind words, I truly appreciate you. In times like these, sticking to the basics will do very well for you! — Bryan Ellis
I’m like Dee..I’m learning strategy, but not implementing them. I need to put more time in finding deals (buyers and sellers), and less time ‘Fine Tuning’ my strategy. Thanks for the focus.
Bryan - I’m like a couple of the others, and like you were at the beginning. I’m really struggling. Lots of training, but nothing’s even close to hitting a home run yet, and I’m running out of time.
Very good information, as always. Thanks.
Lyn
p.s.
I guess what would most help me right now is analyzing a potential deal. I had a very motivated pre-foreclosure seller this weekend(only one month behind in her payments) and I chickened-out because I was afraid the number’s wouldn’t work. But I also wasn’t exactly sure what I was looking for numbers-wise in a Subjec-To deal. So I just defaulted back to listing the property (I’m a realtor) and going the short-sale route with the lender.
I want to be more than a realtor…I want to be an investor!
Any future help with anaylzing a potential subject-to deal would be very welcomed.
Thanks again!
Lyn
Thanks for the great info….marketing and problem solving will win over all the RE strategies when trust and repor is show….great advice.
Thanks
Hey Bryan, when can I take you to lunch? I’m in Mableton / Austell.
Elgin - thanks for the offer! I’ll drop you a private email. — Bryan Ellis
thanks f or a ll the great info
Hi Bryan,
I love your articles and hope that you continue to provide this information to us for a long time. It is nice to receive tid bits of good information without having to spend a fortune for them. Anyway, one topic I would like to have you cover is “Building a Buyers List”. This has been a bit of a stumbling block for me. I am confident in my ability to find motivated sellers and good deals. Any information would be appreciated. Thank you and keep up the great work!
Thank you for the suggestion! Good news - watch your email in the coming days for some free training on that topic! And I have a favor to ask: please tell somebody about FreeRealEstateTraining.com - we grow only through word of mouth, and your help is appreciated. Thanks! — Bryan Ellis
I agree Bryan. Marketing is key to success in this business! You can learn as many techniques as you want but if you never implement any of them what good are they? It took me a while to realize this too but now I’m shifting my focus! I also agree with you that you need a more targeted message. The old messages (ex. I Buy Houses) are beat!
Thank you for your all you do. I was wondering just how you got going with marketing after all those months and suffering through a foreclosure. I am not quite there, but I am stuggling with funds for marketing. Lots of ideas, but most take more than I have right now. I am sure others are in a similar situation. I have tried probates in my area, but property info on them is so difficult to come by (texas) I just have to scatter shoot. I paid for coaching from one of the \"big Gurus\" and probates was all I got. (long story, but for me was a waste of money) I have worked it, but it is slow, tedious and to date has not worked for me. Anything else you can suggest?
Great point can we talk about Round Robin Auctions, what is you take on them? Who has the best info. on this subject?
This is for Lynda, I am an ISA in marketing for RE. The first thing you need to do is go to Amazon.com or a book store and buy “Think and Grow Rich” by Napolean Hill and the next book by Chad Wade “Cracking the Producers Code”. These books will put you in a different mindset! Forget about the “Big Gurus” find a local REIA and start asking questions. As far as low on funds for marketing, I started out on $100 a month - flyers, poster board, etc. I made at home, very low dollar - the flyers you pass out at malls, shopping stores, going for a walk around the neighborhood, etc. Just some thoughts for you and anyone else that needs to market a service…
Bryan,
Thanks, you hit the nail on the head. Unfortunately thats exactly what I have been doing. Fortunately I still have my day job (at least for a while). I attended your webinar on websites and looked up word press. I should have my website up by next week. I also purchased an office phone system and fax. I am going to get serious with my marketing and ensure I have the tools I need for clients to contact me. Thanks again for the motivation.