Is Real Estate a Get-Rich-Quick Scheme?

Is Real Estate a Get Rich Quick Scheme

Certainly, there are a lot of books out there, a lot of articles, a lot of people suggesting that real estate investing could be a get rich quick scheme. Nothing could be further from the truth.?

Real estate is not a get-rich-quick scheme.?

It's not something you can do quickly and make a lot of money out of it. There certainly are ways to invest or to get involved in real estate where you can make a lot of money.?

Wholesaling (not a get-rich-quick scheme)

For something like wholesaling, for example, you don't need any money to get started with wholesaling. All you have to do is you have to have a lot of tenacity, a lot of persistence.?

You go out, you find properties that are undervalued from motivated sellers. Then you go out and you find buyers or people that are interested in purchasing properties that needed some fixing and flipping or some fixing. They purchase the properties from you.?

So basically, your wholesaling. You found the properties from the motivated seller, and now you're selling them to somebody that's going to fix them up and sell them. They are the buyer who's going to eventually sell it to the retail buyer. So that's wholesaling.?

Wholesaling's quite easy to get started with and is definitely not a get rich quick scheme.

Lease Options (not a get-rich-quick scheme)

Another way you can get started in real estate without any money is lease options. And this seems to be the confusion … a get rich quick scheme versus a nothing down transaction.?

Certainly, there are several ways to get started in real estate with nothing down. The first one I just mentioned is wholesaling. The other one out there is lease options.

The biggest lease option strategy is what is called sandwich lease options. You go out and you find a property. Next you put it under lease with the owner of the property, and then you sublease it to somebody else. The reason it's called a lease option is because the person you are leasing it to also has the option to buy it from you. So that's a lease with an option to purchase it.?

The nice thing about lease options is that you don't need any money to do this. You just need a willing person, a person that's willing to lease it to you and a willing buyer.?This is a tenant-buyer who is somebody that's willing to lease it from you over a period of time and then eventually purchase it.?

So, those are the two ways to get started fairly easy with real estate where you can make some money fairly quickly that are no get rich quick schemes.

Purchasing Properties (not a get-rich-quick scheme)

After you start getting money from those activities, you can get involved in what I call?actual investment?opportunities, where you go out and you purchase properties. You go out and buy properties like rental properties, whether it's single-family homes, whether it's multifamily homes, or whether it's apartment buildings. And yes, you can purchase apartment buildings when you just get started.

But the nice thing about these investments is there's not a lot of work involved like the other two … lease options and wholesaling where there is a fair bit of work required. It's almost like a job and it's definitely not a get rich quick scheme.

Rentals (not a get-rich-quick scheme)

With rental properties, you buy them, you rent them out and then hopefully you can sit back and collect rents, which also is a fallacy because you're assuming that the rents that you're going to get will cover all your expenses. You're assuming that you never have to do any maintenance. There's a lot of bad information out there about how you can get rich quick with residential real estate which is a long-term strategy.

Fix and Flips (not a get-rich-quick scheme)

Another strategy that requires a lot of effort and is very popular is fix and flips.

You see a lot of these shows where people go out and they acquire properties. They get them for a steal and then they fix them up and they sell them for a hefty profit.

Now, the challenge with fix and flips is you never know what you're buying. You never know what you're getting into. Chances are you're going to get a property that may be okay, meaning that the estimates for the renovations that you originally came up with are going to come in close to what you estimated, which is good. This rarely happens.

Summary

So all these investment strategies I'm talking about require a little bit of experience and require a little bit of knowledge. Sure, you may be lucky at first. You may be one of the few that does end up making money from their first deal, their second deal, their third deal, but what's probably going to happen is you're going to lose on your first one or two deals especially in fixed and flips.?

Rentals are a little bit easier because it's hard for you to lose money in rentals, but it's also hard for you to make a lot of money in rentals in the short term. Rentals take a long time to make money.?

Therefore I suggest people get involved in either syndication with private equity where you raise money and find properties, larger properties that will appreciate with the increased rents.

So, NO … real estate investing is not a get-rich-quick scheme, but it is a get rich for sure opportunity.?