Where do I begin?
These top 7 myths stop people from getting involved in real estate investing.
Before I became a real estate investor I have to admit that I believed a few of these myths myself.
I’ll get to those in a minute, but right now I want to share what one of our investing rock stars told me.
In fact, he surprised me.
I never would have thought he would have believed in any myths. He always applied what he learned quickly…
… so quickly, in fact, that he left his job in less than a year.
He said, “I thought I needed my own money or credit to purchase real estate.”
That blew me away. It’s one of the most common myths about real estate investing, but I didn’t think this man had that fear.
So we’ll start with this one…
(NOTE: If you’re just getting started in real estate investing, check out this post.)
MYTH #1: You need your own cash or credit to invest in real estate.
WRONG! I busted this myth in 2008. That’s when I became a real estate investor. I started where a lot of investors start… as a wholesaler. By my fourth month I can done a dozen wholesale transactions. In my first 12 months I’d earned a six-figure income.
I didn’t use a dime of my own cash or credit either. (I didn’t need it.)
Watch this video. It’s full of clues.
Simply stated, you are buying properties at a discount and selling properties at a discount. More specifically, you are taking control of the properties.
- It’s not fixing and flipping.
- It is finding opportunity in properties and presenting them to buyers.
Of course, there is something you need to do that helps you find sellers and buyers.
You have to develop your list of leads, which is not brain surgery. There are lots of low- and no-cost ways to generate leads. That goes for buyers, sellers AND investors.
I created a course called Lead Machine that teaches you low- and no-cost ways to build your leads lists quickly and painlessly. You’ll do these things while you’re out and about in your daily life!
MYTH BUSTED: You do NOT need your own cash or credit to invest in real estate. You do need knowledge and time, however. And you need leads. All that means is that you need to learn a thing or two. And that’s not tough.
MYTH #2: I can’t be looked at as the “local expert” in real estate investing.
Really? Why not?
It’s a myth to think that you can’t develop the skills necessary to talk to people about real estate investing. Like everything, it takes practice.
Once you learn what you are doing and can talk to other people about it, guess what? You will be looked at as the local expert. That opens all sorts of opportunities to you.
For one, you can find investors for your deals.
Next, you can use the P.A.Q.™ to explain the benefits of your deals across four quadrants: Appreciation, Depreciation, Amortization and Cashflow.
What’s the P.A.Q.?
It’s a little tool I developed for my own use. It’s not difficult to learn how to use, and it helps you become the local expert in real estate investing!
Speaking of becoming a local expert, you will do yourself a big favor if you host Cashflow games with people who are interested in learning more about how to use real estate investing to create passive income.
That simple act will help you get more and more comfortable talking in front of small groups and inviting them to have more conversations with you.
Pretty soon you’ll be mentoring others. You will be the local expert guaranteed!
I have a video you should watch about how playing Cashflow, a game created by entrepreneur and investor Robert Kiyosaki.MYTH BUSTED: You CAN become a local expert in real estate investing. It just takes the right steps and tools. The Cashflow game is an excellent tool. You might be nervous at first, but you’ll get over it with time and practice. Once you start teaching the game to others, you really start becoming the local expert. I have literally built my business playing this game.
MYTH #3: Real estate investing is only for the wealthy.
No, it is not.
No matter how much money you do or do not have in the bank, no matter what your credit score looks like, no matter if you have credit cards or not… or any assets for that matter, you CAN invest in real estate.
- You might start like I did as a wholesaler.
- You might start as a fix-and-flip king or queen.
- You might just go for the gold and jump into investing in rental properties.
The point is that you can set a goal and get there time and time again, even if you don’t have money, credit, a good credit score or even a job.
It is your knowledge and time you will leverage in your deals; it is the investors’ money and credit. You do not need to be wealthy to do real estate. You only need to learn basic skills that allow you to speak with investors who will let you use their cash and credit once they understand the benefits.
One of our top students said he thought that owning 26 units within a year of getting started was impossible and far beyond his abilities. He proved himself wrong rather quickly.
He and others who learned how to become real estate investors through Cash Flow Diary courses and membership have been able to quit their 9-to-5 jobs.
Again, a top student said that he would never have thought that he’d quit a $100,000-per-year “cushy” government job to become a full time real estate investor, but he did.
That’s because he earns more as an investor, and he doesn’t have to show up to be meat in the seat for 8 hours a day, five days a week. He gets to live life on his own terms.
Isn’t that what we all really want?
Think it’s not possible to quit your job, escape the rat race and retire way ahead of schedule?
Watch this video to see what I mean.MYTH BUSTED: Real estate investing is for anyone interested enough to learn how to use different strategies to create streams of income from rental properties. It’s not just for the wealthy, BUT the single-most common thing that the top 1% of the wealthy on the planet share is that they all participate in real estate investing.
MYTH #4: You have to be licensed and certified to invest in real estate.
I can’t count the number of times I’ve heard this one.
I’ll short cut it for you.
You do NOT need to be a licensed real estate professional to get involved in real estate investing.
Let’s go back to wholesaling.
Someone told me that they thought wholesaling properties was “illegal or immoral.”
Um, no, it is not. That’s a myth.
And you don’t need a license to do this type of transaction.
NOTE: Some states might have rules about brokering deals, but that’s rare and that’s not wholesaling.
When wholesaling, you are buying a property at a discount from sellers who are in trouble or have a problem that you can solve. You can truly help them.
It is therefore not immoral. Quite the contrary.
If wholesaling weren’t an excellent way to go, why would so many people immerse themselves into that particular investing strategy?
Wholesaling works really well and is the fastest path to building cashflow than any other strategy in real estate investing.
Plus, it’s fun.
Or maybe you know another way you can earn $20,000 or more in a single transaction. (If so, please let me know.)
Early on in my podcast newbie days I recorded an episode on this topic. In fact, it’s the very first episode I ever did!
Give it a listen:
MYTH BUSTED: You do not need to be an agent or have a real estate license to participate in real estate investing. While you may choose to have a license or you may already have one, you certainly don’t need one. You may work with professionals with licenses, however, because sometimes that may be necessary. However, you yourself only need what is between your ears.
MYTH #5: You need a lot of experience to be a real estate investor.
Experience comes with practice.
You won’t be experienced when you first start out as an investor. What better way to get really good at your new skills than by practice?
I compare real estate investing with riding a bike.
Are you going to look good at first when you’re learning to ride the bike? Heck, no. But in short time you are riding like the big boys. The more you ride… the more you practice pedaling… the better you get.
The same goes for real estate investing.
You start with basic skills and you keep adding to them. You will literally be learning and earning, learning and earning. It is a great experience.
I don’t know what I’d do if I weren’t a real estate investor.
Here’s a cool video I recorded a while back about learning new skills and why you can reach your goals if you stay the path you’ve set.
Keep riding!MYTH BUSTED: When you get started in real estate investing you won’t have experience. That comes over time. You’ll keep adding to your experience as you keep moving your goals-needle forward. Learn as many strategies as you can and choose those with which you are most comfortable. While wholesaling might not be your cup of tea, fix-and-flipping may work better for you. Or maybe you want to do buy-and-hold deals so you get rental properties and earn a consistent passive income from each. You can do that in single-family houses and multi-family properties. As you ramp up your experience and knowledge, you may want to do commercial deals.
MYTH #6: Banks are the only way to finance real estate transactions.
Until I got involved in real estate investing, I believed this myth myself.
But it’s wrong…
I proved that pretty quickly.
If you believe this myth, don’t be hard on yourself. You haven’t learned that there are plenty (and by that I mean more than you can count) of individuals who will be grateful to let you use their cash and credit to put to use in your deals.
It’s a win-win.
You benefit from accessing their money to use in your deals; investors benefit in the form of returns. And it’s not just the type of returns you might think.
Did you know some people don’t want more money?
Let me repeat that…
- Some people don’t want more money.
- What they can use are deductions and depreciation in your properties for their taxes. That’s a bigger benefit to some people.
- Others want a long-term arrangement where they receive a check every month, and the secret is that they don’t mean right away. It’s how you structure the deal.
- I always ask them when they want me to stop sending them a check!
- Other people will want to wait till further down the road to see returns. There are benefits to this arrangement, too!
When I started out, I had a credit score of 398.
Do you think any bank would loan money to me for my real estate transactions? No way.
I had lost a primary residence, I couldn’t scrape together $75 and I couldn’t feed my family. That’s not the type of debtor a bank will lend to.
Investors aren’t interested in any of that. They look at the numbers in the deal and how they can benefit.
- Will it cut their tax bill?
- Will it add to their nest egg?
- Will their involvement in your deals put money in their pocket month after month for years to come?
Once I learned how to explain deals and benefits using my Profit Analysis Quadrant™ tool (that I typically draw out on the back of a napkin at Starbucks or any restaurant) I was able to access more investor money than I dared dream possible. (More than $10M and counting.)
MYTH BUSTED: Banks aren’t the only way to go for funding your deals. You may not qualify for a traditional bank loan anyway. Banks won’t work with individuals who have too much debt already or a low credit score. Even if you can go to a bank for a loan or two for your deals, you will be capped out and they won’t keep lending to you. It’s just their rules. Private investors are an excellent alternative. You can raise private capital a lot more easily and quickly than you might imagine. Learning to raise private capital the Cash Flow Diary way is what allowed one of our students leave his day job in four months! (In fact, this skill is helping others do the same – though this man quit his job faster than anyone else so far.)
MYTH #7: There is no room for failure!
I saved this one for last… for good reason.
If I had a dollar for every time I heard this myth, I’d have enough to put down on a small rental property.
Why are people so afraid of failing?
Failure is a part of life!
You can’t avoid it, and you cannot move forward, learn something new, gain better skills or literally do anything without risking failure events.
That’s all they are… failure events.
I’ve had some doozies and I’m still standing. I corrected my path and kept going.
What’s great about what I do now as investor is to cut the learning curve for others interested in being successful real estate investors.
They get to learn from my mistakes… and I’ve had plenty.
Regarding fear, well, I am human and I’ll be honest. I have fears. I don’t let them hold me back, and I have ways to deal with the emotions around my fears.
For me, I use prayer and talking to mentors. Yes, even at this level I have mentors. It’s good to have them, because I can bounce ideas off of them. They help me keep my sails set right.
Sometimes all you need is a little inspiration and motivation. If I can be that for you, I’m happy.
Here’s a podcast episode I did on overcoming your fears… including fear of failure that might be holding you back from doing your first deal in real estate!
MYTH BUSTED: There’s plenty of room for failure events. That’s how you have to think of them. In fact, failure is absolutely necessary in real estate investing. Failure is something all successful entrepreneurs move through. They don’t let their failures stop them from their goals. You cannot expect that you’ll do everything right the first time or even maybe the first few times. Failures do not kill you.
Truth is that there are plenty of other myths I could have busted here in this article. Maybe I’ll write another one soon on more myths.
Let me know if that interests you. Shoot me an email to firstname.lastname@example.org.
In this article I covered the top 7 that I’ve heard from people over the years who’ve told me they’ve thought about getting involved in real estate investing but never took the first step.
Typically they tell me their reasons:
- They’ve heard negative things from others in their lives who didn’t ever participate in a single transaction… yet these people say real estate investing is risky. It can be if you just do it blindly, but that’s not what I suggest anyone do.
- They’ve heard from people who have participated in real estate deals and it didn’t go well for these individuals. That’s likely because they didn’t educate themselves before going in. That’s a no-no. Why do anything without educating yourself on the process first?
- They have a “better way” than what I’m teaching. This one cracks me up, because these are often the same people who haven’t done even one deal yet. “So, how’s that working for you?” I ask.
- They are scared to try real estate investing because they just can’t see themselves as being “expert” enough to do it right. That’s just fear talking. The funny thing is that it can be fear of success as much as it is fear of failure. After all, what do they do when they are actually earning thousands of dollars every month and have no more excuses as to why they can’t make ends meet, can’t take trips with their families whenever they want, can’t quit their miserable day jobs, etc.? What would they have to complain about then?
- They don’t have money to invest. We covered that in this article. You do not need any of your own cash or credit to do deals in real estate. I’m living proof… so are lots of other real estate investors. If you have time and knowledge, you don’t need cash or credit!
A number of people you’ll find on our private Cashflow Creators Facebook group have learned they need zero money and that their credit doesn’t have to be great (or good at all) to do deals.
They’ve learned new skills they put to use immediately and then started earning money faster than they thought possible.
They learn in very short time that they shouldn’t have bought into the myths that held them back.
Ultimately, they’ll tell you they wish they’d gotten involved in real estate investing a whole lot sooner. I know how they feel.
I wish I had gotten involved years earlier than I did!
Have a question? Start a conversation in the comments below!