Be critical not foolish - Posted by HR
Posted by HR on November 08, 1998 at 15:41:29:
You are exercising excellent critical thinking skills to pick up that there are a lot of con-artist sales folk out there that make big bucks selling info about re instead of selling re. You are right. And that’s because you can’t “learn” creative re investing anywhere except from the small, underground niche market of folks who know about it and write books, programs, and seminars to teach it. Did you learn about it, for instance, in high school, college, or graduate school? Can you get a B.A. or M.B.A. in Creative Real Estate Investing? Neither did we nor can we.
Still, there are some major flaws in your thinking. Allow me, if you will, to challenge you. You are obviously smart. When you apply your good critical thinking skills to your cognitive errors, you will see your folly, and your attitude may even change. Perhaps you will even decide to take action. And if you take right action with right knowledge followed wisely and persistently, perhaps you will even become wealthy.
Folly #1: Just because I’m unfamiliar with it, it must not be possible. See how silly this is? Because you are unfamiliar with it, all that means is you are unfamiliar with it. That’s it. Antidote: gain as much knowledge as you can to make an informed decision. Start with reading everthing on this site and others and with inexpensive books. I just finished reading Bob Allen’s Creating Wealth ($12); you should read this. I would also recommend Investing in Real Estate, second ed. by McLean and Eldred ($20) for a good textbook overview of the field. Both won’t give you enough to get started, but they will show you how it can be done. To really get started, you should buy some of the more expensive seminars ($100-200) of the pros (like those on this site and CS). I personally recommend staying away from the expensive, traveling shows; they are way overvalued and your money is better spent on specialized books and seminars.
Folly#2: Because I don’t know anyone that has done it, it must not be possible. Emmbee: do you know any millionaires? So you are telling me that millionaires do exist, and you trust that they exist, but you still don’t know any? Why aren’t you being very consistent? Antidote: Reach beyond your limitations. Want to meet some re millionaires? Join your local Real Estate Investment Group (reia); look in the phone book. That’s where you will meet some serious flesh and blood players.
That old saying is soooo true: if you keep on doin’ what you’ve always done, you’ll keep on gettin’ what you’ve always gotten. If all you know are people who, after working a job faithfully all their life, have never achieved wealth (or at least comfort AND financial security) then I suggest you challenge THAT paradigm of YOURS. They have nothing to teach you financially, other than what does not work. Read the books of the self-made. You will find they really do live in a different universe than most–not because they were born with a silver spoon, but because they know how money works and how to make money. It’s all about knowledge and attitude. Read Rich Dad, Poor Dad by Kiyosaki and Keep your hard earned money by Fellman while you are at it.
Folly #3: Because there are cons, the whole field is corrupt. No; the waters are shark infested by cons, to be sure; but there is sunken treasure lying all around you. As you gain more knowledge, your ability to separate the hard sell and those taking advantage from the REAL experts gets better and better. Don’t be a fool and throw the baby out with the bath water.
I’ll give you a personal example. Over two years ago, my wife and I decided to buy our first house. We knew the neighborhood we wanted to buy in, and we began to drive around on Sundays (and then Saturdays, too) looking for our dream house. We were saddened by what we found. We coulden’t afford anything. This is the best neighborhood in the city, and everthing was selling for at least $100 a square foot. Yikes. We were determined to spend not more than 150K, and we needed a big house. We looked and looked and looked for nine months.
We considered doing a fixer. Coulden’t find anything. Even junk built 50 years ago was at least 200K. We reached the point where we decided we just coulden’t afford this neighborhood. I was real depressed, grumpy, and irritable for over a week. I coulden’t believe that we coulden’t afford what we wanted.
In this one part of the area, I saw a house next to a day care center that was run down somewhat and had the nasty spanish stucco flair popular locally that I hate so much. I decided not to even look at the house. Why bother? I don’t want to own nasty spanish style.
I was in denial; I just woulden’t give up, so I kept driving and looking. One day I noticed that even the nasty spanish sold. Uggg. This was so hard to swallow. Even crap was selling, and high.
More weeks of driving around. And one day, I drove by the day care again, and the spanish style house was back on the market. I didn’t have to be experienced real estate investor to know something was up. I knocked on the door, talked with the owner, and she said (exact words), “Something horrible happened.” I thought maybe her partner or the buyer’s had died. “His financing fell through,” she said. She proceeded to tell me how she had already bought a new lot, started moving furniture, etc. and just had to get out…
This post is getting way to long, so let’s make a long story short and say we bought the nasty house for 130K, renovated for 20K (150K mortgage, bank’s money; we did put 15K down, gift from parents), and it recently appraised for 255k. It’s a double and last year we rented the other half for $700 a month. It was spanish and nasty inside (hadn’t renovated since the 60s; but under that shag carpet was oak flooring… It ain’t nasty any more!)
Emmbee, this stuff is for real. I forget who said it, but they are right: if you are willing to do for awhile what others are not, you will eventually own what others cannot. Finding this house wasn’t easy, and being the GQ for 12 crews wasn’t either (especially with a fulltime job). But it’s the fastest 100K I’ve ever made in a year and a half! (This summer we plan on selling the house tax free and doing it again…) Most important, though, emmbee: it showed me that a different, better way is possible, and I haven’t been well ever since.
Your post reminds me of my old way of thinking. I hope for your and your families’ sake that you challenge your thinking. You have no idea what you are missing otherwise. And that’s good. It would be too painful to know what wealth really could have been yours, if not for your cognitive distortions. Better to remain ignorant, and foolish.