5 Mistakes to Avoid When You Start Investing in Real Estate

Dave:
Do you ever remember feeling really dumb when you were a new investor, Rob?

Rob:
Yeah, in the first live and flip that I ever attempted, I thought I could do everything myself. And so I tried to tile a little studio apartment that was under my house. It took me eight hours to tile. I would say maybe like seven, eight square feet. So finally I went and hired a tile guy. I brought him in and I briefed him. I’m like, Hey man, I tried to tile this. It took me eight hours and it was all uneven and kind of lopsided. He is like, you tiled this little section right here in eight hours. And I was like, yeah. And he started laughing and I was like, all right, all right. Maybe I’ll just hire the pros faster next time and not try to do it all myself. Well,

Dave:
That is about as classic a real estate story as I’ve heard, because I think this is just common. It is a rite of passage to make mistakes as when you’re doing anything, and that is certainly true in real estate investing. And it’s also what our show’s about today. We’re talking about classic newbie mistakes. Welcome to the BiggerPockets Real Estate Podcast everyone. I’m Dave Meyer.

Rob:
And I’m Rob Abba Solo. And today we’re laying down the five most common mistakes that new investors make. You’re going to hear about which of these mistakes we’ve made personally, how we overcame them, and how to avoid them in the first place.

Dave:
All right, let’s do it.

Rob:
So let’s jump into number one here, which is buying the wrong deal. Dave, what might buying the wrong deal look like to a newbie investor?

Dave:
Well, I think when people talk about buying the wrong deal, ideas probably go straight to a deal that loses money, and that is certainly not a good deal. But I think there are other categories here too. One that maybe doesn’t make as much money as you could. Maybe you’re deciding between two or three deals and you wind up not picking the best option. But then there are also bad deals or wrong deals that are just not well aligned with your strategy, something that doesn’t fit your lifestyle or doesn’t fit your skillset or your long-term plan very well. So I think there’s actually a broad category here. Are there any of these that sort of resonate with you in particular? Rob?

Rob:
All of ’em. All of ’em. I would say this, when you’re getting started, you don’t really know what your lifestyle is or you don’t know what you want your lifestyle to be. And so I think we kind oftentimes break into the real estate game with a little bit of stars in our eyes thinking, Hey, we want this one specific thing. So for example, short-term rentals, we know that in general, short-term rentals yield a better return, more cashflow. And so a lot of people kind of buy into that lifestyle of like, oh yeah, I want to get short-term rentals and I want to quit my job and blah, blah, blah. But the problem is that might not actually align with you as a person because while it might produce a lot of money, which is the thing that you want, you might hate people, you might hate hospitality, you may not be an operator that can deal with sort of the day-to-day tasks that come along with the short-term rental. And that right there could be a reason where maybe the deal isn’t necessarily bad from a metric standpoint, but it’s actually bad for the individual because they just don’t like everything that’s associated with running that particular type of, I guess, niche within the real estate world. I

Dave:
Think there’s often, there’s just lack of awareness that different real estate strategies come with a trade-off. And so I think when you talk about wrong deals, it’s not just about the numbers, that’s obviously really important, but it’s also about making sure that it’s appropriate for your skillset. And while you were talking about that, Rob, I actually was thinking of even another category of wrong deals, which sort of goes to my first deal when I think about if and what I did wrong there. I bought I think the right property. I think I even did the right strategy. I did the wrong structure of the deal. I had three different partners on that deal. And although it worked well for me, I sort of had this partner who was equal in trying to do the property management and we were supposed to split the property management work 50 50. I think most people who do partnerships probably know a 50 50 ambiguous kind of structure for that kind of thing often doesn’t work out. So that’s something you have to think about too, is not just property, not just strategy, but also structure and making sure that it works well for your lifestyle and goals as well.

Rob:
Yeah. Who are the key players on that deal? You mentioned the skillset one. I mean, this is a growing pain of mine. I obviously do more of the rental side of things. I don’t do a lot of fix and flips. I’m trying to get into them. I feel like I’m a newbie in the world of fix and flips, and in the last year in two years, I’ve bought a hotel or a motel specifically, and I bought a flip that was supposed to be a very quick flip, but it has not panned out to be that I’m not cut out for flips because I want everything to be really, really nice and everything that’s always really, really nice is never on budget, and I’m just not cut out for being a budget person that’s like, Hey, yeah, we’ll cut costs here. I just want to always go to the top end of everything. So maybe I just need to go into luxury flips. Maybe that’s my problem. I’m going into the budget ones

Dave:
Maybe. So, but it’s probably such a different mindset from your other business where it’s like you’re trying to curate an experience when you’re doing short-term rentals, which you have to do and that’s why you’re good at that. But with a flip, obviously you want to make it good quality, but the key with a flip is making it good enough, not the highest possible finishes unless you’re doing, like you said,

Rob:
For me it’s always like it’s got to be good enough for me to live in, which is just a very bad way to look at the flipping horizon and everything like that. But that’s why I’m a newbie and I want to give a little bit of time to talking about how can someone avoid this? How can someone avoid buying a wrong deal?

Dave:
Yeah, that’s a good question. I think for the money part, it really is just learning how to analyze deals well, and I think we’ll talk about that in a few minutes here. So I’ll skip over that and talk just a little bit more about really thinking hard about what your long-term goal is. And I know that’s really hard at the beginning because most people are just super eager to get into their first deal, and you should be, and it doesn’t need to be perfect, but even a little bit of forethought into, do I want to be on the property every day, like Rob said, are you someone who’s going to deal with uncertainty really well? Because flips are a whole lot of uncertainty. Are you investing for cashflow right now? Are you investing for equity right now or are you playing the long game? And just taking even an hour to sit down and think through some of these big questions, I think will help you build a better buy box that is more aligned with what you’re trying to accomplish.

Rob:
So I think what you’re saying is that real estate investors should start with strategy.

Dave:
I didn’t want to pitch my own book on this show, but I did write a whole book about this topic, so if you want to read it, start with strategy. There you go.

Rob:
Awesome. All right. Well, let’s hop into number two. You kind of alluded to it, which is analyzing the deal incorrectly. Guilty, guilty, guilty of, I’ve done this so many times in my career. What assumptions do you think people get wrong when they’re stepping into their first or second deal?

Dave:
I think a lot of what happens, at least I’ve done this in the past, is sort of buying into the best case scenario a little bit where you’re looking at the different trends and you’re like, oh, rent has been great. Rent growth has been great over the last year or two, and appreciation’s been amazing. And assuming that those things are going to continue, maybe not indefinitely, but at least for the next couple of years. So I think trying to take a sober approach, it makes more sense, but that is definitely a common mistake that honestly everyone does this. This is not just newbies. Everyone does this at some point in their real estate investing career, but

Rob:
How do you make sure that you’re analyzing the deals the right way? And what else do newbies get wrong? We’ve got more tips right after the break.

Dave:
Welcome back investors. Let’s get back into the most common newbie mistakes.

Rob:
I would even venture to say that a lot of people make the assumption that they’re going to be a tiptop operator and better than everyone else. This is something that stepping into the short-term rental game, you’re like, oh, well, I’ll just manage it better than the last owner and I’m going to make way more money as a result. Or like, oh, well, I’ll just make a better flip than everyone else in this neighborhood and I’m going to make more money as a result. So there’s always a little bit of overconfidence stepping into deals. I feel like when you don’t know what you don’t know. And that can be kind of trouble on the assumption side too.

Dave:
Absolutely. That’s a very good point. I think for me, when I think about what I’ve done the worst or the mistakes I’ve made the most has mostly been on the expense side. I don’t know about you. I think I’ve been tried to be pretty modest about appreciation, growth and rent growth, but stuff like CapEx has always, at least especially early in the beginning, is really confusing because you’re like, oh, I’ve got to fix the toilets. I get that I got to replace appliances, I get that, but I’m not thinking about replacing a hot water heater every 11 years because I didn’t even think I was going to own this property for more than five years maybe. And so those are things that I definitely omitted in my first few deals.

Rob:
Yeah, let’s talk about that for a little bit. So let’s first cover what CapEx even means, and this might be why most newbies even missed CapEx to begin with because it just sounds like a fancy word and I don’t know it. I don’t have to worry about it. So CapEx is short for capital expenditure, and that’s basically all of the major appliances and systems in your house that are going to break down over the course of an investment. So this would be your roof, your appliances, your water heater, things like major systems on your property. Now, when you buy a house, it doesn’t mean that your AC is going to break soon or that year or even the next year, but what it does mean is that eventually, if you own this house over the course of 30 years, all of those systems will break down or need to be replaced at some point.
And so the idea with having reserves CapEx reserves is every single month you take a portion of your rent and you put it in a bank account and you save up a really big savings account so that whenever your refrigerator goes out, you’ve got 2000 bucks that it’s going to cost to replace it already on you, and you don’t have to go and find $2,000 out of nowhere. This is something that for me, in the short-term rental side of things, I got into the game. I remember in my early days on YouTube, I would talk about, oh, my property made this much. I made $3,000 this month, or I made $4,000. And people would be like, what about CapEx? What about maintenance? And I was always like, well, I didn’t have any CapEx, so I’m not going to factor that into my calculations. But if you’ve ever heard the term, when it rains, it pours. That’s kind of how it works in real estate where when one thing breaks, it all starts to break. And so that’s something I’ve kind of learned the hard way where hey, stuff didn’t break the first couple of years, but years three and four, it starts to compound pretty quickly.

Dave:
You just need to never have the thought in your head of like, oh, things are going pretty well at that property. I haven’t had to worry about it. The second that thought enters your mind, everything will break in the next month, then it will just be one thing after another. It really is kind of like rains, it pours. There are dry spells and that’s fine. That’s just how the business goes. You just need to be, as Rob was saying, you just need to be prepared for it and have that money set aside because otherwise you might be put in a situation where you’re short on cash, and that’s as a real estate investor, the one situation you really want to avoid is not having enough reserves when these things do come up. So Rob, you talked about some of the mistakes you’ve made. How have you gotten beyond those and avoid them currently?

Rob:
Well, I’m a big fan of understanding sort of what I call the revenue arc or the seasonality arc of a property. This is obviously pertaining to short-term rentals, but I think it’s going to come into play for long-term rentals as well. And so what I mean by this is when someone goes and buys, let’s say something like a short-term rental, I want someone to understand sort of the ebbs and flows, the highs and the lows of how much that property is going to make over the course of a year before they start pulling any of the profits out. And the way I think that this applies to long-term rentals as well is we tend to factor in vacancy into our long-term rental projections, but you don’t actually know how that vacancy is going to fall out year over year. So what I tell people is, for the first year of owning an investment, don’t count on pulling any money out.
I would let all of your income stack for the first year and kind of build up your reserves that way. I’ve been very, very disciplined, thankfully, over the course of really my entire real estate career, I’ve always taken the stance of, Hey, I’m not going to pay myself from real estate. I’m going to figure out how to make money other ways, other side hustles, other jobs, whatever it may be. And so all of my real estate bank accounts are well past the reserve state because I just don’t ever really spend my money. This is my philosophical choice. You don’t have to do what I do. But for that reason, I’m always very comfortable because I’ve had six, $7,000 repairs come up in the last couple of years, and it doesn’t really hurt all that much because I’ve saved up so much money. So I would say for anyone getting started, I know that the temptation is to pay yourself that 200 bucks, 300 bucks here and there, but if you can really stack up your bank account, it will just save you from the storm. That will eventually happen and you won’t feel like you have to sell the property to fix the property.

Dave:
I think that’s excellent, excellent advice. And you don’t have to do that, but I do the same thing, Rob. Every time I buy a new deal, I’m like, yeah, at least six months I put cash into a bank account and reserves, and then I stack it for a little bit just to be like, you know what? Something’s going to break and I’m going to be prepared for it. And then when I feel comfortable, I take it out and reinvest it. I think when it comes to analyzing deals, there’s two things to consider. One is more philosophical, and for me, that’s forcing myself to be a pessimist. And I think I am naturally an optimist, but with deal analysis, I just think you just consider the worst case scenarios all the time and assume things are going to go wrong. And that helps actually with the first question too, with buying the wrong deal, if you assume everything is going to go wrong, then if that does happen and you still think the deal works, then fine, you’re prepared for it.
But if goes right, which hopefully at least a few things go right, then it’s just all upside. So I like to be very conservative with that. And then the second one is using good tools. You use something like the BiggerPockets calculator that asks the right questions and creates the right inputs for you, then you’re not going to miss stuff like CapEx because it’s right there in the tool that says, what are you budgeting for CapEx? And if you had never heard of that, that would teach you about it as a little tool tip. So I think it’s important to have the right philosophy and the right tools,

Rob:
Big time. So I’ve got a little system here. I call it the three Cs. It’s a comp calculate corroborate. So comp is go comp comparable properties. If it’s a short-term, long-term doesn’t really matter. Go see what the competitors or what other people are making in your area, then go and calculate it. This is where we would go and use the BiggerPockets calculator, put in all of your expenses, actually pencil out of this if this deal’s going to make money based on the comps. And then the third one, which is ideal, it’s not always feasible for everybody, but the third one is corroborate. Talk to someone in that market and find out some of the insights, some of the anecdotal insights of the moneymaking that goes on in that particular market. For example, I love that learning the seasonality for a beach market. Like, hey, in May, that’s when it starts to pick up in June, July, it’s like crazy.
August is the peak month, and then September is when it starts to slow down. And the Smoky Mountains, hey, from March or mid-March all the way through December 31st, high season basically, and then January and February are breakeven months, or you might lose money and kind of understanding some of that. Or one of the things that I figured out was at a beach market, everything is going to rust. And so I go and I talk to people, I’m like, Hey, what should I be factoring into my CapEx to basically figure out how much do I have to budget for fixing appliances and things that will break a lot faster than normal. So corroboration will be huge for you if you can find other investors in your area. And you can also corroborate quite a bit in the BiggerPockets forums.

Dave:
That’s a great idea. I’ve never heard it termed that way, but I think that makes a lot of sense and is totally true because when you’re looking at a lot of deals, you can’t double check everything right away. You can’t go into super amount of detail. You have to analyze them. That’s like the calculators in BiggerPockets. They’re meant to go quickly, but then you put a lot of assumptions into that calculator and you got to go double check those assumptions before you do a deal. I love that. Alright, well let’s move on to our third newbie mistake, which is letting the lack of money stop them. Rob, I actually don’t really know when you first started, did you have a hard time raising capital or were you able to just jump right in?

Rob:
Yeah, so the first house I ever bought, which was a primary that turned into a house hack, my wife and I barely qualified. I don’t really know how we qualified, but we did, this was 2013, and I was able to fund the down payment for this house. It was $159,000. We put about three and a half percent, I think that comes out to roughly 8,000 bucks. And I got a tax return that I want to say it was like three or $4,000. And I just remembered this part of the story because it was so long ago recently, but the other three or $4,000 that I needed to fund this down payment I didn’t have, but I had this guitar amp that was like $4,000. It’s expensive. I was a guitar player in a previous life and I used to play in sixth Street in Austin, Texas like three, four nights a week.
And I saved up all the tips that I got, which was like 50 to $75 a night. I saved them up for a whole year and I bought this guitar amp and it was like the thing, my life achievement. But when it was time to buy this house and I really wanted it, I sold the guitar Amp and I was like, I’ll buy it again one day whenever I have it. I never bought it again. I went all in on real estate, but it was a tax return. And I tell that story because the Guitar Amp meant a lot to me. It was the first thing that I ever really bought that was super nice and my hard earned money, but I sacrificed something that I really loved, something that I really, really wanted and I gave up this thing to get something bigger in return. So that’s kind of what I always tell people is sometimes you have to give something up. It’s not sexy, it’s not the fun thing, but it enables your path into real estate oftentimes, if you can put aside some of your personal desires and stuff like that,

Dave:
That’s a very cool story. I did not know that, but something now it’s clicking your love of John Mayer. I didn’t realize you were a

Rob:
Guitar player. This is

Dave:
Sure. Yeah, yeah. Now it all makes sense to me, but I think that’s a great point. Obviously not everyone has something that they can give up, but if you do, it’s really just a question of what you want more. Do you want something that you might love or need right now? And if that’s okay, that’s fine. It might just be slower for you to get into real estate. Or if you’re like Rob, you can come up with a way to sacrifice something that you like for getting into the industry. For me, I guess I went, I don’t know if it’s the more traditional route, but I guess it’s a common route for newbies. I did a combination of newbie strategies, which is I had partners, I was just saying earlier, I had three partners on my first deal. It was also a house hack, and this was way back when I’m dating myself now, but this was when there was the $8,000 first time home buyer tax credit right after the financial crisis.
And so I took advantage of just a couple of different opportunities to piece it together because I had no money. And not everyone listen. Not everyone has partners that they can find. I had friends and family I could go to and partner with. Not everyone that, but I did that in addition to house hacking, so I could put low money down, self-managing the properties, building sweat equity. I didn’t put any money into my first deal. I didn’t have any. And so I think it’s really, it’s just about hustling, whether it’s the way I did it or the way Rob did it. Some people are fortunate have high paying jobs, but some people you just have to figure out what you’re willing to sacrifice and give up to get started.

Rob:
Well, you mentioned not everyone might have something to give up. I disagree a little bit. Obviously I gave up kind of an expensive materialistic thing. Not everyone has that, but you can give up comfort and if you listen to the show, I’m a big proponent for house hacking. House hacking to me is a very low down payment or a very low cost of entry way to get into real estate. And what you’re giving up is your personal space, your kitchen, your bathroom that you share with other people to have roommates that will pay you rent to help subsidize your mortgage. I have house hacked I think three times at this point. Every time I go to my wife and I’ve pitched her on the idea, it’s not like she was like, yeah, hell yeah, let’s do it. It’s always like a, Hey, this going to be kind of tough, but I promise if we do this, we can live in this house and it’ll enable us to do bigger things.
So it doesn’t have to be a materialistic thing that you give up, but it might be comfort. It might be time. It might be you going out and getting a side hustle or getting a side job to build up a little bit of income to save up a down payment. For me, I actually started a furniture building business when I was getting into sort of real estate and I was building furniture and I was making 800 bucks a month, and I would come home from work and basically go into my basement for four or five hours a night and make tables and coffee tables. I’ve retired that side of me now, but I spent a lot of time making furniture so I can make 800 bucks to fund my life type of thing. So if you can build skills, you can learn a skill. It’s not easy, but it works.

Dave:
Yeah, absolutely. That is a very good way to say it. Yeah. Not everyone has something of financial value you could just sell. But yeah, like you said, you could give up comfort and giving up time is probably the number one way for people who don’t have a big financial backdrop to fall onto to get started because I, again, was able to help find people to help me fund the down payment, but I didn’t put any of that down payment down, so I didn’t have any equity to start. So I managed the property myself in order to earn equity in that deal. I also cold called for a commercial real estate broker during that time to help give myself some money to live off and to learn the industry. And so I think there’s things that you can do to get started if it’s something you want off.

Rob:
Yeah, I love it. What are some things to keep in mind for you? You had a partner in one of your first or second deal here. What’s something that someone should keep in mind if they’re going to go that route?

Dave:
Oh, this is something I talk about with a lot of new people. It’s like I think a lot of people go in and want partners and expect a lot out of the deal. And I think the key to a partnership, especially if you’re starting from a position similar to mine where I didn’t have money to contribute to this, is like you’re not going to be an equal partner in this deal. And even if you found it, even if you’re putting in the sweat equity, you have to think about the other partners in your deal and how much risk they’re taking on. They’re the ones putting up capital. They’re the ones that could be doing other things with those money. And so I think it’s really about adopting the right mindset of learning and getting in and going slowly and knowing that if you’re starting with a position where you don’t have a ton of money, your first deal might not be a home run, and that’s totally fine. That’s how most people start, but just try and hit a single and try and build trust with your partner. So maybe next time you can do a bigger deal or you can get a better terms on that deal. So I think that’s the main advice I would give people.

Rob:
Go ahead and send this episode their way. We’ll be right back.

Dave:
Hey everyone, welcome back to the show.

Rob:
If you’re getting into real estate with kind of low money in your own side of things, just make sure you have a solid financial foundation. I think it’s really tempting to be like, yeah, I’ll go raise the money and I’ll have someone else pay for my first deal. But if you don’t really have a relationship with debt, if you’re kind of rocky, if you’re in a lot of credit card debt personally, you probably don’t want to go raise money from someone else when you haven’t really kind of built a solid foundation for yourself. I think that just kind of goes without saying, but it’s one of those things I hear in real estate all the time. It’s like, go raise the money. And it’s like, well kind of cut your teeth on a few things first and then maybe go raise the money.

Dave:
Yeah, absolutely. Just think about put yourself in that partner’s shoes. If someone who didn’t have their financial house in order came to you and said, Hey, will you lend to me on a real estate deal? You would probably say no. So I think you just need to think about how you represent yourself, and real estate is a long game, so if you’re in a bad financial position, using real estate to try and get rich quick or make a quick buck means you’re going to have to take on a lot of risk. And it’s not what I usually advise for most people as they’re just getting started.

Rob:
For sure. Well, let’s get into number four here, which is it’s kind of a combo of two things. It’s getting stuck and never taking action and getting into that first deal. So where are some of the common places that newbies tend to get stuck?

Dave:
Great question. I guess there are maybe two or three areas that I would say first and foremost is deciding where to invest. I don’t know if you get that question as much. I do a lot because I talk about this.

Rob:
Yeah. Number one question. What market’s good market?

Dave:
Yeah, what market is a good market? That has to be the number one, and I’m going to be honest, Rob, I take some blame for this because four years ago I started publishing these lists. I was like, best market to invest. And there’s a point to those articles, but they’re largely to point you in the right direction. And I really want to stress the point here that there is no such thing as the best market to invest. It really is finding a market that aligns with your strategies, your abilities, and what’s realistic for you. But how do you answer that when people come to you with that question?

Rob:
I don’t believe in there being sort of this magical market, this unicorn market that, oh my gosh, there’s these untapped gems across the country. I’m personally a believer that every market’s a good market, and you have to make deals in whatever market that you’re in. This goes short-term rentals. If you are in a quote oversaturated market, well, you just have to stand out from the competition and be better than everyone else so that the saturation doesn’t really matter if it’s a long-term rental, maybe you can’t go out and buy a property on the MLS. Maybe you have to go and buy a fixer, add some value refi, and again, put in your time there so that you can gain equity and a cash flowing property in that instance. So I don’t really buy into the magical markets necessarily, although of course there are some that are better than others. But for the most part, I think whatever city you live in, you can make real estate work there if you really, really want to. It might be harder if you live in la, New York, San Francisco, where it’s really expensive to live, but it’s not impossible, and I know this because thousands of people do it every single day.

Dave:
Totally. I often think of James Dard, who’s been on the show a couple of times. He’s one of the guest hosts of On the Market, one of the best, most respected investors in the country, I would say, and he’s made his whole career in Seattle, which I would think most, nine out of 10 people you said, is Seattle a good market to invest in? They would say no, but he’s made a great career out of it. I don’t think I could do it personally, but he’s just good at the strategies that work well in that market because he lives there and he decided, Hey, I’m going to figure out the ways to make money in that market. Those are different strategies and tactics that I had to develop in my own portfolio and different from you.

Rob:
Do you want to know a quick way to find out if real estate works in a particular city?

Dave:
Yes.

Rob:
Okay. If you ever drive around any street in a city and you see a construction crew working on a house, real estate works in that city.

Dave:
Yeah, someone has penciled the deal. That’s so true. So

Rob:
There’s another kind of big hangup that I think a lot of newbies get stuck in or in a rut, and I think that overall, and it’s a skill that you have to build, I think. But overall, I think newbies getting into the game have a really hard time with goal setting, and sometimes they tend to set their eyes on the big goal, which is like, oh, I want to retire early, or I want to have a giant portfolio, or even a goal as big as I want to buy a house. And because the goal is so big relative to their experience or where they are in that particular journey, it can feel a little overwhelming. It can lead to some analysis paralysis, because if you say basically, Dave, if you’re like, Hey, I want to flip a house in Seattle, let’s just take that as an example, but you’ve never done it before.
Now you’re thinking, okay, I want to flip the house, but now what do I do? Oh, do I get pre-approved first? Do I find the house first? Do I find the deal? And you start kind of scrambling and get stuck in analysis paralysis. What I think would solve this would be to break down your big goal into a lot of tiny goals. Brandon Turner called this mins most important next step. So instead of saying like, okay, hey, I want to flip a house in Seattle, break it down. Get pre-approved first, go find your lender. If you’re going to do a flip, find a hard money lender. If you’re going to buy a house to house hack, get pre-approved by a traditional lender. Find a realtor, schedule a showing. Run your numbers on the house that you did the showing for, make an offer on that house. Even that scares you. You can say, Hey, you get pre-approved. Find a realtor, make an offensive offer that you know is going to get rejected, and then do it again. If you can break it down into a hundred little tiny steps, pretty much any big goal you have becomes very, very obtainable when you see the A to Z blueprint that you can write out on a sheet of paper.

Dave:
That’s such good advice. Yeah, it’s really the same as any problem, any challenge. It’s not unique to real estate. It can feel overwhelming if you start at point A and you’re looking at point Z, which is owning the property, but it’s really reducing the complexity of the problem down to just, what do I have to do today, really as a great, great recommendation there.

Rob:
Yeah. Yeah. Let’s

Dave:
Move on to our last newbie mistake that we’re going to talk about today, which is getting bogged down in negativity. This seems rampant today is a lot of negativity.

Rob:
Now on TikTok, everyone on TikTok so uplifting these days.

Dave:
Oh my God. And YouTube, all the fire backgrounds and stuff. Oh my god,

Rob:
What’s the domes? YouTube clickbait you’ve seen lately going around,

Dave:
There’s this company called the Reveture Consulting. I dunno if you’ve heard of it, Reveture Consulting, and they just put out just shameless fear mongering click bait, and they’ve been wrong for so long. I don’t understand how people keep listening to it. They’ve been calling a crash for seven years.

Rob:
They’ll eventually be, right.

Dave:
Yes, exactly. Broken clock, right? And so I can’t stand it. What about you?

Rob:
Okay, so I saw one recently that was called Why You Shouldn’t Buy a Home in 2024. I think Graham Steffen did that, and you’re like, uhoh, you shouldn’t do. But I think that’s kind of one of those things. It’s exactly what it is, right? It’s clickbait to get someone to click in and hopefully get them engaged. You have to deliver on the clickbait. I think the thing that tends to annoy me about this stuff is where people, they read the article headline, but they don’t read the article. Yes, totally. And so people get scared by the headline, and they don’t ever, they’re like, oh, man, okay, don’t buy a house in 2024. I’m not going to read the article, but the whole article could be like, here’s how you could actually buy a house in 2024, and it could actually be a positive thing. So I think a lot of people tend to take things at face value, especially a lot of newbie investors. If they don’t know anything and someone says something kind of controversial or like a hot take, they stop looking into it because they immediately believe it. I think doing a lot of research into whatever niche that you’re wanting to do, I think there’s always a solution. There’s always a way to overcome whatever the doom and gloom you might be hearing in media.

Dave:
Oh, totally. Yeah, I completely agree. Listen, if you do your research and you genuinely feel that real estate investing is a bad time, that’s a totally fine decision. But just make the decision based on actual information. And like Rob said, not just based on headline or not just based on common sentiment, because people have been saying that the real estate market is going to crash. Robert Kiyosaki has been saying that real estate market is going to crash since 2014 for 10 straight years. And if you go and understand why he or other people have been saying it, it’s not based on fundamentals of the real estate market. So hopefully on this podcast, on our other BiggerPockets podcast, we share with those numbers, and no one knows for sure even when we talk about fundamentals, economics, no one knows the future for sure, but there are some sound economic theories that you could follow and understand before deciding if it’s a right time or a good decision for you to get into real estate or not. For

Rob:
Sure. I think my one piece of advice for anyone that tends to get a little bummed out by the clickbait or the news or whatever it is, if you’re that person, but you still really want to get into real estate, my one piece of advice for you is go talk to someone that’s doing it. Go talk to someone that is successful in real estate. Go to meetups, go actually network with people that are their full-time job, are real estate investors. I promise you, if you would’ve talked to James Dard in the last two years, if you asked him, Hey, should I not do real estate? He’d be like, what? No, you should totally do it. Yeah, it’s harder, but you should totally do it. Why? Because he’s still doing it and he’s still crushing it, and he’s still able to make deals work, right? So if you’re that kind of person that, yeah, if you tend to get bummed out by stuff, just find someone that can do it. One conversation with a successful investor can completely change your mindset. I

Dave:
Love that. That’s such a good point. And I mean, all of the residential investors I know are still continuing to invest right now. I do know some people who focus on multifamily and commercial who are sitting on the sidelines a little bit. But you’ll learn that by talking to a successful investor. Like Rob said, if you went and talked to a commercial investor, you might be a little timid right now. And there’s probably good reason to be timid in residential. Almost everyone I know is putting their money where their mouth is and are continuing to invest right now. So that is an excellent, excellent tip. All right. I think we did it. We have solved every problem a newbie could ever have. So after listening to this episode, no one will have problems anymore.

Rob:
Absolutely not. So let’s recap what we talked about today. The five most common mistakes. One, buying the wrong deal, two, analyzing the deal incorrectly. Three, letting lack of money stop you. Four, getting stuck and never taking action. And lastly, five, getting bogged down in negativity. Hopefully this is helpful and some of the tips that we gave you were actually actionable in your journey. If you want to connect with me and Dave, we’ll have some information in the show notes for you. We appreciate everybody joining on today’s episode of BiggerPockets. We will catch you on the next episode of BiggerPockets. See everyone later. Bye.