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What's Your Reason For Being In Real Estate?
by Alex Gurevich

Do You Have a Real Reason for Being in Real Estate?

I do want you to stop and think for a few minutes what your reason is for being in real estate investing. I really mean it - think! Is it because:

• You want to be your own boss
  
• You're tired of the "rat race"
  
• You want to work your own hours
  
• You work harder than others
  
• You can buy properties with no money down and no credit
  
• You think you're smart enough to succeed in real estate
  
• You want to replace your paycheck or even get rich
  
• You heard that "real estate produced more millionaires than other industries"
  
• You think you can make more money than a real estate agent
  
• You'd rather do real estate than MLM
  
• You think it's easy to make money in real estate
  
• You think real estate "always goes up in value"
  
• You know someone else who made a lot of money in real estate
  
• You believe real estate is the best cash flow business in the world
  
• Etc. etc.?

I'm sorry to disappoint you - these are all the wrong reasons to be in real estate. Most of the statements above are myths anyway.

In my community there are only 1-2 investors who make over $1M a year, per my knowledge. Yet there are at least half a dozen residential real estate agents who get well over $1M in commissions from sales, possibly more. Working your own hours --- sure, the hours are a lot longer that what you have on a job... To spice things up - you get the financial headaches to deal with all the time, and occasionally - legal challenges to top it off.

You work harder than others? Really? Come on, of course there are plenty of people who are lazy in this business. Or those who are simply too busy to be able to put in the time it takes to succeed.... but there are still enough ambitious and hardworking people in this country who are trying to make it in real estate. You ain't alone with good work ethics, believe me. There are plenty of cash flows and business opportunities out there besides real estate -- just open "Small Business" or about a dozen of other similar magazines for small entrepreneurs widely represented on a magazine rack at Barnes and Noble.

In fact, a couple of years ago I was at an expensive seminar with a man who authored a book titled "Your first $100 million". That title should tell you something. He was in the oil business, publishing, start-ups, mergers and acquisitions, etc. He said he didn't understand the fascination of a small investor with the cash flow or growth potential from real estate. He said, there were plenty of businesses with incomparably higher cash flow potential than that of rental properties.

Consider the realities of today's real estate investment business in your town. Thanks to Carlton Sheets and Co. - real estate investing has become one of the most saturated marketplaces. There are not even hundreds, but thousands of investors in every sizable community nowadays. I bet you, if a Yellow Pages section of Real Estate Investors in your town was ever created -- it'd be the longest section in the entire book, far outstretching the Lawyers and Doctors sections.

• Look at all the "we buy houses" signs everywhere and classified ads.
  
• Look at dozens of people mailing to and calling on owners in pre-foreclosure.
  
• Look at those searching for fixer-uppers in bad parts of town to flip to rehabbers.

I was recently at the local investor club meeting (there are 3 in my area!). There were 7 people with fixer-rehab deals to flip to someone -- and not a single rehab buyer there.

• Look at people responding to ads in real estate classifieds.

This past weekend I was running three For Sale ads. Got 9 calls from regular buyers and about 7 calls from investors.

• Look at the number of people advertising to take over payments or lease option homes.
  
• Look at number of people bidding at foreclosure auctions at the courthouse -- with cash!

I think you get my point. So what is your reason to be in real estate investing and believe you'll be able to compete? Do you have a good reason?

My take is -- the only reason today to be in a real estate investing game is -- to possess and capitalize on unique advantages you may have in your marketplace. If you don't have unique advantages -- the probable outcome is mediocrity at best. More likely - even failure to achieve any financial results that matter to you. Resentment and bitterness will follow. Then the blame will be allocated to the "gurus" that got you hooked. Then departure from the real estate industry altogether.

What Do I Mean By "Unique Advantages"?

It's something that masses of competitors don't yet know, possess or employ in their business: knowledge, new angles and strategies, new market niches, technical expertise, legal savvy, tools that make work easier, faster and more productive, etc. As you can guess, all the basic stuff, all the fundamentals of real estate investing don't qualify as unique advantages. The masses already possess and employ them.

• It's not enough to know how to do a Contract For Deed, Lease Option, Seller Financing or Taking Over Payments deal.
  
• It's not enough to know how to tie up a house on a contract and flip it to someone else for profit.
  
• It's not enough to know how to rehab "ugly houses" and sell through Realtors for full market price.
  
• It's not enough to know how to raise money for deals.
  
• It's not enough to have a website, an automated voice mail system, live assistant service, etc.

If you don't already know all of that and use most of these tools, you're behind the curve. You have almost no chance of even getting off the ground (unless you have cash, credit and are determined to pay retail price for properties). Even if you do.... you still have hundreds of competitors who are as well-equipped as you are when it comes to fundamentals.

What do you think happens when 5,000-10,000 courses on any and every one of these subjects are sold (and trust me, they are) to the masses? You can count that at least several hundred people (and likely a lot more than that) in your market place possess the same basic knowledge. Even if only 10% of them will ever do something with the information --- you got more competition than you want doing identical things they learned from more or less the same source.

If That's All You Know Now - That's Not Enough. Period!

So, your home work assignment for today is to ...think hard and figure out if, indeed, you possess at least some unique advantages in your marketplace and how you can use them to reap the biggest financial benefit you can. If you have that advantage, you know exactly what allows you to compete effectively.