Discover 10 sure-fire routes to failing miserably in real estate. Inversion communication, explaining the opposite, is the style of billionaire investor Charlie Munger, who once gave a graduation speech on how to have a miserable life. It can be incredibly educational to invert a subject like being successful in real estate by explaining what NOT to do.
#1: Victim Mentality
One route to real estate failure is to blame circumstances, other people, and other situations for your shortcomings and lack of results. You could blame people closest to you like your family or blame politicians. You can blame the circumstances, maybe the interest rates are rising or the market's crazy in your area. The key to this mentality is that because it's something or someone else's fault, you don't have to take any responsibility for your lack of results. It's everybody else's fault. This is a surefire way to fail in real estate.
#2: Argue Your Limitations
You dwell on, focus on, fixate on what you can't do. So, whether it has to do with your lack of money, your lack of experience, or your lack of connections, the key here is that you only focus on all the things you can't do. Not only do you focus on what you can’t do, you completely ignore anything you can do. That is what arguing your limitations is all about, and it's a great route to failing in real estate.
3 - Issues Signal Failure
This is to recognize short-term issues and challenges as a sign that long term you will be a failure. Therefore, you need to quit now. That means that any time you run into early problems as you're embarking in real estate, you need to recognize that as the reason why you need to get out now and not continue.
Now that would be a different approach than Thomas Edison when he was trying to invent the light bulb. If you recall, he said that he found 1,000 ways not to invent a light bulb. He looked at all those short-term issues as a sign that he needed to make some adjustments to his next attempt. But not you because you're trying to fail. Instead, you look at a few short-term issues and interpret that as a sign of what's to come and that's a whole lot more failure.
If you want to learn more about this side of failing, I have a great video on Seven Traits of Great Real Estate Investors, but now let’s switch gears and get more specific to real estate.
4 - Don't Spend Money on Marketing
Don't spend money to find new deals to generate leads. In fact, build your whole business on the free model: referrals, networking, wholesalers, and agents. Find all your deals for free. That's a fantastic way to fail. I have a video on Why Profit is a Good Thing and why that matters to you. I think it's one of the most important videos anyone in business should ever watch. By all means, go the free model, it’s a great way to fail.
5 - Don't Follow Up
When you talk to that individual for the first time, if you don't get it immediately under contract, then just like Kevin O'Leary with Shark Tank, they are dead to you. Don't follow up. Don't call, text, reach out, or find out if things changed. Which by the way, I have a video on a Magic Bullet for More Deals and it's literally just about following up. It's cheap and it works incredibly well, but we're trying to fail here. So don't follow up.
6 - Do Deals You Don't Understand
Dive right into a major rehab that requires different contractors, permits, and because it's an older home, a lot of retrofitting. That's a great way to fail. In fact, I have a book, Real Estate Investing Gone Bad, with 21 stories of what not to do, and the foundation of almost every single one was doing deals that the person did not understand. This is a phenomenal way to fail. Take on a deal you don't understand at all and that will put you right into the lion's den to get chewed up.
7 - Do Everything Yourself
If you want something done right, you must do it yourself. So that means if something needs to be fixed up at a house, don't hire a contractor. No, you have YouTube. You can watch a video on how to replace the countertops, how to paint, and how to install vinyl plank. What if you need help with legal issues or accounting? You have Google these days, who needs to hire a professional? You don't need a mentor; you can just google it. Do everything yourself, including administrative tasks. Don't hire an assistant. That's a fantastic route to failure in real estate. Especially considering real estate is a team sport. If you can see the me in the word team, you're on a great path to failure.
8 - Time the Market
With this route to real estate failure, you sit on the sidelines when everybody else is exuberant because you know that one day you'll be laughing when they're losing. You're going to lay low and wait to buy at the perfect time and then you're going to sell at the perfect time. You’re one of those types that in 2018-2019 saw the correction coming, so you pulled out. You sold your assets, sat on that cash, and watched the pandemic roll out knowing that this was perfect timing.
Then the real estate prices went up by an average of 50% in less than two years. Now you know you're on the right track because it's going to explode so you will continue to time the market. You're going to sell high and then you're going to buy higher. And you're not going to know if you bought or sold at the right time because you're timing the market, which is impossible to do. And that brings up my video, The Best Way to Time the Market, which is, spoiler alert, don't. What I love most about number eight is it’s like in baseball when you go up to the plate and you strike out because you didn't swing. It's a great way to fail.
9 - Expect Instant Results
Real estate takes awhile to not only close, but to build a pipeline, do a lot of deals, make a lot of money and achieve great results. Which means setting expectations of instant results is a great way to fail. You set these high marks, you have these big goals to accomplish in the next two months and you can’t make them, so you feel like a failure and quit. An easy way to fail is to set unattainable, high expectations for instant results.
10 - Quit
The final route to real estate failure is to quit. That's a guaranteed way to fail.