Are You Too Fast for Your Own Good?

By Robert McLeod

Success is great. I’ve certainly had my share of it, and I would highly recommend it to anyone who asked. But for someone who’s new to the world of real estate investing, it can also be one of the most dangerous things in the world. Why? Because it can give you a feeling of confidence and security that emboldens you to do things you wouldn’t do and take risks you shouldn’t take. When you apply for your first Real Estate Job, you’re cautious and careful with your money but after a while and you learn more about the industry and feel like you can make riskier investments. After all, if you’re cash flowing $200 a month on one property, why shouldn’t you buy ten of them? Or, heck, why not the whole building? The answer is, because you’re not ready for that yet. Unfortunately, many fledgling real estate investors never hear that message – or, at least, don t listen to it.

How do I know? I say it to people all the time. I ve seen people who haven t even closed on their first real estate deal already trying to line up their second and third. I’ve seen people who go from owning single units in Edmonton to borrowing as much money as they can in order to try to develop an entire piece of property in Newfoundland. And, I’ve seen people who were eking out positive cash flow on a unit suddenly putting a second mortgage on it in order to buy the entire building. I see it all the time and it almost always ends the same way – badly. Trust me on this, folks; when it comes to investing in real estate, slow and steady really does win the race. Real estate should be boring. If it s exciting, there s a problem.

Now, I’m not suggesting that people avoid taking risks. Investing in anything beyond GICs is an inherently risky activity, and those who are clinically risk-averse shouldn’t even be considering buying an investment property. But not all real estate is created equal, and neither are the risks associated with it. Knowing how to buy and rent single units doesn’t qualify an investor to suddenly start chasing distressed assets in foreclosure and yet, this happens all the time.

From where I sit, that’s not investing. That’s taking your money to the casino and betting it all on black. And, in the end, the house always wins. Had you had the option to learn how to play on the casino platforms properly, you might have had the chance of winning at least something. It’s still not too late to bet and learn. Same as how you would invest in real estate, this could be a way to earn some income from your investments. The only difference being, the risks and benefits associated with one might be long-term while the other could be short-term. If you think this is a good route to make some money online, you could check for the Top rated Online Casinos Canada or elsewhere and learn the tricks and tropes to earning some good money.

There can be multiple ways of making extra income like real estate investments, stocks, crypto, betting, etc. Choosing a method to make money can depend on your interest, confidence, and where you plan to put your money. You can try your hand in Zoome casino if you have confidence in your winning skills; likewise, when you learn the ropes of real estate and invest in the right place and at the right time, hopefully, the technicalities of investing should come as easy for you.

Think of it this way: Imagine you opened an investment account with a brokerage and started investing in bank and pipeline stocks; you know the predictable, steady-Eddie companies that generate a nice return without too much risk. A few weeks later, a friend pitches you on a company that s managed by a person you don t know that s making a product that you don t understand in a place you re not familiar with, and he wants you to borrow $200,000 and pile it all into its shares, which he thinks will return 30 percent per year. You d tell him that he was out of his mind. But when it comes to real estate, people often do the exact same thing every day.

Yes, we know that real estate is a hard asset, that people need a place to live and that they’re not making any more land. That being said, most investors aren’t buying with CMHC financing at three percent and planning to live in it for 20 years, and often times they’re buying ten of them and hoping everything will go right. And when it doesn’t, well, they get wiped out. Don t be that kind of real estate investor. Instead, learn to be more patient – be the tortoise, not the hare. Over the years I’ve found that the biggest risk to a real estate investor’s returns isn’t a lack of money or knowledge or even opportunities but, instead, a lack of patience. Likewise, a single-minded focus on growth, and the use of the leverage that funds it, has vaporized more money over the last two decades than practically every other bad decision put together.

I’ve always found it strange that we instinctively understand and accept the fact that dentists and doctors have to spend years in school before they starting yanking teeth and cutting flesh and that athletes have to put their time in the minor leagues before they start swinging for the fences in the majors. But when it comes to investing in real estate, we think people can go from amateurs to professionals in the span of a few months. That just isn’t realistic. You should think of becoming a truly successful real estate investor, the kind that can use the equity and passive income it generates to fund the quality of life you want and deserve and as an education, one that you can pay for with one of two things: time or money. I’ll let you guess which one costs more in the end.

Oh, believe me, I get it. You’re an entrepreneur, and you’re not one for biding your time. You see and hear about other people going from zero to 60 (units) in what seems like a few seconds flat. But here s the thing: it s not about how long it takes you to reach your goal, but whether you actually reach it in the first place. The faster you go, the more likely you are to crash and burn. You rarely read about successful people that woke up one day, decided to do something, never made a mistake, and lived happily ever after. That s a fairy tale, and we know fairy tales don t happen. I’ve met very, very few successful real estate investors that didn’t start small, get a little bigger, make a few mistakes, learn from them and then – and only then – take that big leap.

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Robert F. McLeod, CSI, CCC is the founder and CEO of McLeod Project Marketing, a boutique developer consultancy based in Edmonton, Alberta. He is also the Associate Broker for Re/max Real Estate Edmonton Ltd. Robert is a three time REIN Player of the Year winner and has been awarded the REIN Leslie Cluff Memorial Award. In 2011, Robert was an Edmonton Top 40 Under 40 with Avenue Magazine. See more at www.mcleodprojectmarketing.com.