All you need is a reputation as a real estate investment instructor or trainer, and you'll begin to get emails and Tweets from people who have complaints. I'm talking about general complaints about real estate investment. Some have tried and failed, while others haven't even tried because they've been exposed to negative results by one of their friends or just on the Web. Let me tell you when real estate investing truly sucks:
You try bird-dogging and can't even get an investor to talk to you.
I hear this one a lot. It sounds so easy when you read the "guru" articles about making a few hundred dollars every time you bring them an address. Now, just how valuable is an address to an experienced real estate investor who has all kinds of people working with him/her in the real estate business, mortgage companies and title companies? It's not worth a dime in most cases.
The average person hoping to cash in from driving around looking for a house with high grass and newspapers piling up is in for a rude surprise; nobody needs that address. If it's of value, someone is already onto it, either through online resources, courthouse visits to find notices of default, or just a referral from someone in an investor's network. You're late to the party.
Does this mean that the entire bird dog concept is a scam? Not really, but it requires more than a little gas and a notebook. There are people out there locating deals for active investors, and they are getting paid to do so. However, it's going to suck for you if you don't learn what they want, how to locate it before the competition, and how to match deals with buyers.
Wholesaling real estate doesn't work because there aren't enough cash buyers.
It's a lot like door-to-door selling, as you'll get a lot of doors slammed in your face if you just go out and hang a shingle, place an ad, or put up a sign on a street corner. "I buy houses" on a sign doesn't do a thing for you, and you'll be out letting the world know that real estate wholesaling sucks because you spent money advertising and didn't find a seller. Or, you'll be upset because you had a motivated seller at the right price and the buyers you contacted slammed that door.
Not only are there active and eager cash buyers out there, there are many others who would beinterested in buying homes as rental investments if they had more information. This is a lot like the bird dog thing; if you go at it without knowing what you're doing, you're going to fail, and you're going to Tweet about real estate wholesaling being a big scam. In the current market, properly applied wholesaling concepts are perhaps the most effective strategies out there. Don't properly apply the concepts, and it's going to suck.
Foreclosure homes aren't good buys unless you're a contractor.
I really like this one, because it's true in a way ... at least for someone who wants everything handed to them ready for profit. That's not going to happen. You can buy, fix, and flip foreclosure houses at a nice profit, even if you can't manage to drive a nail with a really big hammer. You can't do it if you pay too much for the house and use retail contractor bids for the work. No investor is going to pay you more than the home is worth, no matter how pretty you make it.
It's easy to find "fix-and-flip sucks" comments because too many wannabe investors are not ready to do their due diligence and beat up the banks with low bids until they buy right. There aren't any "Blue Light Special" signs to draw your attention and they aren't going to roll over just because you want a better deal. It's really simple to get this right, if you work from the tail end. Knowing what a rental property investor will pay for the house in rent-ready condition, you have to work backward through the cost to rehab, and then you have to get the price you need to make it work.
Real estate investing does suck for the wannabes who want a get-rich-quick plan and search out advisors or gurus who promise just that. It's not rocket science, but there are some basic rules and it is work to build a profitable real estate investment business. Learn, apply, and you'll succeed.
Building permits/total housing units: 0.15% Decline in building permits 2005-2011: -60.29% (11th smallest) Building permits 2011 YTD: 8,136 Total housing units: 5,567,315 At the beginning of 2011, a number of new, restrictive building codes went into effect in Pennsylvania. This caused a rush among builders to secure permits, with housing permits increasing a massive 117.8% between November and December 2010, according to the Philadelphia Federal Reserve. The state's housing market has not been doing well since. Permits issued from January to June 2011 fell 16% compared to the same six-month period one year earlier. The national average for permits issued in the first six months of 2011 compared to the first six months of 2011 is a decrease of 6%. Read more at 24/7 Wall St.
Building permits/total housing units: 0.14% Decline in building permits 2005-2011: Building permits 2011 YTD: -77.09% (11th largest) Total housing units: 721,830 Maine has seen one of the largest decreases in building permits in the past six years. This is unsurprising as home sales in general declined substantially. Home sales for June 2011 decreased 21.39% from June 2010, according to the Maine Association of Realtors. The state's median sales price also decreased 1.37% over this same period. According to numbers from the Census Bureau, Maine has the highest vacancy rate in the country, reaching 22.8% in 2010. However, this number also includes empty vacation houses. Read more at 24/7 Wall St.
Building permits/total housing units: 0.14% Decline in building permits 2005-2011: -61.85% (12th smallest) Building permits 2011 YTD: 11,033 Total housing units: 8,108,103 New York State's housing market is among the largest in the country. As a result, the number of permits is minuscule when compared to the state's total housing units. Although new home sales decreased in the first half of 2011 from 2010, the number of permits actually increased slightly during that period, from 10,189 in 2010. This is significantly lower than 2005's 28,921 permits. Read more at 24/7 Wall St.
Building permits/total housing units: 0.12% Decline in building permits 2005-2011: 69.55% (24th smallest) Building permits 2011 YTD: 3,402 Total housing units: 2,808,254 Despite having a healthy economy compared to much of the country, Massachusetts' housing market is beginning to face serious troubles. In June 2011, sales of single-family homes in the state decreased 23.5% from the year before, reaching the lowest level since 1991, according to the Warren Group, a New England real estate research firm. With so few home sales, it follows that not many new homes are being built. Year-to-date, building permits for 2011 are about one quarter of what they were in 2005. Read more at 24/7 Wall St.
Building permits/total housing units: 0.12% Decline in building permits 2005-2011: -76.61% (12th largest) Building permits 2011 YTD: 6,184 Total housing units: 5,127,508 Ohio has suffered, and continues to suffer, greatly from the housing crisis. Over 8,000 homes were foreclosed in July 2011, the ninth-largest amount in the country, according to real estate company RealtyTrac. With such a high foreclosure rate, currently at one in every 608 housing units, housing is already too inexpensive for people to want to build. Ohio has therefore had one of the greatest decreases in building permits in the country over the past six years. Median existing home sales are also down in many areas of the state, according to data from the National Association of Realtors. In Toledo, prices are down 17% from one year ago, the third largest rate in the country. Read more at 24/7 Wall St.
Building permits/total housing units: 0.09% Decline in building permits 2005-2011: -74.06% (14th largest) Building permits 2011 YTD: 1,403 Total housing units: 1,487,891 Connecticut has had one of the greatest declines in the number of new building permits in the country. This trend saw a small turnaround in June -- the first monthly year-over-year gain in 2011 in new construction, according to the Connecticut Department of Economic and Community Development. However, the Hartford Courant reports that for "the first six months of the year, residential construction was down 30 percent compared with the same period in 2010." June was also the first increase in home construction in five years. Read more at 24/7 Wall St.
Building permits/total housing units: 0.09 Decline in building permits 2005-2011: -82.19% (7th largest) Building permits 2011 YTD: 4,250 Total housing units: 4,532,233 Michigan is one of the states that has suffered the most from the recession. The state's unemployment rate peaked around 15% in 2010. It is now at 10.5%, which is still significantly higher than the national average of 9.2%. The state has a vacancy rate of just under 15%, which is one of the highest in the country. New building permits have also decreased by over 80% since 2005, also one of the highest rates in the country. The state may now be more focused on tearing down old buildings than building new ones. Read more at 24/7 Wall St.
Building permits/total housing units: 0.09% Decline in building permits 2005-2011: -84.18% (3rd largest) Building permits 2011 YTD: 4,897 Total housing units: 5,296,715 Illinois has seen an almost 85% decrease in new housing permits since 2005. This is the third largest drop in the country. There are a number of initiatives being made across the state to improve the housing markets. In Chicago, for instance, Mayor Emanuel has made a number of changes to increase the speed with which building permits are issued. Additionally, a "Micro-Market Recovery Program" has been introduced to slow the city's foreclosure rate. Read more at 24/7 Wall St.
Building permits/total housing units: 0.09% Decline in building permits 2005-2011: -72.71% (17th largest) Building permits 2011 YTD: 774 Total housing units: 881,917 West Virginia's decline in building permits has slowed to almost a crawl. In the first six months of 2005 the state issued almost 3,000 permits. For the first half of 2011, that amount decreased to 774. If every permit were to result in a new housing structure, those homes would represent less than 0.1% of the total housing units in the state. Despite all this, construction is one area that is benefiting the state. According to the organization WorkForce West Virginia, 700 construction jobs were added in-state this past July -- the largest amount of jobs added in the private sector. Read more at 24/7 Wall St.
Building permits/total housing units: 0.07% Decline in building permits 2005-2011: -70.81% (22nd largest) Building permits 2011 YTD: 312 Total housing units: 463,388 Foreclosure filings increased 4% in Rhode Island from the first six months of 2010 to the first six months of 2011, according to RealtyTrac. Foreclosures dropped by 29% for that same period on the national level. Rhode Island home sales decreased 20% from one year ago in the second-quarter, according to the Rhode Island Association of Realtors. Additionally, median home prices have dropped 2%. These numbers indicate that Rhode Island's housing market is not recovering at the same pace as the majority of the country. For this first six months of this year, the state has issued a mere 312 building permits, the smallest number in the country. Read more at 24/7 Wall St.
Follow Dean Graziosi on Twitter: www.twitter.com/deangraziosi