03/21/2014 10:05 am ET Updated May 21, 2014

When Real Estate Investing Really Sucks

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.

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