These People Lose Money in Real Estate

Our apologies in advance ... there's a rant ahead.

There are some people who should not invest in real estate.

Not ever.

They will lose money, cause frustration for themselves and ultimately it will be a failure for them.

We've seen it over and over again.

And it's sad.

There's an investor we know who bought a property.

Did massive renovations to it and had it rented out before the renovations were complete.

She had drawings made of the finished product and showed it to prospective tenants.

She got top dollar for rent.

The house is a cash flow machine.

It has a lot of newly created equity in it.

She went down to the property during the renovations, dealt with contractors, city permits, delays and crazy situations.

At one point she was on her hands and knees on a dirt floor under the foundation of the house checking out something the contractors were working on to verify it was done properly.

She had NEVER done any of this before.

And she did this all while she was PREGNANT.

She knows how to make money.

Some people will read this and think that's crazy.

Those people should never invest in real estate.

Investing in real estate requires many, many things to be successful but there are two things that are always mandatory:

1. A willingness to get your hands dirty.

2. Good communication skills.

If you have the above two qualities then you're fit for investing in real estate.

We see a TON of investors who invest in property by reading the cash flow numbers off of a spreadsheet.

Then go off and buy a property.

And then try to manage that property from a distance (even if they live close by) by not dealing with things head on.

Here's what we mean...

Literally yesterday Nick and I were at a property that had a sewage backup.

Some people would wonder why we were there?

Why not just call a plumber to have it fixed and we could work on other "high value" activities.

We've learned ... LONG AGO ... that if you don't go by YOURSELF you will never know the actual extent of the problem.

Your tenants, meaning well, will describe it one way.

The plumber will describe the situation in a different way.

You'll be left trying to figure out what to do without first-hand knowledge of the situation.

You don't have an information advantage in this type of situation.

You've put yourself at a disadvantage because you have to make decisions without all the data.

This will lead to bad decisions, incomplete repairs or overspending on repairs that weren't necessary.

Some people literally laugh at us for still going out to check on properties.

Those are the same people who often lose money in real estate.

They've been sold on the idea from various real estate "gurus" that you can get good property managers and be done with the property.

Although a good property manager is worth their weight in gold ... they will never replace the advantage you will have by checking on things yourself.

The idea that you can remotely manage a property and really maximize it's value to you isn't something we have seen work out well.

There are exceptions to this ... but they are rare.

If you're not willing to deal with a problem that pops up the day before you go on vacation, the night of your son's important game, the day of your daughter's recital etc. then don't get into this business.

This business is tough and it needs your attention.

The next thing that comes up regularly is the lack of communication skills that result in chaos.

99% of any issues with properties can be handled with good communication.

We've seen new investors literally swear at members of our team because they lost a deal.

We've also seen investors yell at tenants over repair issues.


If you want to cause havoc in your life there's no better way than to yell at your tenants or the professionals you work with.

We've also seen people write nasty emails to contractors, tenants, mortgage brokers and realtors.

These people always get back exactly what they put in.

No one will bend over backwards for them.

No one will do a favour for them.

If a tenant can make their life miserable they will.

If a professional comes across a great deal they'll never call those people first.

And then these people wonder why the world works against them.

You don't have to Mr. or Ms. Friendly all the time.

You can be strict and firm.

But you do need complete, timely and fair communication with people.

We strongly believe you get back from life what you put into it.

If you're not willing to occasionally get your hands dirty...


If you're not willing to develop firm but cordial communication skills...'ll likely lose money in this business.

And you'll give it a bad name.

So stay away.

OK, now that's off our chest's we can go off and have a happy day.


Until next time ... Your Life! Your Terms!

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0 comments on “These People Lose Money in Real Estate”

  1. Good article. Nothing beats dealing directly with tenants and tradesmen yourself. This is a people business and if you don't like dealing with people and problems you shouldn't be in this business.

  2. This story is so true, I spent most of my life as a farmer and was quite successful because I was not scared to put in the long hours and the hard work it takes to generate success. I always say if it was easy every body would be doing it, then no money would be made. Tom and Nick you got it right again, rant on!!

  3. Old saying:

    You can always catch more flies with honey than with vinegar.

    It works in every situation.

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