Chandler Properties Blog

I was reading an article the other night on www.biggerpockets.com that was a great satire of the “Get Rich Real Estate Programs.”  It characterizes how the average real estate investor’s career turns out when they buy a real estate program from a TV show.  Click link here to read the article “Lucky” The Wanna-Be Tycoon.

Typical Real Estate Program Claim
Late Night real estate infomercials glamorize real estate investing by showing interviews of average people sitting in front of mansions talking about how they got rich with “no money down” real estate techniques.  They will also talk about how they closed a deal and immediately made (cashed out) $25,000 using the techniques learned on the tapes.  This is a common claim that I see on lots of these programs.  I don’t consider these claims outright fraud, because they are not totally lying.  However, they are very misleading to the average person who does not have a financial background.  

Let’s examine the above claim about making $25,000 at closing.  The individual buying this property is not earning income of $25,000 at closing.  They are simply taking a loan out, using the property they purchased as collateral.  The bank is lending them money and will take the property if that money is not paid back to the bank.  This is not earning income.  It is as silly as getting a new credit card and going to the nearest ATM and withdrawing $5,000, then saying, “I just made (cashed out) $5,000 with my new Visa.”  It is true you have $5,000 in cash, but their is also a $5,000 debt owed on that cash.

Typical Successful Real Estate Entrepreneur
The typical real estate investor is not the overnight success described on these TV shows.  Successful real estate investors are generally individuals with a passion for the process of real estate and see money as means to do deals.  They enjoy looking at hundreds of properties in search of great deals.  Although the money earned from successful deals is great, it is not what drives the investor.  It’s similar to how a poker player views poker chips.  They don’t play poker because they want chips; they play poker because they love the game.  There is a thrill from outsmarting their competitors and being considered the best at their craft. The chips are simply a means for them to play the game and measure how good they are at it. 

For those considering investing in real estate, I recommend avoiding these get rich quick programs and focusing on a long-term wealth building strategy.  A great book that outlines this type of strategy is Gary Keller’s, “The Millionaire Real Estate Investor.”  If you are considering getting involved in real estate or are just looking for a down-to-earth book to read, check this book out.