Why Real Estate Investment Infomercials are NOT your Friend.
Ask any real estate professional and they will tell you that, at some point in the past decade, they have been approached by someone calling himself an investor and asked to submit a large quantity of offers to purchase property. If you’ve ever had insomnia you may have switched on the TV late at night and seen one of the many programs trying to convince that, in exchange for a few hundred dollars, you can quit your job and become a successful property investor. Maybe you’ve even met someone who told you she’s about to become a millionaire buying properties at tax sales. Certainly the commercials trot out dozens of people who swear they changed their lives in 10 easy lessons.
Do you actually know anyone who has done this? Purchased a “how-to” kit or attended one of those pricey weekend seminars and proceeded to make their fortune with “No Risk! No Credit! No Down Payment!!?” No? Us either. (although I’ll be there are some wealthy folks out there selling these programs…)
Can you invest with no credit? Sure, if you pay cash or find a creative financing source. Can you invest with no down payment? Again, sure. If you aren’t financing the property, there wouldn’t be a down payment. But what about the “no risk” part? Well, the truth is, there is no such thing as a no-risk investment. Investing is built on risk and successful investors learn how to avoid risk as much as possible and minimize the risk that is present.
On the opposite end of the spectrum, what about those investment programs that guarantee some level of return, or promise to finance your first deal? There are even programs that promise to locate your first investment property for you to “get you started,” maybe even fly you to see the property and put you through a high pressure pitch. The scary thing? Even intelligent, reasonable people sometimes get caught up in these scams, losing any savings or investment funds they have and getting themselves into credit-destroying debt.
So what are the warning signs to look out for? Any program that calls itself “risk free” or promises that you will make a lot of money quickly, with little effort, or with no investment. Any program that promises to reveal an exclusive or secret system is a scam. We promise. There are no investment secrets. Any real estate, finance, legal, or tax professional can tell you the ways to accomplish real estate investment so that you will maximize your returns and minimize your risk, and they will do so under a fully disclosed and legally regulated way.
We really hate to be party poopers but, in real estate investing, the only free lunch is likely to be the one your broker takes you on to celebrate closing a deal.
Next up, how to do your homework before investing in real estate.
NOTE: We pride ourselves on bringing you the most informative, up-to-date, and accurate information possible about the often-confusing world of real estate investing. Nothing we post however is intended to be taken as investment, real estate, or legal advice. You should always contact a licensed investment, real estate, or legal professional for information and advice about your own unique investment scenarios.
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