Crucial Mistake #3: Failure To Establish Clear Goals And Defining "Success" As Anything Other Than Making Big Profits...
There's only one reason for you to be a real estate investor: TO MAKE MONEY.
Seems obvious, doesn't it? But I've discovered that some investors don't have a clear profit motive for being in the business.
Just imagine this [very common] scenario:
An aspiring real estate investor named Joe sees an infomercial on late-night T.V. He becomes mesmerized by the amazing claims of massive wealth, and so he decides to order the course called "Make A Gazillion Dollars As A Landlord".
The material arrives and Joe rips open the box and sticks in the video tape. He consumes every word like a hungry lion chews on his prey. Joe really starts to get excited, and he sees the potential for creating huge long-term wealth. He believes that the ideas will work, and he wants to put them to work for him.
So he goes off and diligently attempts to find good investment property. And while he's doing this, he tells his friends and family all about what he's doing. He discovers that his friend at work, George, also is interested in real estate - only George focuses on "rehab" deals. Instead of doing rentals, George finds broken-down houses, completely renovates the property, and sells the property for a large profit - usually around $20,000 or so.
...and Joe begins to get a little jealous, because he can see that using his Landlording strategy, he'll have to wait a long time - maybe 10 to 20 years - before he'll really see any significant profit. But George is making big lumps of cash every few months. Joe wants some of that cash.
So, Joe goes to a seminar to learn about rehabbing. He gets excited about that, but then the process repeats. Joe hears about the next "latest-greatest" strategy, and he goes to yet another seminar and learns that one, too.
Is it wrong for Joe to go to the seminars and learn the strategies? Absolutely not. It would be stupid for Joe to try to invest without proper training. But...
...Joe has two problems here:
Problem #1 is that Joe didn't take the time to define why he wanted to invest in real estate. If he was investing for retirement, then his original Landlording strategy may have been appropriate. But if he wanted to make significant current income, then Landlording certainly isn't the way to do it. Joe wasn't clear about his goals and until he establishes some clear goals, he'll spin his wheels and waste ever more money on courses and seminars that will never do him any good.
Problem #2 - Because Joe hasn't yet experienced any real financial success in real estate despite spending a lot of money on courses, he starts to redefine his internal definition for "success". Instead of success being equated with financial results, Joe has slipped progressively into a state of mind in which he defines success as his ability to learn more strategies and be the most knowledgeable "investor" around - despite the fact that he's never done a deal.
You know what I'm talking about, don't you? Joe has become the type of person who acts as if he knows everything there is to know about real estate investing, but the fact is that all he has is "book knowledge" but no financial results to show for it.
Because Joe didn't have a clear picture in mind of what he wanted to accomplish, he has not made any profits. And because he hasn't made any profits, he's subconsciously chosen to redefine "success" as "the attainment of vast knowledge about real estate investing" rather than "the attainment of vast wealth from real estate investing".
Why does this happen? If Joe doesn't make any money, and his internal definition of success is to make money, then Joe would have to brand himself as a failure. And Joe isn't comfortable with that. So instead, Joe redefines success to match what he's doing: Joe now considers himself to be a success merely by knowing all of the strategies, rather than using them successfully.
So Crucial Mistake #3 Is: Failing To Establish Clear Goals And Defining "Success" As Anything Other Than Making Big Profits