The Real Estate Game is a Team Sport

By Joel Persinger
YourRealEstateDude.com

There is something about human nature which drives many of us to be independent. As a result, the spirit of the “do it yourselfer” is strong in each of us. I ought to know. I spent half of this past weekend working on our house and the other half working on our car. But, while this spirit of independence can be a good thing, it can also hold us back when we apply it to a process that is as complex as buying, selling or investing in real estate. Over the years I have seen many example of this, but one fellow whom I met recently brings the whole idea of independence gone wrong into sharp focus.

This fellow had decided to get into the real estate market when things were booming. So, he went to a seminar, learned enough to be dangerous and proceeded to purchase all or part of thirty homes over the following year. He rented out all thirty of the properties and both he and his wife thought they were on the road to riches. Along the way they told many of their friends about their new found success and enticed several of them to follow in their footsteps. They, in turn told others and so it went until some dozen or so families had joined in the game without any idea of how to play it. By the time I met this gentleman he had lost all thirty properties as well as his family home and the other dozen or so families who had followed his example had lost everything as well.

The list of mistakes he made was lengthy to be sure. Here is a short list: None of the properties had a positive cash flow, the tax dodge he tried to use didn’t work, the “trust” in which he placed the properties did not accomplish its intended goal, the properties were purchased at full market value, he used all of the equity from his personal residence to fund his enterprise, the loan structures he used were extremely risky, etc, etc. In short, his entire approach was a ticking time bomb waiting to go off. At no time did he consult an attorney, CPA, real estate broker or anyone else.

Real estate is no place for the “do it yourselfer.” My grandfather was one of the most successful people I have ever known and his favorite saying was, “You don’t have to be smart, just hang around smart people.” He surrounded himself with those whom he knew would look after his best interest and had the knowledge and expertise with which to do so. So, if you are going to play in real estate you will need a good lawyer, CPA and real estate broker at a minimum. You will also need a deep understanding and acceptance of the fact that the real estate game is a team sport.