Real Estate Investing for Beginners: Expectation vs Reality

Let’s debunk some common myths about real estate investing, and share what it’s ACTUALLY like, no sugar coating – enjoy! Add me on Snapchat / Instagram: GPStephan

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First expectation: Real estate investing is passive.
The reality is that creating the type of rental property to the point where it’s passive income takes a LOT of work. But the work is, at times, still ongoing. Eventually you’ll have a vacancy. Eventually you’ll need to fix things up again. Nothing will last forever. Sure, you can get a property manager who’ll handle much of this for you – but you will need to do SOME work yourself, even if it’s as small as choosing between finishes or approving bids on work. It won’t be an insane amount of work, but it will be something. So yes, real estate CAN be fairly passive…but it’s not passive if you don’t put in the work UPFRONT.

Second Expectation: In order to invest in real estate, you need to do the repairs yourself or be a good handyman.
The reality is that I can’t do anything besides change a lightbulb. While I do know some landlords who do the work themselves to save the money, this is absolutely not a requirement – and depending on how much your time is worth, it’s often cheaper just to pay someone else to do it the right way. It’s also worth noting that since all these repairs are a write off, you can write off the costs against your income…but, if you do the work YOURSELF, you cannot deduct the cost of YOUR OWN LABOR.

Third Expectation: It takes a lot of money to start.
The reality is that it often takes 10%-25% down to begin investing in real estate. This COULD be a lot depending on your definition of “ a lot,” and also on your area. Buying a property in Los Angeles would be significantly more expensive than in Kentucky, for instance. Where one person might be able to buy a property for $20,000 down, someone else might need $200,000.

Fourth Expectation is that it’s often like the TV shows.
The Reality is that it’s NOTHING like what they portray on TV. Oftentimes those TV shows will be loosely scripted around creating drama and creating a show that’s actually interesting enough to watch all the way through. Every episode needs a goal, a problem that arises, a solution to that problem, and then a resolution at the end. The real life problems that come up just aren’t that exciting or interesting. It’s often boring and mundane.

The fifth expectation is that you’ll make a lot of money investing in real estate.
The reality is that oftentimes one property won’t make you rich. Most mom and pop landlords won’t make a lot early on, but as they scale up, they can earn a significant amount of money from a lot of smaller sources. This is how many landlords start making money, enough to quit their jobs and invest in real estate full time. It’s growing your portfolio over one or two DECADES and accumulating those properties that might make you only $900 a month….but buy one of those every 18 months, and in 15 years you’re making $9000 per MONTH. That’s how most landlords make their money, and make a LOT of it. But the beginning will be slow and frustrating until you begin adding more and more to your portfolio.

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Suggested reading:
The Millionaire Real Estate Agent:
Your money or your life:
The Millionaire Real Estate Investor:
How to Win Friends and Influence People:
Think and grow rich:
Awaken the giant within:
The Book on Rental Property Investing:

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39 thoughts on “Real Estate Investing for Beginners: Expectation vs Reality”

  1. Hell man if I can get a rental property that makes me 900 extra dollars a month added on to what I already make with my regular job, ya I'd be balling lol. But I do get the point though

  2. Wait did you say your first rental brought in 1200 a month but after expenses it was 900 something? So your expenses were only 300. Wtf were you renting? A cardboard box?

  3. This man is so helpful damn. I’m 16 and I want to just be friends with you, you’re oozing knowledge without even trying. I’m taking this intern/mentor class next year, and one of the requirements is to find a mentor to work alongside. Do you guys know any way to get in contact with a real estate agent who is open to having a high school apprentice? Calling and emailing usually leaves me bereft of any response, so I’m thinking i should do what graham did and show up to open houses just to meet people. Any advice?

  4. I am a veteran and I hope to use my VA loan to do this like you. I have been watching a lot of your videos lately and learning a lot. Keep it up.

  5. Graham,
    I usually fix everything myself but you still have a great point in having a reliable contractor in the local area for the tenants to be on call with. It makes perfect sense. Response is paramount.

  6. Hey newbie here I love your contractor strategy. Tips on how to establish a relationship with a contractor that you trust this much. I have never really needed one and would love to get that kind of team started. How did you get yours and to the point you trust them this much? Thanks and as usual great video.

  7. Great video! This information about real estate investing is fantastic and will help viewers to maintain their real estate. CastlePoint REI, provides real estate investment services. We value relationships above all else. We respect the magnitude of responsibility that is entrusted to us by our Investment Partners.

  8. Why not rent homes, and also flip and resell homes? So instead of making just a few thousand a month on passive income, you can also maybe sell 1 house every 4 months for another $20k-$40k profit?

  9. Your first property was grossing 1250/month. After expenses it was more like 900/month. Are you including PITI in your expenses? Are you just talking about operating expenses?

  10. You can deduct your own work as a handyman. Just register an LLC "handyman guy LLC" and bill it to yourself. Duhhh. Handyman LLC will spend money on power tools etc so you can find a way to lower the tax bill for that LLC. Come on man, you know thst

  11. If I'm still paying a personal mortgage, Am I able to still get a bank loan to invest in real state? I'm completely new at this, I'm in the process of educating myself about it first.

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