Survey Says...
This is kind of personal question, that comes from my fear and doubts.
It occurred to me the other day that REI investors may not all be making 100K or more per year and that like every other profession, there are investors who fall into every income range (irregardless of experience).
In other words, there may be investors out there who have been doing this for 5+ years and still only eek out 50K a year.
Having said that, does anyone know any statistics/surveys done on this topic? I.e., information about what the average RE investor makes in a given year? What percentage of investors make 50K+, 100K+ etc? After x years, the average investor make y.
I guess I'm starting to get past some of the hype and looking for some factual data to tell me I'm on the right path and that I'm not leaving a very well paying IT career to eke out a living as an REI only so I can have a retirement fund. This is not a question of how hard am I willing to work for it, but a question of how realistic are my goals based on experiences that don't come just from infomercials 
Thanks for all who are willing to share.
Robert
I honestly doubt there are any statistics on this. REI is such a broad topic. You have developers, landlords, flippers, etc... With all these different types of investors, the question would be which do you want to do? Even knowing for instance, you want to be a lease option guy....I don't think you'll find data on that kind of salary. Even if they did setup some survey like that, the results would really be meaningless.
Think about factual data on performers, athletes, inventors, entrepreneurs, etc. Maybe the data is out there, but does it really matter to the individual??
However, I truly believe that if you commited to becoming a REI would you be successful. Any successful REI please chime in and tell us if that is true or not. You're never going to have factual proof that you will make X amount of dollars if you do this. It's not like working in a salaried field with standard pay scales...you get guaranteed income, but there is a limit. If it's security you need, then I don't think the REI game is for you. But if you are willing to tolerate risk, go for it.
Good luck from a former IT worker.
I'm not a serious full time RE investor by any stretch of the imagination, but I'd say your question is the easiest one to answer I've seen.
I would venture that the "average" investor makes about $10 a year for one clear and obvious reason. The majority of people who buy all the courses, and print-up fancy business cards do nothing, or get scared off in the first month they actually try.
The average network marketer makes negative cash flow... I know people making millions... and I know several very well making multiple six fig. in their first year.
The average RE agent can't support themselves on their income... I know one that retired at 36, and others that can't handle the business they have.
Why? Most people in those fields do not have the discipline to focus without being told what to do every day. Those who find that internal drive to push forward, learn and succeed do. Those who don't teach gym and attend seminars (along with many of those who do.)
While the 80/20 rule applies to almost every field, I'd guess in RE investing, it's more like 95/5... A lot of others are running in place or "dignifiably unemployed."
That being said, REI is the most well-beaten path to wealth the world has ever known.
Getting an "average" figure for what an investor makes will undoubtedly be the most worthless piece of information you could receive... and one of the worst indicators of your future success.
I'll let the experts give you real advice for a roadmap, but I'd guess that the consensus would be that you don't need to leave your IT career, so why would you?
Jus my $.02
thestudentisready,
Very well said; I don't decide anything based on stats. I am a small business owner, and for me it is not a matter of doing this or that, but doing this AND that.[ Edited by ojedra on Date 05/21/2004 ]
Quote:
On 2004-05-21 16:49, thestudentisready wrote:
The average RE agent can't support themselves on their income.
This is my point exactly.
I have no doubt that I can make money at REI and that I can build wealth over the long haul. But my goal os to let RE be my sole basis of income within 2-5 years as I 'm getting to the magic retirement age in IT (40 something). I'm not afraid of commitment, making decissions or the self discipline. I've started several small and financiallly succssful sole proprietorships, but I'd be irresponsible to not evaluate what percentage of people who try this actually succeed.
Thanks all.
Robert
[addsig]
Agreed.
Greetings Robertt,
I couldn’t agree more with what snek11 and thestudentisready have already said. But I think there’s an even bigger question. What’s an REI? Some people do real estate strictly as an investment. Others as a profession. And there’s HUGE difference.
If someone’s doing it as an investment, they’ll know when and/or whether to quit their day job – because they’ve learned how to make money at it. If they’ve never even invested in RE, why would they stake their livelihood on it? Not that it can’t be done, but it’s a hard why to find out.
I’ve bought and sold properties over years, and have made a good deal of money doing so. But if you look at my profile, I list myself as a "Newbie" because it’s something I dabble with – but it’s not my profession. And in my case, I’d want my "investment" returns to far exceed my regular income before I’d go fulltime REI.
On the other hand, a friend of mine (with very little REI experience) decided to go fulltime about a year ago. He now owns about a dozen properties, has in excess of $7,500 a month positive cash flow, and close to a million dollars in equity. Not bad for his first year.
I believe it’s really just like an entrepreneurial endeavor. It has a lot to do with knowledge, ability, focus, persistence, risk tolerance, and all the other ingredients of a successful person.
Thank everybody.
Robert
[addsig]
I agree, too many variables for numbers to have any real meaning.
This board reminds me so much of 2000 on the stock message boards, everyone was going to quit thier jobs to be daytraders and get rich. A few got rich, fewer realized they weren't good investors, just investing in a good market and quit in time to keep the riches. More lost what they had made, those who showed up late to the game lost thier shirts. In my group of friends I saw the whole range, one who stubbornly refused to face reality and lost 5 years worth of profits, the most arrogant "I'm a great trader" one of us was the first to throw his arms up in defeat (a wise move) and retired to hawaii, the self professed "dumby" of the group has kept trading and making money to this day. Me? I lost about half my profits before I bailed, these days I stick to mutual funds. Another friend ended up about the same as me.
The point? Of the 5 of us, even though we all had some good years and made money, only 1 had what it took to really be a trader, and he was the guy always saying how he didn't know anything, the rest of us thought we were smart, but we were really just along for the ride like so many wanna bes were those days. Fortunately we got in at the start of the boom, those who joined late didn't have years of profits to cushion the fall.
I don't know what the REI market will do, wish I had that power, but it's easy to see that the low interest rates have contributed greatly to the increase in property prices. Home value is more of a $ per month value than it is a sales price value. Thus a home that sells for 100k costs 535ish a month at 5% interest. If the rates go to 8% that home will still be worth 535 a month or about 73k. Not a big deal if your locked in at 5%, you just can't sell without taking a loss, but so many people are being creative now with ARMs and interest only loans (kinda like all the margin accounts in the market) those people could really take a pounding if they aren't savy enough to use them properly. Then what happens when the market is flooded with repoed homes from belly up investors?
Anyway, I'm rambling, just be careful, don't quit your day job, and only invest what you can afford to lose. By the way, for what it's worth, which is very little, I make about 13K a year on REI.
Quote:
On 2004-05-21 19:39, mykle wrote:
what happens when the market is flooded with repoed homes from belly up investors?
Mykle,
Thanks for your honesty and transparency. I guess I'm counting on buying some of those homes. I don't have any plans of quitting my other business, but as I mentioned earlier I would like to be "retired" and making my income only from RE in 2-5 years. I'm starting out slow, and won't quit my other IT business until I have learned enough and making enough in RE to be safe. I'm just trying to know what are realistic goals. The only numbers you ever really hear are the infomercials and the used car salesman at the REI meetings, so you never really quite know what the truth is.
Thanks,
Robert
[addsig]
"I guess I'm counting on buying some of those homes."
Now that's a plan I can relate to! I think you will be ok.
What is your envisioned nitch in REI?
Mykle,
I'm looking to do flips/wholesaling to build up some cash and to buy rentals when the cash flow is positive. In California where I live, you either need to put down a lot of cash up front to make the cash flow work or buy rentals other places.
I had to turn down a great deal last night at our REI meeting just because the 800/mo rent couldn't support 165K price. And around here 165K is a steal.
My goal is to do a flip every 3-4 months. After 7 months of reading/as listening to tapes, I am slowly getting up enough nerve to try it. I've watch 3-4 properties go by that I could have made a bundle on had I been more aware of how I could have done the deals.
Thanks for the encouragement.
Robert
[addsig]