If It Sounds Too Good to Be True in Real Estate It Usually Is, But Not Always

There is exactly one cliche I believe without reservation.

If it sounds too good to be true it probably is.

I say probably because the absolute version of that statement has cost people real opportunities. Not every situation that looks too good is hiding something that will hurt you. Sometimes the catch is worth the gamble and the only way to know is to understand exactly what you are getting into before you decide whether to get into it.

Here is how I actually think about this.

The Timeshare Test

I use what I call the timeshare test when I am evaluating something that looks suspiciously attractive.

You have seen the offer. Spend a weekend at a resort and get a hundred dollar Amazon gift card. The only requirement is sitting through a four hour presentation.

Are they going to use every sales technique available to pressure you into buying a timeshare you do not want and probably cannot afford. Absolutely. That is the whole point of the weekend for them.

Is that okay if you genuinely just want the hundred dollar gift card and have the discipline to sit through four hours of sales pressure without buying anything you did not come to buy.

That depends entirely on whether you know what you are walking into.

The people who get hurt by that offer are the ones who did not fully account for what the four hours would actually involve and who underestimated their own susceptibility to sustained sales pressure in a controlled environment. The people who walk out with the gift card and nothing else are the ones who went in with complete clarity about what the deal was and what it was not.

That is the whole framework. Not is this too good to be true but do I fully understand what I am getting into including the parts they are not advertising and am I genuinely okay with all of it.

Off Market Deal Lists

Here is a specific application of that framework that comes up constantly in real estate investing.

Someone is selling access to a list of off market deals. Motivated sellers. Below market properties. Opportunities nobody else knows about.

The too good to be true alarm goes off immediately for most experienced investors. And for good reason. If these deals are genuinely below market and genuinely off market why is someone selling a list of them rather than buying them.

But here is the part most people stop thinking about before they get to the useful conclusion.

Hundreds of people are getting that same list. Possibly more. The deals are not a secret. They are a commodity being distributed to everyone who paid for access. The list itself is not the edge.

Knowing that and being able to act on it faster than everyone else who got the same list might be the edge. If the list is accurate and you have the competence to evaluate a deal quickly and the relationships to move on it immediately you might beat the crowd on the occasional deal that is actually worth pursuing.

Most people on the list cannot move fast enough. Most people on the list cannot evaluate accurately enough. Most people on the list will hesitate on the good ones and move on the bad ones because the bad ones are easier to convince yourself about.

If you are not most people on the list the list might be worth something. Know what you are actually buying before you decide.

What Has Actually Been True in My Experience

My career in this business has been a continuous series of roadblocks and issues.

Not a few. Not occasionally. Continuously. Every deal has had something. Every project has produced surprises. Every partnership has required navigation. Every contractor has had a moment that required direct intervention.

The investors who told me early in my career that the deals just flowed once you had enough experience were either not being honest or were describing an experience I have never had in twenty five years of doing this.

What actually happened over twenty five years is that I got better at navigating the roadblocks. Faster at diagnosing problems. More confident that the issues were solvable because I had solved enough of them before to know that most of them are. The roadblocks did not go away. My relationship with them changed.

That stubbornness, the bone deep conviction that I can figure it out even when figuring it out is not yet clear, is the thing that has carried me through more situations than any strategy or system or course ever has.

Is that too good to be true. It sounds like it from the outside. From the inside it has just been the reality of showing up every day and refusing to let the current problem be the last word.

The Part People Leave Out

People in real estate investing tend to share the outcomes and leave out the process.

The deal that made three hundred thousand dollars gets posted. The eight months of complications, the contractor who had to be replaced mid project, the permit that took six weeks longer than projected, the buyer who backed out two days before closing and the second buyer who came in ten days later at a slightly lower price, none of that makes the post.

The result looks like it came easily. It did not. It never does. And the people who enter this business expecting the results they see advertised without the process that produces them are the ones most likely to conclude that the whole thing was too good to be true when it turns out to be hard.

It is hard. The results are real. Both of those things are true simultaneously and the second one does not cancel out the first.

The Summary

If it sounds too good to be true it probably is. That cliche exists for good reason and ignoring it is expensive.

But probably is not always. Sometimes the catch is worth the gamble. Sometimes the list that everyone else got can still be useful if you are faster and more competent than everyone else who got it. Sometimes the deal that looks suspicious is suspicious for reasons that do not actually affect you.

The discipline is not blanket skepticism. It is complete clarity about what you are actually getting into including all the parts that are not being advertised before you decide whether to get into it.

Know what the catch is. Decide if the catch is acceptable. Then move or do not move based on that honest assessment.

Nothing worth having in this business comes easy. That part of the cliche is completely true every single time.

Have a deal that looks too good or a situation that feels off and you want a second opinion before you commit?
Schedule a call at calendly.com/jeph-reit or reach me at Jeph@REIGuideService.com.