There's a funny comedy sketch by Jerry Seinfeld about how feeling embarrassed he bought ginsu knives after watching an infomercial. He jokes that we really don't need a knife that can cut through a shoe. Let's face it folks. Although enticing, infomercial products are a waste of money. And also a waste of time for that matter.
We've all seen 'em too. The iconic infomercial products like the ginsu knives, P90X, Snuggie, Chia Pet, Shake Weight, etc.
And there's also the infomercials telling you that YOU can be rich by just following a few simple steps to buy real estate with no money down. Think of it – none of your money is involved and soon enough you'll be retired, sitting on the beach with an endless supply of piña coladas being served to you day and night. It's that simple!!
Wait – what?! Who buys this crap anyway??
Who Buys Infomercial Products?
We all do. Marketing and ad agencies are really good at making infomercials that just suck us in. But, hopefully you can learn to outsmart them. Just say no to infomercial products and save your money for better things.
I bought an infomercial product once in my college years. Since I've been a kid, I've had my mind on money and such a strong desire to be rich that I was a sucker for one of these scams. Back in those days, I used to stay up until 3 or 4 in the morning and then sleep late into the day. And late night is when those infomercials have their target audience.
I bought the kit from a “real estate guru” on TV and was excited for my quick road to wealth. It came with a bunch of CDs and forms and only cost several hundred dollars. I thought, Hey, those dollars will be nothing compared to how much money I can make!!
The box showed up a couple weeks later and I tore into it ready to go. I listened to each CD and went through every form to make sure I was ready to go… and then I wasn't.
Sure, there was a lot of great information in the package, but when I was done with everything, I still felt like I had no idea what I was doing. And a lot of it had very specific circumstances that needed to be in place for this to work.
So, the kit sat there doing nothing but gathering dust and so did my pursuit to financial freedom. And that's where it ended.
Infomercial Products Are A Bunch Of Crap
Yup, I didn't end up making a dime from that kit. I'm here to tell you that infomercial products are just plain crap. Yes, I'm sorry to burst your bubble. But there's not a cookie-cutter way to get rich by buying into these schemes.
There are too many variables involved for this to work as easily as claimed. For instance, the cost of real estate in your area can be completely different than that in my area. This means your approach to deals will likely have to differ somewhat from my approach.
The only thing that keeps me from crying myself to sleep about throwing away my hard-earned money is that I can't be the only one who's fallen for these. I'm sure plenty of other people are buying these get-rich-quick kits. They wouldn't be on TV all the time if they didn't sell.
But before you throw out the “I knew real estate is a horrible investment,” know that's not what I'm saying. Real estate is an excellent asset class and can provide great passive income in the area of rental properties. Just know that you're not going to get instantly rich from it. And that you do need to put some time and effort into owning physical real estate.
If you want to invest in real estate without the hassle, however, consider real estate crowdfunding. It's a great way to gain exposure for a fraction of the cost of a typical down payment.
Your Time Is More Important Than Infomercial Products
And when I say you need time for real estate, I'm not talking about fixing things. Yes, you're welcome to take care of leaky toilets and clogged drains if you're a hands-on guy, but know that you don't have to.
I use a property management company for my rental properties who takes all the phone calls and brings in all the contractors as needed. They work 24 hours a day so I don't have to. I just collect the checks.
The time and effort I'm referring to is learning your market and figuring out costs ahead of time so the property you do buy will pay you every month after all expenses (including property management if you use them). That's the work you need to become good at. Learning the game, the numbers, and the understanding the market you're after.
My horrible first impression of real estate with the infomercial product disaster didn't deter me. A few years later, I became a little more serious about rental properties and bought my first rental house. And guess what – I made some mistakes, BUT I also learned quite a bit.
And that's the key, because I can tell you that I didn't make those same mistakes on the duplex I bought after that house which cash flows pretty nicely every month.
Based on what I've learned, I can tell you that depending on your area, there ARE some more or less systematic ways to do real estate in your area. However, those methods are different for everyone and you'll start to figure out your own systems that work in your area over time.
Be Wary Of Get Rich Quick Schemes
Although there are always going to be the get-rich-quick schemes out there, there are also a lot of good ways to learn more about real estate and how to truly do it right. I actually attended a great all-day seminar a number of years ago that was very valuable (unlike the late-night scam I wasted money on!)
There are also frequent local get-togethers all over the country that you just need to step up and attend. Then there are the Real Estate Investors Association (REIA) meetings that can be of great value to investors who are either new or veterans of the trade.
So don't waste your hard-earned money on the real estate infomercial product scam like I did. If you want to grow rich, you need to GROW rich and do it methodically. Find the right avenue that works for you.
Then once you've got that going, expand into other areas. For me, real estate rentals are the way to go as a source of passive income I'll have for many years to come and they're a major part of my financial independence plan.
For you, there might something you find to be a more exciting path for passive income (dividend stocks, owning a business you can step out of, etc.), but avoid the trap of not doing anything. Pick something, learn it, and then go after it. Don't be afraid of mistakes – that's how you learn and become good at what you do.
Remember, there's no easy money. But if you take the time to really understand and go after something, you can make it work and develop some excellent revenue streams for yourself.
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