Setting Realistic Expectations in Real Estate Investing
It’s rare to see service providers discuss the types of clients they don’t work with. Refusing service is often misunderstood as discrimination, but in reality, it’s about ensuring the right fit for both parties.
As my mentor once said, “Everyone’s money is just as green.” So why would a service provider set criteria on whom they work with? The answer is simple: to align expectations and optimize time.
The Importance of Clear Expectations
Success in real estate investing depends on patience, financial understanding, and strategic decision-making. However, many new investors enter the market with expectations that don’t always match reality. The two most common gaps in expectations involve time and money.
1. Time Expectations
Many people see success stories in the media and assume that wealth in real estate can be built overnight. In reality, it takes years of experience, learning, and smart decision-making.
Even Lionel Messi once said: “It took me 16 years of hard work to become an overnight success.” This concept applies to real estate as well. Long-term investors who stay patient and disciplined tend to see the most significant financial rewards.
As Leo Tolstoy wrote in War and Peace:
“There is nothing stronger than these two: patience and time. They will do it all.”
2. Financial Expectations
When starting out in real estate, setting realistic financial goals is crucial. Investors often ask:
💬 “How much money can I make?”
The answer depends on several factors, including:
✔ Experience level
✔ Risk tolerance
✔ Time commitment
✔ Investment strategy (e.g., Rentals vs. Flips)
Returns can range from 8% to 40%, but it’s important to remain practical and strategic. Some investors unintentionally set unrealistic profit expectations, which can lead to frustration when results don’t align with their initial assumptions.
Understanding Price vs. Terms
To illustrate this, let’s consider an example:
The Case of an Out-of-State Investor
An investor from another state was interested in purchasing a BRRRR (Buy, Rehab, Rent, Refinance, Repeat) property in Tampa Bay. She had watched numerous videos showcasing the potential of high cash-on-cash returns from this strategy.
However, when asked about financing, she stated:
❌ “I want to buy the property using conventional financing.”
🚨 Here’s the issue:
BRRRR deals typically involve distressed properties, which means:
- Quick closing timelines (often within two weeks)
- Non-traditional financing (cash or hard money is usually required)
- Properties that may not qualify for conventional loans
This investor was looking for both a low price and flexible financing terms—something that is rarely possible. In real estate, buyers typically choose between price or terms, but rarely both.
What Does This Mean?
When purchasing a property, investors generally prioritize one of the following:
✅ Price: Getting a lower purchase price often requires cash or hard money for a faster closing.
✅ Terms: Opting for conventional financing means paying a higher market price and going through a longer approval process.
It’s rare to find a deal where both price and terms are equally favorable to the buyer.
Active vs. Passive Investing: Matching Effort with Returns
Another important consideration is the level of involvement in managing investments.
A Tale of Two Investment Styles
Consider an investor who has built a strong portfolio in a high-cost market like California. He:
✔ Finds his own deals
✔ Manages renovations directly
✔ Works closely with his team of agents, lenders, and appraisers
By being actively involved, he achieves higher-than-average returns.
Now, if the same investor wanted to invest in another state without directly managing the process, the expected return would naturally be lower. More passive involvement typically leads to more moderate, but still stable, returns.
💡 Key takeaway: Investors seeking higher returns must often take a more active role in finding, funding, and managing deals. Those preferring a hands-off approach should expect more modest but steady returns.
How We Help Investors Navigate These Realities
At Graystone Investment Group, we specialize in real estate investments in the Greater Tampa Bay area. Our goal is to help investors—both new and experienced—make informed and strategic decisions.
We work best with investors who:
✔ Understand that real estate is a long-term investment
✔ Are realistic about risk, return, and effort
✔ Recognize the difference between active vs. passive investing
Interested in Investing? Let’s Connect!
If you’re considering investing in real estate, we’d love to discuss the best strategies for your goals. Whether you’re interested in wholesaling, buy-and-hold properties, commercial investments, or fix-and-flips, our team is here to assist.
📩 Fill out our Investor Profile or contact us directly to start your investment journey.
