Those two words seem to sum up the majority of most newbies’ thought processes as they head into the world of investment real estate. It was for me, but thank God I didn’t bust as so many are doing right now. I’m thankful for the mercy shown to me, in spite of my own unrealistic expectations, and really feel bad for so many investors out there now. We’ve watched too many bad infomercials and read too many books on the theory of it all.

Think I’m wrong? Look at the numbers of foreclosures across the country. In particular though, look at some of the areas across the country where countless numbers of investors were sticking their money. It’s terrible to see the massive amounts of loss they’re suffering. The West seems to have caught the worst of this with forecasts of declining property values and ridiculous numbers of rising foreclosures. It’s just plain scary.

While the statistics and forecasts above are not just focused on investors, I believe many investors have aided in pushing the market to where it is. They had unrealistic expectations and the market is suffering because of it in so many places. It doesn’t take a genius to figure that out. We experienced it on a large scale here in Indianapolis through parts of 2006 when our own city hit the top of the foreclosure list and we were averaging 1 in every 69 homes. We’ve felt the effects of it and suffered for it.

This has gone on for too long. If you’re a new investor and you don’t know what I’m saying, that’s probably a good sign for you to take a seat and start learning.

Get your head off your pillow, lay your dreaming aside for a few and read. Study. Interview. Learn. Now. Don’t become Casey Serin or anyone else out their who has stuck there neck out and screwed themselves. Find a coach or a mentor and start building your team.

If you’re purchasing a duplex in Miami, FL for $411,000 with a mortgage that rents for $1,000 per side, it won’t cash flow. If you’re trying to flip a house in an area where the foreclosure rates are extremely high, you’re not likely to sell it very fast because the foreclosures have depressed the market. If you’re doing more than one deal and have no team, no mentor, and no experience, then you’re asking for big problems. Come back to earth.

There is cash flow in America, but if you’re not figuring in the costs for a property manager, PITI, maintenance, vacancy loss, etc, you’re going to screw yourself. There are great areas in which to flip a property, but if you’ve chosen a city where values are declining, you don’t have enough in reserves, and/or don’t know what the ARV of the property is and have good solid comps to prove it, you’re screwed.

I believe it’s true that the deal of a lifetime comes about once a week, but you have to know how to look for it, how to purchase it, and how to make it work. If you want to make it work, do yourself a favor and stay away from the Flipper Nation. Set realistic expectations.