Internet vs Real Estate

[Sid23]

It seems that most of the people on this site are using the internet or real estate or a combination of both to reach their fastlane goals.

As someone who has worked in real estate for the past 6 years, I have a pretty decent grasp on the real estate business as a whole. I've been planning to use real estate to help me reach my business goals in life.

Until I found this site, I knew very little about the internet. The more I read about it, the more intrigued I am. For fastlane members starting from square one, the internet may offer them the medium to start generating capital which can be then leveraged into other vehicles.

I thought this may be a helpful thread to start for real estate newbies, internet newbies and newbies who are considering using both in their PLANS.

I've started a list with some general pluses and minuses (none of these are absolute). I'd LOVE for others to add!!

Real Estate

Pluses: (1) demographics favor long term demand for housing (for sale and rental units)
(2) tax benefits
(3) systematic ways to achieve long term cashflow
(4) a big deal can pay you millions in a few years time

Negatives: (1) For the most part, need cash to get started (not always true)
(2) Money is tied up in projects and must sell or refi to pull out
(3) High barrier to entry in big deals

Internet

Pluses: (1) low barrier to entry
(2) you can create a business around anything you want, as long as your entre. premise is thought out

Negatives: (1) lots of competition
(2) harder to understand than real estate

Thanks!!

PS. Those of you who have made their millions already, based on today's business climate and what you see happening in the future, if you had to start with NO MONEY FROM SQUARE ONE, would you ever consider using the other one? (i.e. MJ using real estate, SteveO or Russ using internet?)

 

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[djs13]

I think it depends on your interests and goals. I personally find real estate interesting because its more about buying income streams than having to start a complete start up business. I also am interested in establishing a monthly passive income stream so I'm free to do whatever I want to. I realize that an internet business can offer you this, but I would imagine that it's much more easier to hire a property management company than to hire a CEO to run the operations.

I'm trying to do both REI and internet business at the moment. I'm becoming a bird dog and I just joined my real estate investments club. I also own a few domains but my lack of technical knowledge is preventing me from starting a web site.

As my own personal goals, I'm buying real estate to create a passive monthly income from rents. But throughout my end of high school career and beginning of college, I would love to create a web site that profits so I can reinvest in real estate.

 

[AroundTheWorld]

Real Estate Positive:

"Tangible" Asset... for some 'concrete' type thinkers (like me) something you can see or drive by feels more real.

Leveraged

Real Estate Neg:

Not liquid
Geographic constraints
higher barrier of entry

 

[hatterasguy]

Whatever interests you the most is the best way to go.

I don't really understand the internet or computers, I just get pissed when they don't work. I understand real estate quite well.

 

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[yveskleinsky]

Real Estate

Pluses: (1) demographics favor long term demand for housing (for sale and rental units)
(2) tax benefits
(3) systematic ways to achieve long term cashflow
(4) a big deal can pay you millions in a few years time

Negatives: (1) For the most part, need cash to get started (not always true)
(2) Money is tied up in projects and must sell or refi to pull out
(3) High barrier to entry in big deals

Internet

Pluses: (1) low barrier to entry
(2) you can create a business around anything you want, as long as your entre. premise is thought out

Negatives: (1) lots of competition
(2) harder to understand than real estate

Here's my .02:

Internet

Pluses (to just name a few):

- You can research your target market and find out exactly what they are buying, when they are buying it, how often they are buying it and how much they are will to pay for it.
- Tax benefits of a small business
- Systematic ways to achieve long term cashflow
- A big deal can pay you millions in a few years time
- Large amount of capital isn't necessary to start
- Leverage
- Risk v. reward can't be beat

As for the negatives, frankly I really don't see any at all. The negatives you see are only due to the fact that you are just learning about e-biz...they aren't real. ...I could show you in a couple of hours how to assess your competition and really how to get started in dominating your target market. ...Another benefit to e-biz is that the learning curve doesn't cost you tens of thousands of dollars, (like RE can) and since you can put up a site in a couple of hours, you can continually refine your process at break neck speed.

...I also started out in RE, and it is my first passion. Since I got turned onto e-biz, I haven't looked back. Spend about 3 days in the e-biz section and take notes- then start applying what you learn. It will blow your socks off!

 

[Bilgefisher]

You guys/gals make it extremely difficult to follow the one trick pony advice. Sheesh.:smx4:

Makes me want to jump head first into internet, but I have to keep telling myself to focus, focus, focus.

 

[Runum]

I have been doing the RE thing for the last 2 years and I'm glad I did. I'm also still looking for home run deals. In the mean time I am developing my first webpage.

Here's what I see, in RE I have been everything, investor, researcher, book keeper, rehabber, all labor, and manager. I can see that I spend too much time doing everything in RE and I need to delegate. This has been hard for me. Also, the real estate financing market is certainly changing the rules of the game.

With the internet business, I have been doing the market research and marketing plan. However, I have had to contract out the rest of it because I don't know how to develop the thing I need. So, with this business I am starting out not doing everything and that should help when I replicate this business model.

I agree with the upside of the internet business. Low startup costs and less risk. However, in my case, I will have to be more aggressive and creative with marketing. Also, I can start an internet business without the aid of a bank.

Oh yeah, my profits from the internet business will go back into more real estate.:cheers:

 

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[Kung Fu Steve]

I am super psyched about real estate, but since starting on this board, I realize there are so many more options.

I can create businesses online that branch off of my B&M business. And that has no gerographical limitations. I just had an amazing idea for an e-biz to support my business and I think I'm going to act on it tomorrow.

I am waiting for some new brokers to get back to me with some properties, so I would say the internet is way faster than the real estate business!

 

[8 SNAKE]

I find it interesting that so many people tout the internet's low barriers to entry as an advantage. While I agree that it is, I also see this as a huge disadvantage. It seems to me (as someone who's not in e-biz) that just about any moderately successful idea is immediately copied a thousand times over. That's not to say that a person can't stand out from the crowd and succeed, but it sure makes things difficult. I'd love to hear feedback from those who are in the e-trenches every day.

 

[NoMoneyDown]

I find it interesting that so many people tout the internet's low barriers to entry as an advantage. While I agree that it is, I also see this as a huge disadvantage. It seems to me (as someone who's not in e-biz) that just about any moderately successful idea is immediately copied a thousand times over. That's not to say that a person can't stand out from the crowd and succeed, but it sure makes things difficult. I'd love to hear feedback from those who are in the e-trenches every day.

This is actually true in most businesses - not specifically to the internet. For example, real estate investing in almost every are of the country is saturated with people wanting to get their share of the profits after having read all the promises of fortune from late-night "gurus" pitching about the current foreclosure dilemma. And even specific local markets have their own cycles they are going through routinely. The real question is HOW can you differentiate yourself from the crowd? Even in real estate investing there are 100's of specific niches to excel in: note buying/selling, residential (wholesaling, landlording - even then what specific types, like L/O, owner financing, carrying a 2nd note, etc), commercial investing, and so on.

 

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[MJ DeMarco]

I find it interesting that so many people tout the internet's low barriers to entry as an advantage. While I agree that it is, I also see this as a huge disadvantage. It seems to me (as someone who's not in e-biz) that just about any moderately successful idea is immediately copied a thousand times over. That's not to say that a person can't stand out from the crowd and succeed, but it sure makes things difficult. I'd love to hear feedback from those who are in the e-trenches every day.

Execution. Execution. Execution.

I still keep close tabs on my old company and have been approached to re-invest now that a new management team is in place. Because of this, I keep an eye on the industry. I still see new websites popping up that replicate (copy) what I did - these replications are so weak, they steal our testimonials, my copy (that I wrote) and even graphics.

Now these new companies (copies of my website and business model) appear frequently ... usually 1 or 2 a month. I have a long laundry list of them recorded in my brain and I frequently return to visit them to see if they ever made business traction. Rarely they do. Some disappear. Some stagnate. Most give up.

Yes, copies pop up. But from my experience, the daily execution and marketing (customer service, admin, etc.) typically follows into failure. If you analyzed my industry, you'd say "wow, it's crowded" but you'd also be fooled; most of the websites that have taken initative and copied me are either 1) DEAD or 2) DYING.

So it is true: There are low barriers and the minute you do anything that is novel or making money ... you will get copy-cats within weeks. Ultimately what thins the crowd is daily execution -- consistancy -- in marketing, admin, customer service. If you build a sailboat and drop it on the ocean with no captain, it won't go anywhere.


Again, execution -- not just in building the system, but marketing it, and running it.

 

[Peter2]

I mentioned this in another post about a year ago. An idea means very little. We all have lots of ideas about different businesses we can start. Chances are that someone else has already come up with the same idea.

The only thing that matters is how you execute and market your idea.

Friendster was the first big social networking site, but today they are not nearly as successful as Myspace and Facebook that just decided to copy Friendsters idea.

I have mentioned before that one of my companies sold a product that had been sold for decades by thousands of companies all over the world. I decided to market the product a different way, and within two years I had the largest company in the world. The second largest company had been in business for more than 25 years.

Like MJ said, it's all about execution.

To get back on the subject of the original post. The answer to the question of what business would be the best between real estate and the internet, I would have to say, both or neither. :huh2: What do I mean by that?

Don't focus your effort on a business based on other peoples success. Just because other people make money in real estate and on the internet, it doesn't mean it's the right business for you.

Get involved in something that you are passionate about and the money will follow.

 

[hatterasguy]

This is actually true in most businesses - not specifically to the internet. For example, real estate investing in almost every are of the country is saturated with people wanting to get their share of the profits after having read all the promises of fortune from late-night "gurus" pitching about the current foreclosure dilemma. And even specific local markets have their own cycles they are going through routinely. The real question is HOW can you differentiate yourself from the crowd? Even in real estate investing there are 100's of specific niches to excel in: note buying/selling, residential (wholesaling, landlording - even then what specific types, like L/O, owner financing, carrying a 2nd note, etc), commercial investing, and so on.

Yeah but the difference between those guys and someone like well you and me is that we actualy get the good deals, and know what they look like. We have contacts that send us good deals, knock on doors, and when one comes along we can finance it quickly. We have lists of contractors to get things done cheaply and quickly, agents that we know move property, lawyers, bankers etc. Its not like building a website with clicks, these relationships grow over time, its not something you can walk into.

8 SNAKE's point at least to a not very internet savy person like me seems to make a lot of sense. Cheap websites pop up faster than weeds and its easy to copy most. Its seems like so few actualy succed at becoming the next Google, Youtube, or Myspace.

While you can't really copy at least not without a lot of work the kind of stuff we do.

I guess its all perspective.

 

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[bizboy]

With the internet it's a trial and error, trail and error, trail and error, very hard to market the business and a great buzz is needed for your internet business. So many people start the same internet business, small percent succeed.

Real Estate is a proven system, as long you find the right deals and manage everything well.

 

[kimberland]

The issue with low barrier to entry businesses
is many will start.
That doesn't mean many will continue.
Why?
Because continuing usually means work
and people are naturally lazy.

So you'll get constant churn.
How to compete with constant churn?
Develop a concept
that has returning customers.
One time customers don't care about churn.
Returning customers do.

 

[Sid23]

It's no different with Internet businesses...

The people who succeed over and over are the ones who have the experience, the know-how and especially the relationships. For example, if you and I were to have the same Internet business idea, I'd be a lot more likely to succeed because I have experience and contacts in the industry. I know high-profile bloggers who can help me market, venture capitalists to fund me, guys with PhDs in in comp sci to develop complex algorithms, patent attorneys to help protect my IP, etc.

But, that said, I'm actually not very well positioned to succeed compared to a lot of Internet entrepreneurs; if I had the same idea as a seasoned Internet entrepreneur, they'd crush me because they know *higher-profile* bloggers, *richer* VCs, *better* developers, *smarter* attorneys, etc.

So, just like real estate, there are degrees of experience and ability to leverage relationships, and those with more of both have a MUCH greater chance of success than the rest of us...

Great point JScott! rep speed ++

Peter2, rep speed ++ as well...great point. Do what you love and do best. Ignore the crowd.

I was the original poster of the question because I feel like many on this board are moving away from real estate and into ebiz and I was starting to think maybe I'm missing something obvious? Should I be starting an ebiz too? Am I missing the boat?

I had dinner with a friend last night who works on big real estate deals, his wife (a doctor), and 2 of his friends that were in town who work in Manhattan real estate. I was the only one at the table without a Harvard MBA (or med school degree). I was feeling a little intimidated and figured I wouldn't have much to add.

I was involved in the conversation and by the end, the other four people were asking me questions. I was "teaching" them what I knew. It was pretty amazing. His wife looked at me at one point and said, "Wow, I think you know more than these 3 guys combined!"

It really showed me that even though I'm not in the fastlane (yet), I'm positioning myself, meeting the right contacts (thru my J-O-B) and working for big time guys.

It was just a good reminder to stick with what you know. If I got into ebiz, I would be well behind the curve and start from scratch. Last night was a good reminder that I enjoy real estate and apparently know a lot about it!!

Time to re-read ONE TRICK PONY.

 

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[hatterasguy]

I think it all comes down to what you enjoy. The idea of waking up at 7am and sitting in front of a computer all morning is repulsive to me. However I have no problem jumping out of bed and heading off to the job site, or City Hall.

I actualy drive around and look at property for fun on the weekends.

 

[KC Dash]

It also depends on what you love to do. Find something you love to do first, rather it be real estate, internet, or both.