Investing in Real Estate vs. Gambling
By: Wendy Patton
© 2010. All rights reserved.
Is investing in real estate like gambling?
I was recently playing craps in Biloxi, Mississippi. Now this isn’t exactly like investing in real estate, but there are similarities. Craps has the best odds in the house in Biloxi, if you place the right bets, however, many people choose to play the “sucker” bets. Sucker bets, when won, do pay out great. Unfortunately, the player usually doesn’t win, and therefore the House has much better odds. The House makes much of it’s money on those sucker bets. Slot machines are the biggest money maker in a casino, but sucker bets are right behind in second place. Many people will not be patient and work with the odds and place bets where they should. They go right for the sucker bet and try to win big immediately versus going for the more conservative approach which is more likely to win over time. Real estate is much like this.
Most people won’t or can’t stay in the game long enough to win at craps. For example, I ran into a Realtor friend of mine at the casino, I know from Michigan. She stopped at the table to play for a few minutes. It happened to be a bad few minutes. We ended up losing around $300 during the 30 minutes she was there. She left upset. I stayed and played. I knew to stay in. We weren’t chasing loses. We knew the table was ready to break free. Right after she left I had one roll that put us up over $1000, which was enough to play on for the rest of the night. Unfortunately, she didn’t get to see it or share in it. This is just like so many real estate investors – so close yet so far away. I am sure she was thinking, “Poor Wendy is staying and losing more money.” I don’t casino gamble a lot and I certainly don’t make any money or lose any money casino gambling, it is just an example that is similar to real estate.
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