Doing Everything Yourself Often Leads To Expensive Lessons
A couple very recent real life examples of how a solid expert can be crucially pivotal to either solving or avoiding sticky problems. Yeah, I realize some segments of the real estate investment world avoid certain professionals like the plague. I get that. However, in doing so they also get superb lessons teaching them how to handle the very problems that coulda been avoided so easily. I’ll only reference one of these mini case studies briefly.
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A local businessman well known to me was in a lease for one of his two stores which had almost two years left to go. However, his landlord had violated some plainly written sections of the lease. They also had consistently played hardball with all the property's tenants, many of which were national in size. Though this guy does business nationally, he's pretty much a one horse operation. (He hates it when I say that.) He called me for advice, just as he had years ago when wanting to put the store there. Knowing his attorney was first rate, I asked him if he’d talked with him about it yet. No? Why not? Insert the usual boloney answer here.
Let’s Skip to the Chase.
Once the attorney was done with the landlord, he didn’t have to pay rent for the last three months there. Furthermore, the subpoena they served him was so botched as to be cartoonish. ‘Course, he had no way of knowing this. But the attorney guffawed as he read it. The landlord’s legal counsel kept making the same mistake over and over — and the court kept allowing him to ignore them. Bottom line is that he’s now outa there, and it cost him less than $1,500. He saved just under $30,000.
If he hadn’t immediately called the lawyer as I begged him to do, that outcome would’ve been impossible. The reason was that the attorney provided a couple key answers to questions he NEVER woulda known to ask. That’s a working definition of real expertise in action. He learned that lesson for $1,500 instead of about six times that amount, and who knows how many sleepless nights. I was rewarded with one of my favorite dinners at one of my frequent hangouts. Free swordfish tacos — the name of my new band. 🙂
Stop Grinding on the Cost and You’ll Save Money in the Long Run.
It’s not just a matter of measure twice and cut once, though that certainly applies in many cases. No, it’s about the value experts bring to the table. In business, the concept of the ‘expert’ has been abused almost beyond recognition. It’s akin to the concept of ‘great’ as it’s been bastardized in the sports world the last couple generations. Willie Mays was great. But today? 22 year old Mortimer Snerd is great cuz he’s made a couple difficult catches in centerfield and got a hit in three consecutive games. A real expert in business sticks out like a sore thumb in the most positive of ways.
Make it your business to find ’em and get ’em on your side. Attorneys, lenders, CPAs — the whole lineup. I realize you’ve read and been told to avail yourself of expert advice whenever possible. I’m here to tell ya it’s virtually always possible. Experts have saved me or pulled me outa the fire many times. What’s been fun to realize is how the more I began to rely on bona fide experts, the fewer times I even got near the fire. They’ve literally saved me both time and money beyond counting.
Attorneys, CPAs, and, surprising to some, your lender are the three I strongly recommend you locate soon. Like around 4:30 yesterday afternoon. All CPAs are definitely NOT created equally. I can now count on one hand and have enough fingers left to hold a baseball, how many I know who have a legitimately thorough understanding of the Internal Revenue Code as it relates to real estate investing. I’ve stopped being dumbfounded when yet another investor tells me they did last year’s taxes themselves with a downloaded software. Find a killer CPA and make them your best friend.
This is where many investors run into problems. Yet they're convinced most of those loan related glitches are not coming from their lender's inexperience with investment property loans. I’m here to tell ya that most lenders don’t know most of the underwriting questions, much less the answers. They’ll tell you they do investment loans, which they do. However, my experience is that easily over 90% of their closed business is with owner occupied borrowers. They don’t even play in the same arena. Wait ’til you’re doin’ a tax deferred exchange, and they hit the wall at 125 mph cuz they didn’t realize what they just told you to do with your vesting would effectively blow up your exchange. Think I’m kidding? Seen it dozens of times over the years. I shudder to think how many innocent investors have filed tax returns thinkin’ they successfully deferred capital gains taxes only to discover a five figure tax bill was due instead. Typically that lesson need only be learned once. 🙂
Stop playin’ Russian roulette with a house lender. Sooner or later there’s gonna be a bullet in the chamber.
All of us have had to learn the myriad lessons when it comes to real estate investing. Frankly, it’s been my experience those lessons never really stop coming. The most important choice you can make to avoid learning some of the more difficult lessons the hard way. Some of my best buddies are lifelong members of the DIY Club. The ones who’ve survived learned to discern when it was time to call in a bona fide expert. Discovering you just avoided making an expensive mistake, or missed an opportunity of which you were unaware, makes the cost of the expert a non-issue.
It’s like the old car maintenance commercial: You can pay ’em now, or PAY ’em later.