7 Steps for Rebounding from Major Real Estate Failures

by | BiggerPockets.com

Welcome to real estate investing, the industry where things will inevitably go wrong.

There’s no way around it. If you are a real estate investor and currently investing, and nothing has ever gone wrong for you, you aren’t that good of an investor. Failures are part of the game. We can try to educate and practice as best we can to avoid them, but it is part of the experience. It’s the only way to truly learn! No hotshot, big rig investor out there has ever not failed.

So things will go wrong. What do you do or how do you handle the situation when it does go down?

Here Are 7 Easy Steps for Handling the Worst of Situations


Seriously, calm down! I know it is easy to get worked up immediately and get pissed off and start assuming or believing the worst. I know because I’ve done it. Our first reactions are to think someone has screwed us or we got duped or we are going to lose all our money or [insert the most creative worst-case scenario you can think of here].

So often, though, situations turn out not to be as bad as we assume them to be. Sure, it may still be an unfortunate situation, but there are usually explanations or workarounds or resolutions that will ease our freak out, so give those a chance before you flip your lid. Of course if no good explanation or resolution comes of it, flip your lid all you want, but don’t assume worst-case right off. That’s just unnecessary stress that will lead you to a shorter lifespan or cause you to drink more.

2. Reach Out to the Best Contact Who Can Explain the Problem

This might be an agent, the seller, a contractor, whoever. Whatever the source of the problem, reach out to the applicable contact behind whatever that problem is. Let’s say you just bought a property and only a couple weeks into owning the property you receive a very substantial tax bill that says you owe about 10% of the purchase price in back taxes. Whoa!

Related: Warning: How to Handle a Real Estate Investment Gone Bad!

First refer to the previous step, but then immediately reach out to the person who sold you the property and ask what it is about. This happened recently to someone I know, and it turned out that the seller had in fact sent in the payment but due to a delay in processing of the check, the county resent the bill thinking it hadn’t been paid, but in fact the payment was in and there was no outstanding balance to the new owner. Whew!

As soon as the buyer asked the seller about this, it was explained and end of story. See how easy that was? Always reach out to the best person to ask who is at the source of the problem and find out what is going on. So often it will turn out just fine if you go right to the source.

3. In Case the Source Isn’t Responsive, Reach Out to the Best Person Who Can Get to the Source

Oftentimes you’ll have been referred to the source by someone else. Reach out to that someone else and let them know what is going on. You’ll be surprised at how much that person cares about your experience (especially since they referred you), and it is likely that, since they know the source, they can drill for information for you. Sometimes people don’t respond because they miss an email or maybe they really do suck, so sometimes someone else helping you out can have a positive effect.

If the problem is now resolved, stop here. If your problem is not yet resolved, continue reading…


At this point, the problem is probably for real. Otherwise it would have been taken care of after talking to everyone. Now that it’s a real problem, all those emotions are going to boil back up. I get it. But as best you can, stay calm.

5. Realize Every Successful Investor Goes Through Problems

Welcome to the club of real estate investors! We’ve all had problems. You’d really just be a boring addition to the dinner table if you didn’t have your own battle wounds to share and laugh about (later of course, because you’re still pissed right now).

What else would we all talk about at a dinner table if we didn’t have any “OMG, this one time, this thing happened, and you’ll never believe it, and can you believe it??” stories. Consider it a success to have a failure. Once you’re in that mindset, things will be easier.

Related: What to Do When Things Go Wrong in Your Real Estate Business (Because They Will!)

6. Decide on Course of Action

It’s time to bring your left brain back into action now that your right brain has calmed you down and made you realize how awesome and successful you are. Now you must think logically. Since you are calm and have a clear head about the actual problem, really evaluate it to decide the best next step. The key here is to realize that there are often solutions or remedies that you may not have thought of.

Don’t hesitate to bring in opinions and advice from others. Hello, BP is great for that! Post on the forums your situation and let people respond. You’d be surprised at how helpful that can be. Always evaluate and use all the resources you can when deciding on a course of action for a problem. Worst case really is a major loss of money, which will often lead to needing to file a lawsuit, in which case choose a real estate investor-friendly attorney.

Just remember, money is only that — money. If you lose a lot of it and that money was critical to your well-being in some way, I get that is more than money. But that also supports the idea of not investing what you can’t afford to lose. The worst that can happen usually is you lose a massive amount of money. That is physically survivable, so be glad you are still alive and healthy and can figure it out.

7. Plan to Tell Your Story

You can do this in two ways: a) tell it as a means of helping others and b) entertain everyone at the dinner table! The former is really helpful for not only the people you tell, but for yourself too. It will help you understand what can be or should have been learned from the situation. I know I could have avoided a lot of mistakes if I had had BP or other resources of people telling me about the mistakes they had made. It’s firsthand education!

So pass it forward for others. Then — back to this dinner table thing — be able to laugh at it! You might not be able to laugh right away, but you should be able to later. It’s all part of the battle scar show-off. It’s like when I hang out with a bunch of pilots; we are constantly telling our flying disaster stories or other entertaining stories about our flying experiences, and it’s so fun. It’s very educational for one, but it’s hilarious for two. Same for investors. Tell the stories! We’ll all get a good laugh, and we will certainly all be able to learn from it.

What is the worst problem you have encountered in real estate investing? What is the worst problem that was presented to you but turned out to not be so bad?

Let us know in the comments!

About Author

Ali Boone

Ali Boone is a lifestyle entrepreneur, business consultant, and real estate investor. Ali left her corporate job as an Aerospace Engineer to follow her passion for being her own boss and creating true lifestyle design. She did this through real estate investing, using primarily creative financing to purchase five properties in her first 18 months of investing. Ali’s real estate portfolio started with pre-construction investments in Nicaragua and then moved towards turnkey rental properties in various markets throughout the U.S. With this success, she went on to create her company Hipster Investments, which focuses on turnkey rental properties and offers hands-on support for new investors and those going through the investing process. She’s written nearly 200 articles for BiggerPockets and has been featured in Fox Business, The Motley Fool, and Personal Real Estate Investor Magazine. She still owns her first turnkey rental properties and is a co-owner and the landlord of property local to her in Venice Beach.


  1. Kevin Perk


    Nice article. You are spot on when you say “Calm down.” I know calming down can be hard though, especially when thousands of dollars are potentially at stake, but it must be done to be able to think clearly. So many times our brains immediately go to the worst case scenario when reality is far, far from that. Calming down and taking time to think things through and talking with others often makes that mountain seem like a molehill.

    Thanks for the great article,


    • Agreed Kevin and great perspective on it. Definitely easier said than done, even for me now sometimes, but worth it if you can make yourself calm down for sure! Anytime I’ve gotten really worked up, it’s almost always turned out to not be that bad. Not worth shaving the years off my life stressing, at least not to start.

  2. George Sarianos on

    Hi Ali –

    Great article! I think this should strike a cord within everyone…I know it did for me! I’m actually going through a pretty crappy situation with one of my flips right now.

    We have a large retaining wall supporting our driveway that is in violation of township regulations. It basically needs to be ripped down and built back up. In addition to this project costing tens of thousands of dollars, the property has been on the market for almost 12 months and the comps have moved on us (in a bad way). Needless to say, we are going to be in the red on this flip.

    My partners are fired up and even though I am as well, I know getting pissy isn’t going to solve anything. What keeps me focused are role models that got back up after getting knocked down:
    -Thomas Edison (his teachers told him he was “too stupid to learn anything),
    -Walt Disney (fired by a newspaper editor because he lacked imagination and had no good ideas),
    -Dr. Seuss (had his first book rejected by 27 different publishers)
    -Henry Ford (ruined his reputation with a couple of failed automobile businesses before becoming successful with Ford Motor Co.)

    Even though our primary exit strategy was a flip, having this as a rental might be the better option. We will see. Thanks again for the motivational article!

    • Hey George, you’re welcome but a bigger thanks back to you for sharing your story! I know if you were to elaborate on that situation in the forums or somewhere, a lot of people could learn from it. I’m sure you’ve already learned tons! I don’t flip myself, so can’t relate as much, but it sounds like a major lesson learned and that lesson will probably just make you that much more successful later as long as you keep going with it. Thanks for sharing!

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