3 Times in My Real Estate Career When Failing Was a Success
Is it ever possible to really have complete clarity and foresight? None of us has a crystal ball. What may first appear to be a disaster can become one of the most fortunate happy mistakes of your career.
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As real estate investors, we aim to solve problems daily. We try to use common sense to make sure we perform proper due diligence before making any serious investments. Sometimes we feel confident in our decisions, and other times we feel pressured into making quick choices in an instant. Especially while you are still learning, this unconfident decision-making process is often called learning by trial and error.
Below are 3 investment stories when failing was a real estate success.
3 Times in My Real Estate Career When Failing Was a Success
1. Undercut by Doing the Right Thing
I arrived to the seller’s mobile home right on time for our appointment. This was a 3-bedroom mobile home from the late 1980s inside a mobile home park where I owned a few investment mobile homes already. It was a Sunday, and the seller was getting everything packed into a moving truck so she could be gone by the end of the day. In fact, the seller mentioned a handful of times that she needed to be out of the home by that day and that they needed to have it sold before the end of the weekend.
It is not uncommon for sellers to have unrealistic timeframes when selling their properties. This seller seemed very stressed, and she was definitely trying to project this time-crunch on to me and my investing business as well. Over the course of 20 minutes, we talked about her situation, where she were planning to move to, the future, and, of course, the subject property. Upon taking a tour of the mobile home, I was forbidden to go into the back two bedrooms. The seller said I wouldn’t be able to go into these rooms that day, as there were still a lot of items that had to be packed and removed from the bedrooms.
Pro Tip: Always try to convince the seller to allow you to walk through every room in the property. Even if there is junk and a mess, you have a good imagination and are only looking to inspect the structural integrity of the rooms. Do not buy a property without thoroughly inspecting every square foot.
Since the seller apparently couldn’t wait another day, she was asking a very attractive price for her mobile home. The seller also mentioned she had another serious buyer coming to look at the property later in the day if I was not interested. Naturally, I considered this “other investor” a bluff and that the home would still be for sale on Monday.
It was a Sunday, so the park manager’s office was not open, and therefore I could not verify if this resident was current on lot rent or if the park had any issue with me buying this property. I couldn’t call the state to verify ownership/taxes, and I was also not able to walk through the back two bedrooms to inspect for repairs. While the asking price was under $1,000 to purchase this 3-bedroom mobile home, I told the seller that I would be very happy to purchase this property the next day, Monday. Still I would first need to speak with the manager and walk through the last two bedrooms before we would be able to purchase the home.
I waited till the next day and called the seller again. She informed me that she’d already sold the title to the buyer who came after me on Sunday. At this point, I was mentally kicking myself. I was thinking, “How could I be so stupid to let this good deal slip right through my fingers?”
A few weeks later, I happened to go into the park office and talk with the manager of the same mobile home park. I nonchalantly brought up the seller I had seen a few Sundays before and explained the situation. The park manager told me I did the right thing because the seller was behind on lot rent, and the new buyer had to pay over $1,400 to the park to bring things current. The manager then relayed to me that the back 2-bedroom walls were full of thick mold. While I did not get any further details about the property or what happened to this particular buyer, I was grateful that I did not purchase this home without performing proper due diligence.
Lesson Learned: I was almost pressured into not following proper due diligence by skipping a thorough walk-through of the entire mobile home and also not getting approved at the park first. After this lesson, I made it a policy to never be bullied, pressured, or rushed into any decisions when I wasn’t comfortable with moving forward.
2. The 2-4-1 Deal
In another mobile home park across town where I was also already investing, I came across a package of two mobile homes that were being sold by a mother and daughter. The mother lived in one mobile home, and the daughter lived in another down the road. One of the properties was a 3-bedroom and the other a 2-bedroom. The park manager of this community called me directly and told me about these two properties for sale in her community.
The price of the homes was already fairly decent, and I knew I definitely wanted these two properties. I met with the sellers, built some rapport, walked to the properties, and made my offers. While I knew my offers were lower than what the sellers expected, I assumed that we would negotiate back and forth until we closed the deal together. I knew the sellers had a few weeks before they had to leave, and I was confident I would purchase these homes for a win-win price.
A couple of days went by, and I was holding firm to my offer. I knew these sellers would cave and eventually lower their prices to where I would be making a serious profit with these two individual mobile homes.
The last time I followed up with the seller, the mother informed me they had sold their mobile homes to another buyer. At this point, I was devastated. I mentally already knew I would purchase the properties and was counting the extra cash-flow these two mobile homes would produce. For the next few weeks, I kicked myself, called myself names, and punished myself for missing out on this opportunity.
Lessons Learned: I learned two lessons with the opportunity. The first one is that you can’t steal in slow motion. If you have a great deal in front of you and you’ve performed your due diligence, close on it quickly. I had a number of days to close this deal easily without any competition. Instead, I chose to be greedy and lost these two homes.
Second, I am only human and humans make mistakes. This was a turning point in how I treat and love myself. I stopped beating myself up as hard when making mistakes. Instead, I do my very best to learn from these mistakes, I’ve become a stronger investor, and I strive to improve myself moving forward.
3. The Real Estate Failure
Before I started investing in mobile homes, I spent my small life savings mailing single family home sellers, hanging signs, knocking on house doors, making offers with real estate agents, and making offers to sellers with absolutely no deals to show for it. Looking back, due to being so new, I’m sure I was making dozens of fundamental mistakes along the way. However, I was definitely becoming discouraged and thinking of myself as more and more of a failure.
After a few months of actively making offers on single family homes, I purchased and sold my first investment. It was a mobile home inside of a park. At the time, I was embarrassed to have invested in a mobile home instead of a real house. I was so embarrassed about investing in a mobile home that I did not tell any of my investor-friends that I already met through networking. I thought to myself at the time that I could not cut it is a traditional real estate investor.
What I came to learn is that failing at “traditional real estate” was the best thing that would happen to me in my real estate career. From that first mobile home investment there would be many more to come. What seemed to be a source of embarrassment actually turned out to be a huge source of pride moving forward.
Lesson Learned: Stay active and stay hungry. You have never fully failed until you stop getting back up and fighting for your goals and dreams. Keep striving to learn more and continue to help others.
In conclusion, these lessons are just a few of many that we all have. You may consider these stories a badge of honor that take you to the point you are today. As an active real estate investor, you will continue to learn, grow, and evolve in your real estate investing business. Continue aiming to review what is producing results and what is causing problems in your investing business on a regular basis. Keep what is working and eliminate what is slowing you down.
What failures of yours have been blessings in disguise?
I’d love to hear from you. Comment below!