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Posted over 7 years ago

5 Mistakes on our first 4 properties

In June and July we closed on 2 properties, and are under contract to close 2 more in early September. We made some mistakes along the way, but it's part of the learning curve.

Here's 5 mistakes we made and what we could have done better:

1. Set a definitive timeline with the contractor up front and 
2. Establish clear procedures or system to document the progress collaboratively.

The first property was a BRRR property. We just completed renovations, made some mistakes that resulted in over budget, and over project length (more on this in another blog post). The mistake was not having set a definitive timeline with the contractor up front and establishing clear procedures or system to document the progress collaboratively. Asan would have been helpful with the contractor, but it wouldn't have mattered because the contractor was just not communicative enough. They have multiple projects and are super busy, especially when they are also "in" the business. See BP Podcast Show 125 with Michael Gerber.

The good news is that we finished renting out the first property, which made the whole process worth it! The goal is now to keep the tenants happy, bring in monthly cash, and keep expenses to a minimum so we could start making some money. Within 6 -12 months, we will refinance for more than what we paid, and hopefully get back all our investment!

3. It's your business, you don't owe anyone anything but yourself,
4. Listen to your gut instincts despite the cost.

The second property was a real estate owned property in great condition, which is also a BRRR property. We just started renovations and are in week 2. Due to the overages and time delay in finishing project 1, I hired a new contractor for the second property. My mistake was having the first contractor scope out the second property, while the first property was still under renovation.  Why did I show him the second property? For a few reasons: 1. I felt like I "owed" it to the contractor since he was working on the first property, 2. I was trying to be consistent and build a relationship, 3. The contractor was honest and trustworthy, although his communications with updating and sending pictures were lacking, and 4. Pressed for time, I got lazy. That said, it took me a while, but the overages and inability to meet the communication needs were not meeting my expectations, which I clearly communicated. I finally realized this was not going to work for the second property, so I relieved him of working on the second property. 

Fortunately, I had listened to an early BP podcast, which said to have multiple contractors come bid on your property at the same time. I did this. A few contractors showed up, so I had backup, and decided, for the second property, I am actually using one of those contractors, whose ideas I had liked for the first property, but was hesitant about his costs. Well, the cost and time overages on the first project took its toll. I probably could have saved money on the first property and two weeks of holding costs on the second property had I hired this contractor, which my gut instinct was telling me to hire, but not his cost. So far, the second contractor is doing great on the second property. In the end, I owed it to myself to run a business, which required timely renovations and within budget.

5. Continue to pursue other deals even if you're swamped, and start building systems to ease the pain

Ever since I started with Brandon's first BP webinar and signed up for a pro account immediately after, real estate has been my passion, which I hid for almost 10 years, since I started out as a real estate agent renting apartments. I can't stop listening to the Podasts, which I do while I "Jog for Dollars" every morning, thanks to The Miracle Morning, which has been amazing. I started reading the books that are being discussed on BP, notably Think and Grow Rich, which has truly spearheaded my desire to keep on reading to learn and grow in business and in real estate. Every time I hear of a system some of the larger players have in place, I immediately try to jot it down on Google Keep, and check it off when I'm finished. 

Now, the hardest part is analyzing new deals given the amount of work there is on four properties, plus a full time job. My goal is therefore to analyze at least one a day, no matter what time of day I do this. It's hard, but if I could stick to writing my journal ever morning and evening, I know there's time to squeeze in a deal to analyze. The better the systems, the better the opportunity for success and likelihood of growth. But analyzing the deals and keep deal flow must be a priority in order to continue growing.

For all newbie real estate investors, read, learn, and take action. Pull the trigger, get in the weeds. We have 2 properties and hopefully another 2 within in a few weeks. Does it take hard work? You bet, but you could do it too...just try to avoid these 5 mistakes!



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