What's the worst advice you've ever received?

What's the worst advice you've ever received?

Investor · Gaithersburg, MD · Member since 2013 · 660 posts · 441 votes

So in taking a break from the seriousness of real estate, what's the worst advice you've ever received (or seen if it wasn't directly to you) and where did you get it? No need to name names unless you are referring to someone who is in the public eye (they wrote a book or something). I expect some of you will think some of the advice you read in this thread isn't the worst (or even bad). Everyone has their own comfort level. I slapped this in the Starting Out section because I feel the people new to real estate would receive the most benefit from a thread like this.

To get you started, here are a few I've seen:
You don't need an entity for your investments, umbrella insurance is all you need - Right here on Bigger Pockets
You don't need umbrella insurance, all you need is an entity (LLC) - Again, here on bigger pockets
Negative cash flow is ok as long as (I'll stop here because I've seen about 10 "as long as" statements :) - Almost everywhere.
Borrow money from a credit card or 401k to fund your real estate - Lots of places (Quick note: In the right circumstances, I don't think this is necessarily bad advice but for the general public, I believe it is).

I have lots more but that should get you started. I'll chime in with more as the thread drives on.

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Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
12y

"Money doesn't buy happiness."

Sure, then let me have all of your money.

See this reply in the discussion

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  • Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
    12y
    Worst advice I got was from a seasoned CA RE investor that told me circa 2009 that I was buying too much too fast. My response was that my biggest risk was not buying enough fast enough.
  • Rental Property Investor · Milwaukee, WI · Member since 2013 · 281 posts · 133 votes
    12y

    Put your money in the bank

  • Investor · Gaithersburg, MD · Member since 2013 · 660 posts · 441 votes
    12y

    "Look at 100 houses before you make your first offer." And yes they actually meant physically look. I have 5 properties and I've probably looked at ~25 total properties.

    "Make a lot of low offers and one will eventually be taken." Well yea, but it won't be the property you want. and I'm not sure how it works where everyone invests but if I did that, my reputation would be tarnished and no one would take me seriously.

  • Real Estate Investor · Desoto, TX · Member since 2013 · 560 posts · 528 votes
    12y

    I love my parents to death and I owe them all of my life success so far but they always told me growing up that I should find a good paying job with benefits and stay there. Not!!!!! I have seen 20 year employees shown the door like it was nothing. Company's are always looking for talent so don't limit yourself.

    A co-worker once told me "you have to put in long hard hours because people who don't put in long hard hours are the first to be laid off in down times". This was one of those 20 year employees who was later shown the door. All you really need to do is work smart hours and deliver bottom line results.

  • Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Duncan Taylor:

    Take all advice given you and filter it using your personal experience and goals. Use what helps, toss away what doesn't and get a good laugh once in a while as you follow your own path.

    That's some of the best advice I've read in a long time, and it applies to all of life, not just RE.

  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    12y

    Play it safe, keep your money in the bank. ... My wife

    This is what the country needs ... The current government administration

    Almost any post by @#%$&* giving legal advice when they cannot form a coherent sentence or spell more than 50% of their words.

    Best advice Don't let others determine your attitude ... my little brother

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y

    "If you're not embarrassed (or ashamed) by your offer it's not low enough."

    That is just stupid and I don't want to be in a business where embarrassment or shame is the goal.

    "Whoever names their price first loses."

    This is so, so wrong. It sets up the idea of one winner and one loser from the get-go.

    "Never call it an offer, always call it a purchase proposal." "Never call it a contract, always call it a purchase agreement."

    Whatever. RE semantics aside, price and terms are still king. Manners and kindness are a plus.

    "You can't get the deed and do a short sale or discounted payoff as the owner. Can't be done. There is always hardship documentation. There is always an arms length letter. Blah blah blah."

    This was from pretty much everyone on here on BP, from agents to short sale specialists to lenders. But I did it and was grateful for the challenge. :)

  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    12y

    "Cross Country skiing is too strenuous, you won't be able to do it, better stick to Downhill." - high school friend.

    Not only did I take up cross country skiing, but I thrived. Went on to teach and was a member of Professional Ski Instructors of America. Owned my own ski school and did a bit of nordic ski racing. Even did the American Birkebeiner, which is the largest cross country ski marathon in North America and finished it with a smile.

  • Minneapolis, MN · Member since 2014 · 13 posts · 7 votes
    12y
    Originally posted by @Marcia Maynard:
    "Cross Country skiing is too strenuous, you won't be able to do it, better stick to Downhill." - high school friend.

    Not only did I take up cross country skiing, but I thrived. Went on to teach and was a member of Professional Ski Instructors of America. Owned my own ski school and did a bit of nordic ski racing. Even did the American Birkebeiner, which is the largest cross country ski marathon in North America and finished it with a smile.

    I have to agree. Cross country skiing is one may favorite recreational activities. I've been cross country skiing since I was 4 years old. Joined the Nordic Ski Team in High School. And still ski today!

  • Investor · Denver, CO · Member since 2014 · 84 posts · 52 votes
    12y

    @Ann Watkins great info. I just stumbled upon that same S8 "formula" in 2013 myself. So far, they haven't been any worse than my regular tenants and they do, in fact, generally want to not move. I think it is hard to find a property, especially one in fantastic shape, that once they get it they hunker down and do their best to stay put at all costs. In my area I'm still getting slightly higher rents for non-S8--but S8 is quickly catching up and also guarantees you some money every month as well.

    As far as the worst advice.. hmm.. I can't think of anything super specific besides just other people who don't know RE trying to rain on your parade or business plan--especially when it is young. Don't let the naysayers get you down, if the numbers, work ethic, and business plan are good you will succeed.

  • Real Estate Broker · Houston, TX · Member since 2013 · 187 posts · 111 votes
    12y
    Originally posted by @Eric Y.:
    @Ann Watkins great info. I just stumbled upon that same S8 "formula" in 2013 myself. So far, they haven't been any worse than my regular tenants and they do, in fact, generally want to not move. I think it is hard to find a property, especially one in fantastic shape, that once they get it they hunker down and do their best to stay put at all costs. In my area I'm still getting slightly higher rents for non-S8--but S8 is quickly catching up and also guarantees you some money every month as well.
    As far as the worst advice.. hmm.. I can't think of anything super specific besides just other people who don't know RE trying to rain on your parade or business plan--especially when it is young. Don't let the naysayers get you down, if the numbers, work ethic, and business plan are good you will succeed.

    Thanks Eric! I'm looking at two duplexes directly across from an elementary school. If I can pull this off I'm going rehab them really nice and put all 4 units into S8. I will of course make it clear that "guests" cannot exceed 2 weeks stay...unfortunately when S8 goes bad it's usually because of those not on the lease.

  • Investor · Denver, CO · Member since 2014 · 84 posts · 52 votes
    12y
    Originally posted by @Ann Watkins:

    Thanks Eric! I'm looking at two duplexes directly across from an elementary school. If I can pull this off I'm going rehab them really nice and put all 4 units into S8. I will of course make it clear that "guests" cannot exceed 2 weeks stay...unfortunately when S8 goes bad it's usually because of those not on the lease.

    Even though this is a worst advice thread, thanks for the good tip there about S8 going bad. I haven't had that yet, but I also haven't had S8 tenants long enough comparatively to non-S8. Sounds like a fantastic project and after my first experiences with S8 I will definitely be looking for properties with that purpose in mind.

  • San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    12y

    In many cases, the worst advice usually comes from folks with an "either my way or the highway" mentality. Unfortunately, things are not always black or white — different folks may have different experiences which can yield different outcomes. Just my experience!

  • Investor · Lucas, TX · Member since 2010 · 620 posts · 352 votes
    12y
    Originally posted by @Justin B.:
    "Look at 100 houses before you make your first offer." And yes they actually meant physically look. I have 5 properties and I've probably looked at ~25 total properties.

    "Make a lot of low offers and one will eventually be taken." Well yea, but it won't be the property you want. and I'm not sure how it works where everyone invests but if I did that, my reputation would be tarnished and no one would take me seriously.

    I heard this from Mr. Carlton Sheets years ago. I actually took it to heart when I started out.

    I looked at 100 REOs in 6 months. While I wouldn't recommend it I think there was some benefit to it even if it was not the intended benefit. There is a lot of subconscious knowledge one builds up from just driving neighborhoods, inspecting the inside of houses, doing comps and estimating repair costs.

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    12y
  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @James Wise:
    Originally posted by @K. Marie Poe:
    "If you're not embarrassed (or ashamed) by your offer it's not low enough."
    That is just stupid and I don't want to be in a business where embarrassment or shame is the goal.

    Agreed. Things like that really only accomplish one thing. Wasting everyone's valuable time

    While I agree that there is no point in making shame or embarrassment your goal or wasting anyone's time, but I think this advice might be helpful for someone who is not a natural negotiator and is always careful about not offending anyone's feelings.

    For example, if a new investor is negotiating a FSBO deal where the asking is $100k, but the seller will take $75k. It will be in the best interest of the new investor to make a low offer to test the seller's motivation.

    When I first started, I offered $20k on a property listed for $65k and settled at around $22.5k. The numbers would have worked at even $40k for me, but I wanted to see how would seller react. My goal was not to feel embarrassed or ashamed about my offer, but to make an offer low enough that I couldn't go wrong with the numbers.

  • Investor · Gaithersburg, MD · Member since 2013 · 660 posts · 441 votes
    12y

    The advice I received was referring to actually going inside 100 houses before buying your first one. If you count listings and drive by's it's a different story. There is no way I could have done 100 visit's before buying my first one. I did about 10 on my first one. After that, I started to learn how to choose which ones to go see so when I go see a property now, I've already used all kinds of criteria to make sure it passes all the initial checks (which most properties are discounted before I ever get to the visit point).

  • Investor · Gaithersburg, MD · Member since 2013 · 660 posts · 441 votes
    12y
    Originally posted by @Sharad M.:
    Originally posted by @James Wise:
    Originally posted by @K. Marie Poe:
    "If you're not embarrassed (or ashamed) by your offer it's not low enough."
    That is just stupid and I don't want to be in a business where embarrassment or shame is the goal.
    Agreed. Things like that really only accomplish one thing. Wasting everyone's valuable time

    While I agree that there is no point in making shame or embarrassment your goal or wasting anyone's time, but I think this advice might be helpful for someone who is not a natural negotiator and is always careful about not offending anyone's feelings.

    For example, if a new investor is negotiating a FSBO deal where the asking is $100k, but the seller will take $75k. It will be in the best interest of the new investor to make a low offer to test the seller's motivation.

    When I first started, I offered $20k on a property listed for $65k and settled at around $22.5k. The numbers would have worked at even $40k for me, but I wanted to see how would seller react. My goal was not to feel embarrassed or ashamed about my offer, but to make an offer low enough that I couldn't go wrong with the numbers.

    I think her point was not to be stupid about it. If there is a property listed for $100k and it's in great shape, a respectable low ball offer might be $80k. I'm pretty sure she's referring to not offering $30k on such a property. If the house is crap and needs $50k worth of repairs, then yes, $30k might work. My strategy personally is not to negotiate too much. I go in with an offer that I feel is fair. If I have to get it dirt cheap for the numbers to work, I'm not interested in the deal or wasting my time on it. I've bought 5 properties so far and only had to negotiate on one. Some people may read that and think I might have paid too much. I don't believe so. We've been ~10% under appraisal each time (except 1 where we paid at appraisal) and the other side has tried to negotiate before and we've said we were not interested in adjusting our offer and we got it anyway. To each his own I guess. I don't like the low balling and working my way up strategy. If the numbers work at the price I buy it at, I'm happy :)

  • Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
    12y

    I once had a made an offer on a 2BR/2BA townhouse for $25k. It needed a $10k cosmetic rehab. At the time, I felt good about my aggressive offer being low. I felt bad when I lost the deal to someone who paid $25,500 and later sold the it for $90k.

    For that, I am ashamed. Ok, just regretful.

    I've lost a few competitive bids where I didn't go to my max allowable price. Now, I base my offer based upon what will work AND the level of competition.

    Rick

  • Investor · Lucas, TX · Member since 2010 · 620 posts · 352 votes
    12y
    Originally posted by @Justin B.:

    The advice I received was referring to actually going inside 100 houses before buying your first one. If you count listings and drive by's it's a different story.

    Nope. I actually went inside 100.

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    12y
    Originally posted by @Justin B.:
    Originally posted by @Sharad M.:
    Originally posted by @James Wise:
    Originally posted by @K. Marie Poe:
    "If you're not embarrassed (or ashamed) by your offer it's not low enough."
    That is just stupid and I don't want to be in a business where embarrassment or shame is the goal.
    Agreed. Things like that really only accomplish one thing. Wasting everyone's valuable time

    While I agree that there is no point in making shame or embarrassment your goal or wasting anyone's time, but I think this advice might be helpful for someone who is not a natural negotiator and is always careful about not offending anyone's feelings.

    For example, if a new investor is negotiating a FSBO deal where the asking is $100k, but the seller will take $75k. It will be in the best interest of the new investor to make a low offer to test the seller's motivation.

    When I first started, I offered $20k on a property listed for $65k and settled at around $22.5k. The numbers would have worked at even $40k for me, but I wanted to see how would seller react. My goal was not to feel embarrassed or ashamed about my offer, but to make an offer low enough that I couldn't go wrong with the numbers.

    I think her point was not to be stupid about it. If there is a property listed for $100k and it's in great shape, a respectable low ball offer might be $80k. I'm pretty sure she's referring to not offering $30k on such a property. If the house is crap and needs $50k worth of repairs, then yes, $30k might work. My strategy personally is not to negotiate too much. I go in with an offer that I feel is fair. If I have to get it dirt cheap for the numbers to work, I'm not interested in the deal or wasting my time on it. I've bought 5 properties so far and only had to negotiate on one. Some people may read that and think I might have paid too much. I don't believe so. We've been ~10% under appraisal each time (except 1 where we paid at appraisal) and the other side has tried to negotiate before and we've said we were not interested in adjusting our offer and we got it anyway. To each his own I guess. I don't like the low balling and working my way up strategy. If the numbers work at the price I buy it at, I'm happy :)

    Actually I make tons of really lowball offers. One of my gifts is getting really low offers accepted. My point is that using embarrassment or shame as an indicator of an offer well made is stupid. I can do nothing about how my offer is perceived, so it's a waste of time to take that into consideration. I can be sympathetic and understanding to the seller's disappointment. But building shame or embarrassment into the formula (or trying to get everyone to like me) just smacks of original sin theory. Not my thing.

    I'm guessing that 95% of BP members have never been a motivated seller. By trying not to offend a seller you may be cutting them off from a last chance at a solution. Listen to sellers, think as as clearly as you can and worry way less about rules and manners.

  • Investor · Gaithersburg, MD · Member since 2013 · 660 posts · 441 votes
    12y
    Originally posted by @Robert Steele:
    Originally posted by @Justin B.:

    The advice I received was referring to actually going inside 100 houses before buying your first one. If you count listings and drive by's it's a different story.

    Nope. I actually went inside 100.

    God bless you sir! :) No way I would have had the time to do that.

  • Involved In Real Estate · Palm Springs, CA · Member since 2011 · 144 posts · 78 votes
    12y

    I think some of the worst advise I've ever heard were:

    1. "Don't bother trying, it's not going to work." (from someone who had never owned a property).

    2. "You didn't get ANY response from you letter?! Well don't waste your money on sending them another one!" WTF?! I ended up sending out follow up letters and got more properties.

    3. "Just hang in there, the market will turn around again in a few months". I put my properties on the market and sold anyway. I was doing some buy and hold and some flips in SoCal. this was mid 2000s. Made a killing, paid taxes but still had money left over. My friend lost his house to the bank.

    and the real WINNER:

    "Just QUIT".

    Quitters never win, and WINNERS never QUIT!!!!!!

  • Investor · Lucas, TX · Member since 2010 · 620 posts · 352 votes
    12y
    Originally posted by @Justin B.:
    Originally posted by @Robert Steele:
    Originally posted by @Justin B.:

    The advice I received was referring to actually going inside 100 houses before buying your first one. If you count listings and drive by's it's a different story.

    Nope. I actually went inside 100.

    God bless you sir! :) No way I would have had the time to do that.

    Yes, that was when I was in my twenties and didn't have kids. For my last purchase I think I may have looked at half a dozen prior to making an offer.

  • Sharad M.Pro Member
    Carlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
    12y
    Originally posted by Kristine Marie Poe:

    Actually I make tons of really lowball offers. One of my gifts is getting really low offers accepted. My point is that using embarrassment or shame as an indicator of an offer well made is stupid. I can do nothing about how my offer is perceived, so it's a waste of time to take that into consideration. I can be sympathetic and understanding to the seller's disappointment. But building shame or embarrassment into the formula (or trying to get everyone to like me) just smacks of original sin theory. Not my thing.

    I'm guessing that 95% of BP members have never been a motivated seller. By trying not to offend a seller you may be cutting them off from a last chance at a solution. Listen to sellers, think as as clearly as you can and worry way less about rules and manners.

    I think that's the whole point that you should make an offer that you feel comfortable with, no matter how low that number is. Whether or not you feel embarrassed or ashamed about that number shouldn't have anything to do with how much you feel comfortable offering.

    I agree that you shouldn't make an offer to make sure you feel embarrassed about it, but make an offer that you feel comfortable with and let the seller perceive it how he or she might.

    If a house is listed for $1 mil and it really should sell for $10k for it to work for me. Some people might just pass on it thinking that they will offend the seller. I will make an offer of $7k so that I leave some room to negotiate and come up to $10k.

    I have gotten to the point in my career where the houses are strictly numbers and I offer what works me. Some houses I have picked up at 30% of List Price, some over List Price and some free as part of a package. It just comes down to how comfortable you are with making an offer.

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