What do you wish you knew sooner?
Akron, OH (Akron) · Member since 2020 · 12 posts · 7 votes
I've been reading a lot of books and blogs on real estate investing as well as listening to the BP podcasts. I'm amazed at how much I keep learning. As you look back at your real estate investing journey, what do you wish you had known sooner?
It's not over when you sign the contract, or you get a verbal confirmation, or when due diligence is approved. There are so many areas where any transaction can fall through. So don't get too giddy at a minor milestone, and keep pushing as you did from day 1 until you complete that task. It's not over till it's over, and then some just to be safe :)
I wish I had known sooner how much the rat race sucks. I learned about real estate investing in college but didn't take action until a few years after I had graduated. The pain of those experiences post-college motivated me to take action though.
Also, I thought a job meant financial security.
It's not over when you sign the contract, or you get a verbal confirmation, or when due diligence is approved. There are so many areas where any transaction can fall through. So don't get too giddy at a minor milestone, and keep pushing as you did from day 1 until you complete that task. It's not over till it's over, and then some just to be safe :)
What a great topic! I am still very new to RE investing as well. But I can say that there are two things that I've figured out thus far:
These are not new concepts, and are all over this site. Unfortunately, I did not know about BP when I bought my first home, or when I sold it. When I bought, it was very scary, as I was pretty much using money I had saved up for 10+ years and hoping nothing bad happened during or after closing. It definitely felt like a gamble. In addition, I have a very 'traditional' parent who kept telling me I had to have a husband to help me, otherwise I would never be able to afford to buy a home (I was very happy to prove him wrong.) I would compare it to skydiving....if you've never done it before, there will be people telling you how stupid it is and that they themselves would never do that, it will be scary because you don't actually know how you will feel the second you jump out of the plane. There are absolutely risks involved....but the chances you will actually die are pretty slim. And when you reach the ground in one piece, the pride and accomplishment you feel are pretty amazing.
As for building a team, sadly, since I had nothing to go off of my first time, I learned the hard way how important it is to thoroughly vet your agent (if you're working with one). When I bought my first property I had a woman who was taking me to showing that did not fit my criteria, and in the end, I ended up finding my own properties (I lost out on the first offer), she fought my lender half the way through my sale. Without going into more detail than that, it was a horrible experience, and I would never work with her or anyone from her agency again, nor would I recommend them. Now, when I went to sell, I spent an entire day interviewing agents and eventually narrowed it down to 2 amazing options (again, this was before I know of this amazing RE resource!) My experience as a seller was great, my agent understood my needs, helped me through the process, and was very honest and was quick to point out areas of concern when they surfaced (not after the fact.) I am moving out of the California market for the time being, but when it becomes more reasonable and affordable, I would 100% return to the same team. I also made sure to post several reviews online so that my positive experience could be shared with others. TALK to your potential team members, and make sure you guys are all in the same boat and that everyone in that boat knows the destination you are traveling to.
All personal opinions and experiences of course, but if I had the chance to do it over, I would have 'jumped' sooner, and I would have invested time into interviewing my real estate agent (as a buyer) BEFORE I signed on to work with them.
Looking forward to hearing what other say on this topic!
I wish I had known sooner how much the rat race sucks. I learned about real estate investing in college but didn't take action until a few years after I had graduated. The pain of those experiences post-college motivated me to take action though.
Also, I thought a job meant financial security.
Thanks for your input Paul! I'm definitely in that stage right now as a recent college graduate. The idea of just needing to jump in seems like such a common theme.
It's not over when you sign the contract, or you get a verbal confirmation, or when due diligence is approved. There are so many areas where any transaction can fall through. So don't get too giddy at a minor milestone, and keep pushing as you did from day 1 until you complete that task. It's not over till it's over, and then some just to be safe :)
That's such an interesting take and nothing I've thought of before. Thanks for the insightful comment!
What a great topic! I am still very new to RE investing as well. But I can say that there are two things that I've figured out thus far:
These are not new concepts, and are all over this site. Unfortunately, I did not know about BP when I bought my first home, or when I sold it. When I bought, it was very scary, as I was pretty much using money I had saved up for 10+ years and hoping nothing bad happened during or after closing. It definitely felt like a gamble. In addition, I have a very 'traditional' parent who kept telling me I had to have a husband to help me, otherwise I would never be able to afford to buy a home (I was very happy to prove him wrong.) I would compare it to skydiving....if you've never done it before, there will be people telling you how stupid it is and that they themselves would never do that, it will be scary because you don't actually know how you will feel the second you jump out of the plane. There are absolutely risks involved....but the chances you will actually die are pretty slim. And when you reach the ground in one piece, the pride and accomplishment you feel are pretty amazing.
As for building a team, sadly, since I had nothing to go off of my first time, I learned the hard way how important it is to thoroughly vet your agent (if you're working with one). When I bought my first property I had a woman who was taking me to showing that did not fit my criteria, and in the end, I ended up finding my own properties (I lost out on the first offer), she fought my lender half the way through my sale. Without going into more detail than that, it was a horrible experience, and I would never work with her or anyone from her agency again, nor would I recommend them. Now, when I went to sell, I spent an entire day interviewing agents and eventually narrowed it down to 2 amazing options (again, this was before I know of this amazing RE resource!) My experience as a seller was great, my agent understood my needs, helped me through the process, and was very honest and was quick to point out areas of concern when they surfaced (not after the fact.) I am moving out of the California market for the time being, but when it becomes more reasonable and affordable, I would 100% return to the same team. I also made sure to post several reviews online so that my positive experience could be shared with others. TALK to your potential team members, and make sure you guys are all in the same boat and that everyone in that boat knows the destination you are traveling to.
All personal opinions and experiences of course, but if I had the chance to do it over, I would have 'jumped' sooner, and I would have invested time into interviewing my real estate agent (as a buyer) BEFORE I signed on to work with them.
Looking forward to hearing what other say on this topic!
Thanks for sharing your experience Autumn! Yes, I heard that building your team is crucial. Hats off to you for sticking with it even after a bad first experience. It could be so easy to walk away after that. When would you recommend building a team? I plan to buy a property to house hack next year. Would you start team building now, or just continue learning through books, podcasts, etc.?
@Jordan Wharton Yes, team house-hack! I'm right with you, same timeline! Personally, I am putting together a team now (in my desired area, where I have no experience investing yet!) Books, podcasts, forums and all that stuff is great, and super essential in gathering as much data as possible, and it's a great base for overview knowledge. I would encourage you to continue with all of that stuff (I try to make it a daily habit to at least read one blog, listen to one podcast, etc.). In my case, I use this as an opportunity to keep myself motivated. This site makes my daily goal a one stop shop.
Along with all the online resources, I really enjoy getting people on the phone and picking their brains. I consider this site, and the phone conversations I have as two different tools to help me build my future. You can't build a quality house with just one hammer, you're gonna want to add some tools to your toolbox. ;)
There are so many great people on this site, but there are also a ton that are not, I like to add both to my pool of interviews. When you get people on the phone, you also have a chance to get really in-depth answers to your questions. For instance, I am looking at the Portland area, one question that I've been asking agents is "how do you think the political climate (ie. crazy riots and some very unfortunate damage to local businesses) in Portland will affect the housing market going into next year?" It is location specific, but the answers I am getting help me to understand a lot about the people I'm talking to. I want people on my team who not only have the property/market knowledge...but ones that invest in knowing what is going on in the area, and care deeply about it (read local papers, support local businesses, do additional research on what is going on in the local government, etc.) Ask the questions that are important to you, it will help you to quickly weed out those you could possibly work with vs. those who just don't take the same business approach as you.
Best of luck to you, buddy! You're in a great place to start!
wish i knew how to raise capital sooner
@Autumn Kaiser That's really helpful! Thanks!
@Kerry Noble Jr Great point. What has helped you most to raise capital?
“The rich don’t work to earn, the rich work to learn.”
Lots of extremely valuable lessons can be learned by taking a job in the industry, and over time your experiences will give you considerable insight into investing. Leasing, construction, property management, financing, development, any and all roles can inform your investing and you’ll see your vantage point evolve rapidly with experience.
I also came across this article earlier that seems relevant so am passing along
https://www.cnbc.com/2019/08/23/self-made-millionaire-6-biggest-lies-we-tell-ourselves-about-money.html?__source=facebook%7Cmain&fbclid=IwAR1hqm76-0U7vXo06jTMfU64KCw7y8pznoXPxF6xRUsmbiaYeL9UNmIUt8U&fbclid=IwAR3Ae_-YbwBVzHXj2crpQhdJzxDbOjSOKHhpNv1OzPnMGHbBp2Twqc6OD-M&fbclid=IwAR2O1SpfLlQkp37llRKyKPhxTixj28EkN7cQcqafm8oHUZzzAg2yEouQQRE
@Autumn Kaiser
Has some very good points. Getting to know your market well and the players in it is very beneficial.
Read a lot, but also do a lot. Don’t be afraid to give your time when you’re young and learning, it will always pay off in the end.
Any experience that you have, you can learn from it, take your time and make sure that you are getting all out of something you can. I always looked at tasks through the lens “how can this be improved” or “how can we do this better”.
@Jason Denoncourt Thanks for sharing the article! Love the idea of the conscious spending plan and point 6, believing that wanting to get rich is bad. Very solution driven. Thanks!
@AJ Shepard Thanks for the insight AJ. I think that needs to be the next step in my development. I have a good basic understanding on paper, but need to practice running the numbers on properties and getting more hands on experience.
Wish I took seriously the advice to never stretch numbers...
And to NEVER over-rehab...
You'll lose a ton of money that way (ask me how)
I wish we had known how to write up a better *rent to own* contract, we didn't get the best advice. Still suffering from that mistake but getting closer to the expiration date.
I wish I had a crystal ball and knew beforehand that housing prices would almost double in one area over a few years. Kidding aside, when you have enough for a down payment, buy a place. Also if you have a tenant where things seem like they are going south, trust your gut and cut your losses...and get them out.
@Jordan Wharton I wish I known how to apply the 80/20 rule to my real estate business.
80% of my headaches and hassle come from arguing w/ tenants over repairs and security deposits, finding a cheaper plumber or HVAC company, and other minor issues.
Almost all of the stress in RE comes from this 80% but very little of the reward.
Now I ignore all of the small stuff. I fix everything, err on the side of giving more of the security deposit back, and use quality well-priced subs. Life is better for me, my tenants, contractors and I have my energy to focus on deals.
@Jordan Wharton even little steps add up.
EVERYTHING! And a little more..
But honestly, I wish I would have been set myself up better in my twenties, I do not regret all the traveling I did, but wish I hadn't spent so much time figuring my life out and hopping around different degree programs. If I would have had the knowledge of finances and real estate that I do now, I would be in a much better position.
GOAL: Find a kid in their late teens or early twenties and teach them what I know now, hopefully help someone make steps towards a promising future.
Forrest Faulconer
@Ujwal Velagapudi this is a great response! I'll definitely take note.
@Joe Cassandra how did you over rehab?
@Joe Cassandra how did you over rehab?
- "Oh, this bathroom needs a full gut. The shower isn't HGTV worthy..."
- "Oh, this roof is 10 years old, no buyer will want this, we need to replace it..."
- "I don't like these cabinet fronts, I could paint them for $500...naw, let's replace the fronts so they look better for $2,800."
Overrehabbing you're doing more than you need to...usually for vain reasons and not smart business reasons.
Now, what we do:
1) Look at comps and ONLY get to their level. If their master baths are inserts...leave them as inserts. Don't gut and re-tile and spend thousands.
2) If a roof or hvac is not at useful life (even 13 years old like our last house). DO NOT replace. Use as negotiating piece during DD. Replacing it will not get you more money. The buyer will just find something else for $5,000 to complain about for you to fix.
3) Don't buy expensive stuff. One of our first flips, we got one of those fancy standalone tubs because we thought it would boost ARV. Cost $2,500 for everything for it, did not get that money back.
4) Bank on STAGING to make house sell, and not expensive stuff. Don't add can lights for 'effect.' Don't add a sliding backdoor to 'let more light in.' (big mistake). Bring in $10 lamps to add light. Change the light bulbs to brighter ones to let more light in for $20.
It doesn't mean 'cut corners' and 'hide things.'
It means stop trying to make a house to impress people. You're in flipping to make money.
The more things you start in house, the more problems you'll find and have to fix.
When to hire professionals to do the work vs doing it yourself. Tried to rehab a property while working 40 hours per week. It took 10 months to do a month's worth of work if we have a GC take care of it. The carrying costs and lost rent haunt me. We learned a lot for sure, but I was burnt out by the end.
Also, it never occurred to me that you should have some extra cash laying around after an acquisition in case any big expense comes up right away. It can take a little while to build your nest egg and be fully self sufficient.
I've been reading a lot of books and blogs on real estate investing as well as listening to the BP podcasts. I'm amazed at how much I keep learning. As you look back at your real estate investing journey, what do you wish you had known sooner?
There have been quite a few good suggestions already and one of the biggest points I'd like to add is focus.
Figure out why you want to invest in real estate, pick a strategy that aligns with that why and don't veer from it until you've been successful! I've wasted a lot of time trying to do too many things at once, don't make the same mistake!
Dan