How can we avoid making mistakes in Real Estate? This is such a huge question.
I've been working in real estate in some capacity since I was 18 years old. I turned 19 working on a framing crew just outside Dallas, TX in 1992. My first week on the job I was given the task of moving lumber from one side of the project to where the carpenters were working and keeping the jobsite clean. Within a few months I was learning how to frame entire custom homes. It was brutal work and taught me a lot of valuable lessons.
One day as I was framing in a window, I made a mistake. My foreman asked me a life changing question. "How can you tell the difference between a good carpenter and a bad one?"
Me: "I don't know."
Him: "Good carpenters always correct their mistakes."
I've made so many mistakes in my almost 30 year career that have ultimately cost me some big dollars, and nothing that killed me.
In a recent renovation flip, I hired a project manager that was not a good fit. I should have replaced him within the first couple of weeks. We held on longer than we should have. That cost us over $100k in potential returns. It cost us over 6 months in turn time. It was brutal. I was angry every day and did not enjoy that process. When it was all said and done, we sold the property and came out ahead by a few thousand dollars. That was painful. The lessons will last a life time.
In 2020, I started a property management company that has provided a plethora of opportunities for mistakes. I waited too long to hire my assistant. It cost me several months of cleaning up bookkeeping errors I made. What a mess I created.
So why do I say all this? Working in real estate is messy. It is not for the faint of heart. To avoid mistakes is to never do anything. Get out there and make mistakes as fast as you can and learn how to recover quickly. Do what you can to avoid mistakes, but never be afraid to make them. You will make them. Every deal is different and every one will provide new situations you've never seen.
The real money in real estate is learning how to solve problems which are usually the result of someone's mistake. It will be your mistake or someone elses.
What are some of your most recent mistakes and how did you grow as a result?
My biggest mistakes, so to speak, all fall under the heading of not implementing new ideas and processes as quickly as I could have. It all comes down to "how much further along would I be if I had implemented this lesson 2 months ago?"
We recently had the cold spell in Houston where we didn't have the proper precautions in place to prevent pipes from freezing. We conducted a root cause failure analysis, and have since implemented better processes to prevent pipe issues during future freezes!
Apparently, accounting/bookkeeping is something that people here tend to just want to do it themselves because it seems like they have a degree in it.
I had to fix people's mistakes when they don't get someone that knows how to book things correctly. It becomes very costly for this type of mistake.