Lessons Learned From Two of My Mentors
Lessons Learned From Two of My Mentors
The real estate industry offers many ways to achieve success and many options within each path. I am sharing the lessons learned from two of my mentors; my father and his childhood buddy, Charlie, both have achieved great success and rewards from the real estate industry.
This is not the only way to achieve success; it is just one example. You alone must determine the paths and rewards you desire.
Early in both of my mentor’s real estate careers, they chose to invest in residential rental properties.
They expressed to major pitfalls; 1) too much reliance on a single target market, and 2) not fully considering all the associated costs prior to making an offer and ownership.
Example of a single market; dependency on military tenants/buyers. It is not new that military markets change.
During the 1960s, Charlie had hundreds of residential properties that catered to military tenants. The Air Force Base closed and Charlie lost every property. There were not enough people who were interested in renting. There were so many properties on the market, prices plunged, and there were not enough buyers at any price.
This was a very local problem, which speaks to why reliance on state or national numbers can be very misleading.
Example of a common cost pitfall; not determining and considering all the associated costs of owning and holding a property. Poor consideration can turn a good real estate investment opportunity into a bottomless money pit nightmare.
For example, when I first began managing my own residential rental property in the 1960s, I asked Charlie for his advice. His first advice was to learn how to walk through a property and discover all that needed to be repaired or improved. Make a list. Then, research the costs to have a good idea of what you are facing to determine what your purchase offer should be.
He warned of the dangers of overlooking or not fully considering all the costs. He stated he would even consider the number of screws or nails it would take.
Keep in mind, these two mentors never used inspectors. They never reviewed appraisals. Never. This was their money and investment. Their goal was personal knowledge of EVERYTHING about the present condition of a property, and then they could plan the future with more accuracy. No one knows better of their vision and how and why to improve a property better than they did. The target markets were also a major consideration prior to any offer to buy. What the competition was doing was also important because they always planned to outperform all others.
One of my hidden costs was the sewer pipe. The type of trees in the backyard were known to have aggressive roots systems that have a tendency to enter into the old cast iron pipes. This is can be a slow developing problem that must be addressed eventually. It may not be a problem now, but heads up.
There are many ways and methods to achieve success in the real estate industry. You must choose your own path and determine your own comfort levels versus risks and rewards. No one knows your vision better than you.
Your comments are welcomed.