How I lost $163,000.....what's your biggest mistake?

Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes

Hindsight is always 20/20 right?

What's the biggest mistake you've made?

Mine would be....

Early on I didn't understand the power of BRRRR or buy and hold; I thought flipping and quick cash was the way to wealth. My biggest mistake was selling my very first property. It was a 2br 2.25ba (1 full, 1 three quarter, and 1 half bath) townhouse in a great HOA in a great area (Kirkland, WA) that I purchased it at the bottom (2012) for $127k. Put $20k into rehab and resold for $267k. At the time I thought it was the best thing that had ever happened to me, until I recently looked at what those units are selling or now.... they're in the $430k range. In hindsight I would have kept it as a strong cash flowing rental.

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Account Closed

Johnson City, TN · Member since 2014 · 586 posts · 705 votes

My ex wife. Untold amounts.

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Jon Ree
Investor · Philadelphia, PA · Member since 2017 · 73 posts · 58 votes
9y
I say yours still counts as a win. How did you invest the profits you made? My investing mistake would have been not understanding the power of leveraging and buying our first property with cash and letting it sit there. That said it's done great and there's always time to tack upwind and adjust.
3 Reply
Christian Wathne
OP
Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
9y
@Jon Ree; you're absolutely right. I rolled the profits into bigger flips, then into a buy and hold. Had I known then what I know today I would have figured out how to hang onto it.
2 Reply
Account Closed
Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
9y
@Christian Wathne In 2012 when you sold the property, did you know the value the house would have, 5 years later? Have you considered the carrying costs, capital gain taxes and real estate agent fees, and for goodness sake the traffic of 405? More importantly, have you considered what you have been able to accomplish since, as a result of selling?
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Christian Wathne
OP
Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
9y
Hey @Account Closed no no, definitely didn't have a magic ball back then. Carrying costs would have been a negative number because it would have cash flowed this whole time. Just posing an interesting question that can be helpful to me and other new/intermediate investors about what, in hindsight, was the single biggest mistake people have thought they've made.
1 Reply
Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
9y
I am a hindsight billionair 10 times over .. You cant predict the future
4 Reply
Diane G.
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
Mine was when I first started out in 2003, thought I could never afford Bay Area, and bought in Phoenix... sold in 2007 at $100K loss after a lawsuit with the tenant....But used that money ($100K less) and bought a foreclosure in Bay Area and made about $400K...
But still wish I had not gone outside of Bay Area... Every single buy I made after Phoenix turned out to be a huge win including those bought at the previous peak of 2008....
4 Reply
Ron Orr
Bloomington, MN · Member since 2009 · 107 posts · 30 votes
9y
Mistake is always not having enough cash flow and caring about the market appreciation cycles
5 Reply
Austin Fruechting
Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
9y
Making the best decision you can at the time given the information you had doesn't mean you made a mistake. It's like poker, the idea is to make the right decisions at the time... if you have 2 pair and fold to a big bet on the turn to a guy with straight or flush. So what if you would have rivered a full house? You didn't make a mistake. Folding was the right decision given your ~9% chance for the full house.
5 Reply
Jack B.
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
9y
Originally posted by @Diane G.:

Mine was when I first started out in 2003, thought I could never afford Bay Area, and bought in Phoenix... sold in 2007 at $100K loss after a lawsuit with the tenant....But used that money ($100K less) and bought a foreclosure in Bay Area and made about $400K...
But still wish I had not gone outside of Bay Area... Every single buy I made after Phoenix turned out to be a huge win including those bought at the previous peak of 2008....
Was any part of that loss due to the law suit? What was the law suit about? I'm getting nervous about law suits with tenants now that I have money. Much worse than being poor is having made money and then losing it all to some dead beat tenant law suit, with a huge judgement awarded by a jury of Walmart greeters...
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Jack B.
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
9y
Originally posted by @Christian Wathne:

Hindsight is always 20/20 right?
What's the biggest mistake you've made?
Mine would be....
Early on I didn't understand the power of BRRRR or buy and hold; I thought flipping and quick cash was the way to wealth. My biggest mistake was selling my very first property. It was a 2br 2.25ba (1 full, 1 three quarter, and 1 half bath) townhouse in a great HOA in a great area (Kirkland, WA) that I purchased it at the bottom (2012) for $127k. Put $20k into rehab and resold for $267k. At the time I thought it was the best thing that had ever happened to me, until I recently looked at what those units are selling or now.... they're in the $430k range. In hindsight I would have kept it as a strong cash flowing rental.
MY biggest mistake was NOT buying in the Bellevue/Kirkland area at the bottom. I own some in the area now, but was investing in the south end before that. The gains there pale in comparison to what your condo flip gains today, if you had held onto it.
Next market crash though I'm in SF and Mercer Island...
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Jack B. not to worry.... only one that would lose that kind of money in a lawsuit is someone who is stubborn.. LOL... also as long as you have good insurance and are not a slumlord the risks are minute. Keep in mind your dead beat tenant has no money to sue you .. litigation is expensive and time consuming.. and I submit the above reference to it is quite rare indeed.
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Account Closed
Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
9y
@Jack B. @Jay Hinrichs The city of Seattle now has a department assigned to suing landlords that don't comply with Seattle landlord tenant laws. They have city of Seattle employees - "shoppers" pose as renters, looking for people to cite & sue. I consider that to be "revenue enhancement" enforcement, and a landlord would have to "lawyer up" to defend himself. It isn't the tenant suing, it is the city and they have deep pockets.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Account Closed the post were the investor lost the 100k was in PHX so my point was to lose 100k in a landlord dispute you probably got your back bowed up LOL... not being in the rental business I would not know about Seattle.. but most that follow the laws don't have to many issue from what I see.
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Account Closed
Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
9y
@Jay Hinrichs I agree, it would be unusual circumstances for a landlord to lose $100k in a law suit to a tenant in Arizona. Unclear what the circumstances might be. However, @Jack B. appears to be in Seattle.
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Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
I was doing just fine on my own. Had about 300 units. Was talked into partnering by someone out of the country. He wanted to go 50/50 on the deal. He was impressed by what I did and he wanted to buy something with me and let me "do what I do" Shortly after buying he started to try to micromanage. Wanted me to do all sorts of stuff. I told him "your not my boss dude". Turned into lawsuits. I tried to buy him out for all his money in and then some. Offers to be bought out for the same. Finally cost me about $500k in legal fees. My paying him out (profit to him). Damage he did to my property while he tried to run things himself etc. Never again. No such thing as "partners" in RE. Just marriages. If you wouldn't marry the person don't partner. On the flip side those properties are worth a lot more. One property I almost bought with him (before things blew up) I ended up buying myself due to this. Paid $3.2m. Appraised at $5.9m. Cash flows and I have $0 cash in after my refi. If I was partners with this a hole he'd have 1/2 of that property. If he'd just sat back and let me do my thing I'd have made him a ton of money.
7 Reply
Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
9y
Lol. Dude. That's not a "mistake". I've sold tons of property that is worth way more today. But I'd like to think that I've made more by reinvesting those profits into more property than if I kept the original property.
2 Reply
Account Closed
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y
My ex wife. Untold amounts.
12 Reply
Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
9y
I bought Apple stock at $23 (1/4th that if you includes the splits). Conventional wisdom and layoffs at Apple. Steve Job was fired there were way too many competitions. I sold stock around $25(or $6 today price).
Did I ever look back and regret what I should have done this or that? Heck No!
0 Reply
Diane G.
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Jack B. @Jay Hinrichs
$100K was price I paid to exit Phoenix market because I became "burned out landlord", unfortunately, after owning this property remotely for 5 years....PM issues, AC got stolen, house got broken into, endless repair at (significantly) above market prices... On and on and on....
Lawsuit itself was only < $1000, but it was the last straw on a "burned out landlord", and hurts WAY more emotionally than financially...Made me FINALLY willing to admit I was not good at OOS investing...
2 Reply
Victor Gutierrez
Rental Property Investor · Pawtucket, RI · Member since 2017 · 47 posts · 37 votes
9y
Christian Wathne I know it hurts to know you could do way more money. But that's business you make money but probably the previous owner made money too, so is a circle every body win until the circle is turning all the way around lol
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Diane G. OK that's more like it.. .from your post it sounded like a tenant got a 100k judgment against you or you spent 100k on lawyers.. 1k makes much more sense.. the other malady's are usually symptom's of buying in C class or lower areas. But glad you rebounded into the Bay Area .. I know the Bay Area has treated me well all these years even though I left in 2001... I have done well in Portland home ownership as well over the last 16 years.. I suspect just on SFR's were I lived close to 1 million in net equity.
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Andrey Y.
Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
9y
Originally posted by @Diane G.:

Mine was when I first started out in 2003, thought I could never afford Bay Area, and bought in Phoenix... sold in 2007 at $100K loss after a lawsuit with the tenant....But used that money ($100K less) and bought a foreclosure in Bay Area and made about $400K...
But still wish I had not gone outside of Bay Area... Every single buy I made after Phoenix turned out to be a huge win including those bought at the previous peak of 2008....
You made a huge mistake buying the the Bay Area. Yuuuuge. Don't you know know that California sucks for real estate investing? No cash flow. In fact, the average family earns only $50K in LA county, so its IMPOSSIBLE that CA properties are appreciating the way they do, it must be flawed. Its faulty I tell ya! You are better off investing in Baltimore! :D
3 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Diane G. If I thought back on would a should a could a like this post alludes too.. well then I guess its the 2 homes I owned in Palo Alto one I paid 185k for and one I paid 350k for... suppose if I kept them all these years.... well they would be worth north of 4 million combined... but hey can't look back... got to look forward.
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2 Reply
Diane G.
CA · Member since 2016 · 1k+ posts · 1k+ votes
9y
@ jay hinrichs .... Nooooooo... not $4m, $5m easy... go look at MLS....Lol
0 Reply
Account Closed
Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
9y
trusting anybody
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