Did you make any rookie mistakes? (Plus, NEW BOOK!)

Buying & Selling Real Estate
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Did you make any rookie mistakes? (Plus, NEW BOOK!)

Kaylee WalterbachPro Member
Rental Property Investor · Norman, OK · Member since 2018 · 156 posts · 529 votes

First-Time Home Buyer: The Complete Playbook for Avoiding Rookie Mistakes is available now!

@Mindy Jensen and @Scott Trench have been buying and selling houses for a collective thirty years. In First-Time Home Buyer, they’ll give you a comprehensive overview of the home-buying process so you can consider all of your options and avoid pitfalls while jumping into the big, bad role of homeowner. You can get the book, along with some stellar bonus content, on the BiggerPockets Bookstore!

We've all made some rookie mistakes... So if you could travel back in time, what’s the ONE tip you would give yourself before you bought your first property?

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Leon F.
Louisville, KY · Member since 2015 · 26 posts · 75 votes
5y

I bought my first investment property from the foreclosure sale and I did not evict the previous owner like I was advised.

It's been problems ever since.

19Reply
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  • Kaylee WalterbachPro Member
    OP
    Rental Property Investor · Norman, OK · Member since 2018 · 156 posts · 529 votes
    5y

    I'll start... We just bought our first house about six months ago. (Unfortunately, this book didn't exist back then, and we were going in totally blind.) 

    Our apartment lease was ending at the end of July (and we were getting married in the beginning of August), so we thought we "needed" to find and buy a house by then. It definitely rushed our decision unnecessarily... something that the book talks about at length, actually. I wish we would have slowed down and looked at a few more properties before rushing into a decision.

    [email protected]
    8Reply
  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Kaylee Walterbach How many can we post here?! My rookie mistake (before I found BP) as a homeowner, was buying a property with a significant other and having NO PLAN for what would happen if the relationship fell apart. Fortunately, this "worse mistake" is what launched me down the path of homeownership, househacking / live in flipping, and investing! Woudn't have it any other way ;)

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    16Reply
  • Max Maysonet
    Investor · New Haven, CT · Member since 2019 · 17 posts · 18 votes
    5y

    My experience on my first property has yet to come, but I am sure I will make a mistake as it is my first property. As long as I learn I don't care that I make a few mistakes, because I plan to take notes and learn from them. 

    I'm targeting a 9% COC return, or a rehab that can allow me to raise sweat equity to fund the next investment. I'm taking as much as information as I can right now because there is plenty that can go wrong with a first time home owner process. I plan the Buy and Hold strategy.

    I haven't read the book yet, but I want to hear everyone's thoughts as well. 

    14Reply
  • Kaylee WalterbachPro Member
    OP
    Rental Property Investor · Norman, OK · Member since 2018 · 156 posts · 529 votes
    5y

    @Whitney Hutten You can post any and all of them! There is something cathartic about talking about all of our mistakes... haha. But it is true that our "worst mistakes" tend to work out in the end! (For example, the house that I rushed into buying isn't a total loss. We're doing a live-in flip so... still, not the worst thing that could have happened!)

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    3Reply
  • Kaylee WalterbachPro Member
    OP
    Rental Property Investor · Norman, OK · Member since 2018 · 156 posts · 529 votes
    5y
    Originally posted by @Max Maysonet:

    My experience on my first property has yet to come, but I am sure I will make a mistake as it is my first property. As long as I learn I don't care that I make a few mistakes, because I plan to take notes and learn from them. 

    Very good point! I don't think there's any way to get started without making mistakes, so might as well embrace it!

    [email protected]
    4Reply
  • Leon F.
    Louisville, KY · Member since 2015 · 26 posts · 75 votes
    5y

    I bought my first investment property from the foreclosure sale and I did not evict the previous owner like I was advised.

    It's been problems ever since.

    19Reply
  • Nicholas Valente
    Contractor · Hopedale, MA · Member since 2020 · 31 posts · 29 votes
    5y

    @Kaylee Walterbach

    **DO NOT HIRE YOUR FRIENDS TO WORK AT YOUR HOUSE**

    (Obviously if you know their quality and timelines first hand and they are rockstars. Use the discount)

    Made a 6k mistake subbing out the electrical to my friend. We are no longer friends because of what happen.

    7Reply
  • Aaron W.
    Rental Property Investor · Northern Virginia · Member since 2019 · 793 posts · 620 votes
    5y

    Know your why and set goals that will accomplish your why, then take action everyday that moves you toward your goals.

    5Reply
  • Andrew FreedBusiness Member
    Investor · Worcester, MA · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    In this competitive market, I did not want to let the deal slip through my fingers. As a result, during the negotiation/inspection of my last property, I had the option of reducing the purchase price by $7,000 or get about $2,500 in fixes. To keep the bond strong with this seller, I decided not to reduce the price and allow the fixes to occur prior to closing. In hindsight, I would have bought the deal anyway and it was a fair price, but business in business. If I could have saved $7,000 and put it in my next deal, that would have been the better decision. There are always deals out there, don't get caught up in FOMO. 

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    10Reply
  • C. Gorm
    Investor · FL · Member since 2020 · 6 posts · 9 votes
    5y

    I don't know if these have been mistakes as much as just items to note that I have run across with properties I've bought and sold:

    If selling or renting at any point is part of your goal with the hopes of appreciation, not taking a loss, or covering your mortgage, know the market you are buying in and the potential future buyer/renter availability. Living in the country is nice, but when you think about selling or renting, who (if any) are the buyers/renters in that area? (personal experience)

    Make sure you participate in the inspection process if you can. Ask a lot of questions!

    Plan ahead, take your time, and don't rush due to FOMO.

    When you find a rate from a lender that you are satisfied with, lock it in immediately. Yeah, you may feel like you could have gotten a better deal if rates dropped, but you will feel worse if you didn't lock the rate and they raise rapidly between contract and closing. 

    9Reply
  • Kent McDonell
    Rental Property Investor · Madison, WI · Member since 2019 · 1 post · 16 votes
    5y

    I pulled together a group of friends from college to do a flip with me, and since they are all in different states, they were able to support through financing and paperwork, but I was the boots on ground. We searched for a while, making 5 or 6 offers on properties, but we were not getting any replies. 

    Finally, a new deal popped up on the MLS and my realtor was all excited about it. He found some comps to convince me that the ARV was 70K higher than the sale price, and that it would only need 20K of work. We got excited (first mistake) and made an offer at nearly list price because we saw how many people were viewing the house.

    Trusting the two optimistic comps at 260K (second mistake) above three others that were 230K let us to believe there would be meat on this bone. 

    As it was my first big project like this, I got sidetracked a lot during the project, getting derailed from primary goals with little details like rerunning electrical. Ultimately, we finished our remodel 45 days behind schedule and it barely looked tolerable, certainly not anything to be proud of. We had cut corners in the kitchen, bathroom, flooring, and refinishing the walls, and all of it showed. Having an unclear vision (third mistake) of the final product caused many changes in scope with significant cost creep as we rationalized along the way. 

    Months later we sold it for a loss of 18K, and I still shake my head every time I drive past that street. I'm never walking into a project that unprepared again. 

    16Reply
  • Michelle Gerac
    Member since 2021 · 17 posts · 26 votes
    5y

    My rookie mistake on my first property was not budgeting correctly, nor having a set timeline or clear end goal. Looking back, I wish I would've been able to hold on to that property and lease it out, but I ended up having to sell it because I ran out of cash. 

    Once I sold it, I did end up getting a good deal on another property that I now lease out, but the second time, I had a clear goal, realistic schedule, and set budget. I will not let what happened on my first property happen again!

    8Reply
  • Chris Davidson
    Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
    5y

    Mine is a bit different than most I have read in the thread so far. Mine was back in 13' or 14'. I was looking for a unicorn of a deal and had really tight criteria. It was a buyers market and I took that to an extreme. If I could go back and not passed up on half those deals I thought wouldn't get the numbers I needed I would be in a better place and have more doors. Like I have seen on here the best time to buy was 30 years ago the second-best time is today. 

    So my advice is don't bank on appreciation but also don't just look at year 1 on deals.

    6Reply
  • Steven Jenk
    New to Real Estate · Nashville, TN · Member since 2021 · 3 posts · 3 votes
    5y

    Not a purchasing mistake, but a selling mistake. I used a real estate agent to sell my condo when the market was incredible aggressive. I should have pursued FSBO. I sold the condo in one-week with photos taken off the phone and one open house. I set the price and accepted one of the first offers. I'f I'd have attempted FSBO (prior to going with a realtor), I would have likely saved ~$10-15K.

    3Reply
  • Kevin Zolea
    Rental Property Investor · Collingswood, NJ · Member since 2016 · 282 posts · 116 votes
    5y

    Assuming that professionals that were referred to me by other investors I looked up to were the right fit for me and not taking a deeper look into them before working with them.

    6Reply
  • Martin NealPro Member
    Rental Property Investor · Chicago, IL · Member since 2017 · 293 posts · 383 votes
    5y

    @Kaylee Walterbach always use license contractors. Any unlicensed vendors I used came back to bite me in some way, shape or form.

    7Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    5y

    Congrats on the new book @Mindy Jensen and @Scott Trench!

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    3Reply
  • Nikki Frick
    Denver, CO · Member since 2019 · 11 posts · 68 votes
    5y
    Oh no, Whitney!
    I'm running a new series on BiggerPockets Instagram called "Sunday Scaries" - just an opportunity to show how mistakes and scary situations happen to everybody. Would you mind if I shared this?

    Originally posted by @Whitney Hutten:

    @Kaylee Walterbach How many can we post here?! My rookie mistake (before I found BP) as a homeowner, was buying a property with a significant other and having NO PLAN for what would happen if the relationship fell apart. Fortunately, this "worse mistake" is what launched me down the path of homeownership, househacking / live in flipping, and investing! Woudn't have it any other way ;)

    1Reply
  • ThomasRoy Penland
    Rental Property Investor · Albuquerque, NM · Member since 2020 · 53 posts · 32 votes
    5y

    @Kaylee Walterbach

    The only rookie mistake I can say is not purchasing a home. Sounds like a good decision to me. Their will always be a better place to purchase, and with that, there will always be a worse of purchase. But for the long term hold, and save along the way for the next purchase.

    0Reply
  • Anthony Angotti
    Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
    5y

    @Kaylee Walterbach

    Valuing cash flow only at the beginning led me to invest in more C class type assets primarily for too long.

    Had I focused more on B class and above type neighborhoods with more rent and value appreciation I would be further ahead as far as long term wealth generation.

    Today I look more at long term IRR over simply year one cash on cash return and cash flow.

    4Reply
  • Jacob Lapp
    Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes
    5y

    @Kaylee Walterbach

    My biggest rookie mistake on my first deal was selecting one of my first tenants.

    I bought a vacant (pretty much turnkey) triplex to househack. I had a trustworthy friend interested in living in one unit and paying a cheaper rent to take care of grass/snow and to act as a buffer or property manager between myself and other tenants. This actually worked out great and is still working out great to this day!

    So I needed one more tenant.

    After the AOS was fully executed I listed the final unit on Facebook and got a lot of interest before I had ownership. I told everyone that I didn’t have ownership yet and would start showings the day of settlement. (August 28th) and my goal was to have all leases in place starting September 1st.

    Settlement came and a ton of people showed up and filled out applications. Then someone showed up and said they would pay the year in advance (just sold their house) all I saw were dollar signs!!! So I looked past their low credit and didn’t do a background check😑

    The check cleared and I was overjoyed. That was the majority of the mortgage for the whole year and it all came in at once!

    8 months later I noticed I didn’t see the father out recently and asked where he’s been.

    “He’s back in jail”

    Mind you his daughter who was living there did not make enough money to cover the rent on her own. I told her she can definitely stay until the year was up and that I would help her find a place to go.

    This was an extremely stressful couple of months. During the middle of COVID I knew I couldn’t evict but helped her find a place and helped her move there as well.

    So aside from a stressful couple months everything worked out and I didn’t lose money which is the key. I learned the importance of thoroughly screening tenants and not jumping at the quick pay day.

    Hopefully this helps someone haha

    3Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    @Kaylee Walterbach. Do not trust your own rehab estimates!!!

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    3Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    5y

    My list of Rookie mistakes is long: (in no particular order)

    • Buying a first property in a "D" neighborhood
    • Using an off market seller's title company, ignoring red flags when a purchase deal is going south
    • Renting to friends, Hiring friends
    • Letting bad tenants stay too long because it's an "inconvenient" time for another turnover
      Buying used appliances and lawn equipment
    • Failing to have a process in place for accepting pre-move in funds in a TIMELY manner
    • Giving a tenant with "legal issues" a chance; Giving an out of state tenant that I could not adequately vet a chance.
    • Not expecting constant change in tenants, rules, vendors, employees, everything...

    P.S. CONGRATS on the new book!!!

    9Reply
  • Joshua McMillion
    Rental Property Investor · Madison, AL · Member since 2019 · 487 posts · 658 votes
    5y

    @Kaylee Walterbach

    My biggest mistake for our first home purchase was purchasing based on personal wants and not an investment. I did not know BiggerPocket yet, and if gifted the information we have to know, I would not have purchased the property. Most markets in the U.S right now are growing by an average of eight percent or higher. The market I purchased has been flat, and I actually decided to sell it this year and rebalance it to a newer, more desirable market! I was also completely new to home purchasing and just accepted everything without thought. Knowing the process is POWERFUL and can save you time, money and make you better with negotiations. 

    Sincerely, 

    Josh

    2Reply
  • Guy Primo
    Member since 2019 · 24 posts · 3 votes
    5y

    @Max Maysonet. Can you explain COC ROI

    This is what I’ve come up with, does this Make sense?

    Property 250,000

    25% down 62500

    Mortgage 1332

    Vac $100

    Repairs $100

    Unit 1 1400

    Unit 2 1400

    Rent $2800

    Expenses 1532

    Cash flow 1268

    Cash flow x 12

    1268x 12 months =15216 annually

    Down pay 62500

    Closing 5000

    15216 \. 67500 = 0.225 x 100 =

    22.55% ROI first year

    These are approx expenses I just added $200 to the mortgage of $1332

    0Reply
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