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 · 158 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.

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  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Nikki Frick Sure! 

    Podcast Guest on Show How to Build Generational Wealth Without Losing it Along the Way
    0Reply
  • Joshua Moseler
    Investor · Savannah, GA · Member since 2019 · 5 posts · 8 votes
    5y

    Paralysis by analysis. That was my first big mistake. I spent to much time planning and learning, and not enough time doing!

    4Reply
  • Hooman Arasteh
    Denver · Member since 2021 · 10 posts · 4 votes
    5y

    How Can I get the audio version of it?

    1Reply
  • Charlesa F.
    Rental Property Investor · CT · Member since 2017 · 24 posts · 17 votes
    5y

    My biggest rookie mistakes have been using the first realtor to contact me through realtor.com instead of utilizing BP to find an investor friendly realtor. And using a home inspector I found through google instead of finding a verified one from the American association of home inspectors. Those mistakes alone have cost me thousands.

    4Reply
  • Charlesa F.
    Rental Property Investor · CT · Member since 2017 · 24 posts · 17 votes
    5y

    Also discussing my goals with people who aren't like minded. I allowed a family member talk me out of a good deal. 

    8Reply
  • Stephen Zygiel
    Real Estate Agent · Tulsa, OK · Member since 2018 · 8 posts · 4 votes
    5y

    I bought my first house from a friend. With the transaction being a little less than arms-length, I was more lenient (and trusting) in issues that I would have been otherwise. Not having an agent to represent me in a transaction type I had never been through before meant I realized my blind spots after signing instead of before. Luckily my home inspector was very good. While I did get a reasonable deal, I have had to put a bit of work into it to really shore up a few of the issues with it.

    0Reply
  • Janelle Carlson
    Flipper/Rehabber · Ventura County, CA · Member since 2018 · 33 posts · 27 votes
    5y

    What mistake didn't we make! I think the biggest one was buying a property with no utilities on. Because of this, we weren't really able to do proper inspections and were just going based off of how everything "looked". This, of course, led to having to replace all the electrical and plumbing... total nightmare and budget buster! We would have either asked for the utilities to be turned on just for the day or asked for a lower price to include the potential of having to replace all plumbing and electrical. 

    1Reply
  • Alison Hallifax
    Investor · Redmond, WA · Member since 2016 · 18 posts · 6 votes
    5y

    I bought my first house straight out of college in Seattle around 2004 with absolutely no experience and a had a partner who was convinced we could pull off a major overhaul on a 1920's house near the University of Washington.  Location was, and still is, great.  The initial plan was live in the house and house hack the remaining rooms to grad students.  We came up with a grand plan of taking the roof completely off the top of the house to make the dormer style roof into a full third story.  In order to avoid a bunch of pesky setback rules we also had a deck system that was over the top of some living space on the second floor.  Did I mention we were going to do this all on our own to save money?  

    With our grand plan in place and permits in hand, we started our bold journey into construction.  We promptly ripped out the interior cabinets and kitchen, and began the process of knocking out the top of the chimney to remove the roof.  If you have never seen a person being dangled down a chimney to dangerously remove the chimney piece by piece, you are really missing out.  The roof was removed and replaced with the best tarp money could buy.  The neighbor's call at 2am during a snow storm should not have been a surprise...but somehow it was to these two idealistic laborers that decided to rip the roof off of a house at the tail end of fall.  At 3am we were on top of our roofless house with shovels and buckets literally removing snow from (what should have been) the inside of our house because the tarp was somewhere on the other side of the property.  After hours of removal, we did our best to visquine the interior of the house to prevent further damage.  Upon our return the next day, the snow had melted and turned our giant visqueen into a "stairwell water balloon" which was threatening to burst.  Out came the buckets again.  We did the best we could before the visqueen gave way and sent a wave of water cascading through the house.  (Think The Shining when the elevator doors open.)  For those that have not had the pleasure of working in a 1920's house...the drywall is actually strips of wood with plaster over the top.  Well, the water took care of a lot of the plaster for us, and our project expanded to replacing the lathe and plaster with drywall.  Since the walls were open, we opted to replace the knob and tube while we were at it. Despite numerous other incidents like almost losing an eye to a flying hammer, nearly losing a member of our trusty team to a fall off the second story while attempting to hand lift a 20 foot steel I-beam, and failing relations with my partner over the next year, we finally got the place dried in.  Our project continued for a total of almost 2 years, and lives moved on...as they do. The day before I got married I finally received a pay out from my former partner for just the money i put into the project as I sold him my interest in the house. My sanity was worth it, as was avoiding another 2 years of poor decision making from my partner.  The 2 years of work I put in was an Master's Degree experience in construction, real estate, psychology, and hard work.  

    All was not lost though. After licking my wounds, my wife and I did a complete (well planned) remodel of another 1920's house which made a nice profit. We moved on to BRRRR process remodels in Pittsburgh and are now involved with multiple Syndication and partnerships in apartment complexes around the country.

    For all those newbies...you may make mistakes but they make for some good stories you can eventually tell down the road when your ego has recovered.  But if I hadn't jumped in, I would never have earned that Master's Degree though.  If only I had Bigger Pockets in 2004!!

    4Reply
  • KP Rajan
    Jersey City, NJ · Member since 2017 · 9 posts · 2 votes
    5y

    My rookie 'mistake'  occurred when my first purchase was a rental property out of state.  I didn't know about BP back then (and though I did register 5 years back, think my account was inactive for a period and only recently activated)  and so flying blind.  I wouldn't call this a mistake but more of a learning point:

    Circumstances - First time buyer, out of state purchase. realtor was introduced by my very good friend (both locals in that state) who praised that realtor's experience and considered him to be a very good friend. 

    So, I blindly assumed that realtor was the expert and had my best interest in mind.  The realtor was a nice person no doubt and smooth in marketing.  

    I naively didn't probe too much into his assumptions; he gave a simple spreadsheet that calculated the 'ROI" touting 21% overall return for that property and that was enough for me to get it done. In the hurry - and given the many steps involved - I just went with what he recommended.

    It was only later I realized that his #s provided for a very low maintenance (think $50 a month), no vacancy, and conveniently forgot to include the rental commission I had to pay for him for finding a tenant (which is one-month rent).  And then the expenses that followed once the first tenant vacated.  Gosh! It was tight slap in the face when I thought it will take a few hundreds whereas it stretched to a few thousands because of re-carpeting, full painting etc.

    No complaints as these were expenses that went into the upkeep of the home, and tax deductible.  I just wish that I had been more prepared and not go by projections given by others.  Though he might not have intended to mislead, he might have forgotten to be more practical.  So, learnt never to assume that the 'experts' are always right. :)  

    1Reply
  • Jake Song
    austin, TX · Member since 2020 · 13 posts · 6 votes
    5y
    Originally posted by @Leon F.:

    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.

     That's awesome. Where did you find your deals?

    0Reply
  • Alyssa Davis
    Member since 2020 · 11 posts · 5 votes
    5y

    @Kaylee Walterbach

    @Kaylee Walterbach when will this book be available on audible/as an audio book? 

    0Reply
  • Max Maysonet
    Investor · New Haven, CT · Member since 2019 · 17 posts · 18 votes
    5y
    Originally posted by @Guy Primo:

    @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

    Of course it makes sense, These are actually good numbers! (I'm assuming that there is no PMI due to the fact that you put down 25%).

    These are numbers that can allow someone to sleep at night as long as you rent to financially solid tenants.

    A 22.55% ROI or COC (whichever you'd rather go by) is a beautiful deal and is hard to find for some!

    That's a complete 100% ROI in under 5 years, impressive.

    0Reply
  • Max Maysonet
    Investor · New Haven, CT · Member since 2019 · 17 posts · 18 votes
    5y
    Originally posted by @Guy Primo:

    @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

    You may have the wrong person, I didn't ask what is COC nor ROI, But I do like these numbers!

    0Reply
  • Klint Ruud
    Investor · Nashville, TN · Member since 2019 · 92 posts · 96 votes
    5y

    For the most part, the first house I bought went incredibly well. I'm fortunate enough to have had the guidance of many people before taking the plunge. BUT the first INVESTMENT property I purchase was an absolute nightmare. I was rushed into the situation and put too much trust in the wholesaler that I didn't do enough of my own due diligence. I bought it way too high, the rehab was significantly more than what he quoted me and I barely made out breaking even. (Which is better than most in this situation). Most would quit real estate altogether after an enormous loss. But from this experience, I learned that I needed to run my own comps, run my own rehab estimate and use GC that would be completely honest with their estimate rather than just taking the cheapest bid. BUILD A TEAM. I never go into a deal scrambling to find the right people now. 

    My advice: 
    -Find an agent you fully trust who isn't just trying to make money off of you / get your license. 
    -Find a lender(s). One for hard money, and one for a conventional loan SO that you can approach a deal with confidence without worrying about funding.
    -Find a GC that is honest and is willing to walk the property with you. And make sure they have sub-contractors that are trustworthy aswell.
    -There is always another deal, don't get wrapped up in a bidding war because you're desperate. On the other hand, don't be so thorough that you suffer from analysis paralysis. 
    -Make sure the first one, you don't lose money! 

    0Reply
  • Dallas Hayden
    Member since 2021 · 63 posts · 48 votes
    5y

    I've never used an agent and do not follow any official RE investing "process". I've been burned before but have never made any serious personal mistakes in RE (aside from occasionally working with bad consultants). 96% of my problems have been caused by other parties. Yes, I've learned to occasionally change approaches and take more precautions in certain areas. It's definitely a learning process!

    0Reply
  • Tim Polk
    Realtor · NWI (Northwest Indiana) · Member since 2018 · 63 posts · 36 votes
    5y

    @Kaylee Walterbach

    Ah, what I would tell a younger me if there was a time machine? Never hire GC's or contractors out of desparation, put remote cameras on every jobsite & stop laying awake at night worrying if you've bit off more than you can chew. It will be worth the ride!

    0Reply
  • Katelyn Seng
    Member since 2021 · 3 posts · 0 votes
    5y

    I graduated with a BS in Marketing. Is this a good entry level job for someone with little to no experience?

    0Reply
  • Emily Ford
    Investor · Southlake, TX · Member since 2016 · 20 posts · 15 votes
    5y

    My first property was a SFR with a septic system. I had a general inspection done but did not know to get a septic inspection performed. The old system was not working, and it cost me later down the road for the installation of a new system.

    0Reply
  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    5y

    My first house was thirty years ago but I remember it well. It was owner finance and we did it on a handshake. Then she drew up some papers later and I signed then without reading them. She added a clause that said I had to cough up the rest at any time at her discretion. 

    FF 2 years later and she got a job offer out of state. She enacted the clause and I had 30 days to come up with the money. 

    Sometimes a handshake can cost you your hand.

    The other thing I would say it's learn from your mistakes. I did the same thing last November lol. Not a big deal on that one though as a can cover that one in less than a month. These are the only 2 O/F I have ever done. Good thing too. I have no hands left.

    0Reply
  • Ed Brancheau
    Investor · San Diego, CA · Member since 2019 · 166 posts · 121 votes
    5y

    Start earlier. Avoid paralysis-analysis.

    1Reply
  • Dominic Kosteris
    Member since 2021 · 58 posts · 37 votes
    5y

    I bought a four unit on a block that was arguably the worst in the city of Chicago. It was hard finding tenants and even harder keeping them

    0Reply
  • Nihir Patel
    New to Real Estate · Chicagoland, IL · Member since 2021 · 3 posts · 0 votes
    5y

    @Kaylee Walterbach Rookie mistake: Our first selling experience and greed played a big part responding to the first offer on Day 1, potential buyer backed out now. Still in search of the perfect next offer.

    0Reply
  • Rik HunterBusiness Member
    Real Estate Agent · Chattanooga, TN · Member since 2020 · 107 posts · 62 votes
    5y

    I refinanced before finishing a BRRRR in order to finish the BRRRR and buy a SFH.

    We house-hacked a duplex and had completed all the exterior rehab but not much of the interior rehab on our side. The rented unit was mostly done except for the fact that after the tenants moved out, we added a new floor, counter top, and sink in the upstairs bathroom and had to replace the carpet after pet damage. 

    By this point, we didn't know we were buying a SFH and had started the refi process to pay for rehabbing the unit we lived in (as well as pay off credit cards. We were "walking dogs for dollars" (my version of driving for dollars) and stopped to talk with neighbors who were planning to sell their house. We made a great off-market deal. Of course, after moving to to the SFH and finishing the rehab on the duplex unit, I wanted to refi again, but I couldn't refi the current VA loan because it wasn't out primary residence.

    USAA says I need to use a commercial loan to refinance, but if there are any alternatives out there, I'd love to hear about them. 

    Podcast Guest on Show Finance Friday: Can I Live in Flip My Way to FI at 55 Years Old?
    0Reply
  • Kenton LeVay
    Investor · Austin, TX · Member since 2018 · 119 posts · 114 votes
    5y

    I would definitely go back and do some more thorough research on construction and hiring a contractor. I moved in and had a grand plan of fixing the place up including finishing the basement. I was very enthusiastic and bit off WAY MORE than I could chew. Dealing with the unending hurdles of renovating a 50 year old house and not knowing what to look for when hiring a contractor (which forced me to needing to fire the first one and replace him)....the first home has been full of setbacks. I'd go back and tell myself to slow down, start small, and don't be afraid to ask for (and pay for) help.

    1Reply
  • James Cunningham
    New to Real Estate · Member since 2021 · 5 posts · 0 votes
    5y

    I bought a brand new condo in 2007 out of fear that the market was going to keep rising and I'd never be able to get in...2 years later I had to short sell for $105k less than purchase price. Back then I had no idea about off market deals, fixer-uppers, etc., and thought that was the only option for homeownership. Sadly, I did not have anyone in my circle that told me this was a bad idea, oh did I mention the outrageous HOA fees that went along with it, making it a loss if I tried to rent it out? Lots of lessons learned on that one

    0Reply
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