What do you wish you knew before you started investing?

Question

Nicholas Miller · Answer

it iss less expensive to do your best and fail at a couple of real estate deals than it is to pay tuition for a degree that will not help generate wealth.

Brie Schmidt · Answer

Account Closed I am a buy and hold investor who uses leverage to grow.  I wish I had a better understanding of financing (DTI, conforming guidelines, financing options) before I started so I could plan out my plan better.  Luckily I learned along the way

Mike H. · Answer

2 things I would have changed if I could:

1) Target more expensive properties from the get go. I wish I had targeted homes in the higher price range and in better areas during the first few years I started investing.

I had assume that I needed to stay in that 80k to 100k range to keep my mortgages low and have better margins. i.e. $800 rent with $400 a month gross profit.  But really the ones in the 130 to 150k range make for much better rentals here in my area. Same gross profit so the margins aren't as good. But the turnover and renter pool are far better.

2) Rehab better!   When I first started, I was a complete noob. Was getting advice from my brother in law who was a small time builder during the boom. He kept stressing do everything as cheap as possible - "its a rental". Don't fix anything you don' t have to.

Needless to say, my turnover in those first few properties was ridiculously high. After about 2 years and 6 or 7 properties, I finally settled in on the strategy of rehabbing them nice. And always have one or two things that really make the house pop.

Even when looking at houses, I don't look at the numbers first at all. I look at how easy is it going to be to rent this house.  Decent layout? Decent yard? Kitchen? What can I do to make it easy to rent and how much will that cost? If I can't make it right and have at least a couple of items that really make the house stand out, then I'll pass.

Doesn't mean everything has to be new. I'll leave older windows in a house. But maybe I'll update the windows in the bedrooms.  Maybe put new laminate in a living room instead of carpeting and then do a nice tile backsplash with new countertops in the kitchen.

In one house, I put granite countertops. In another stainless steel appliances. Those are rare instances. Usually its opening up walls or doing a tile surround in a bathroom.....

John Mathewson · Answer

Don't grow too fast. In Real Estate Investing there are so many moving parts. I tried to grow very fast and it came back to hurt me and slow me down. I do think just jumping in and learning to swim is important but what i had to realize is that not everyone learns like that as I do.

Take it one step at a time and understand every step of the process from financing to how to install tile. No you don't have to be an expert but you need to understand the basic concepts.

Roger Wagoner · Answer

John, I don't suppose you have a link to a free resource like that Excel sheet you like? Do you like the free tools here on the BP forum?

Eric Taylor · Answer

Aside from purchasing a property for cash, how does one buy and hold without a mortgage?

John Myers · Answer

I wish I had a better handle on the numbers behind the transaction.  I had no experience in properly analyzing sfr rental properties.  I now have a spread sheet I developed to calculate all the financial calculations in order to understand the investment from a financial perspective.

I wish I would have focused on smaller properties.  I have 5 homes greater than 2500 square feet.  It cost a lot to replace carpet or paint compared to a smaller home.

Account Closed · Answer

Nicholas, I like the cut of your jib sir! Amen.

Account Closed · Answer

I would generally agree on rehab, doing nice rehab within reason can pay you back. Don't go crazy though :). You can make a rehab look a lot nicer by just spending an extra 2-3k for nice tile and light fixtures. That's usually a good investment i think.

What do you wish you knew before you started investing?

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