New York, NY · Member since 2019 · 34 posts · 47 votes
Hello Everyone,
As a new investor, what was the biggest mistake you made and what would you have done differently. I am opening the discussion for newbies such as myself to learn from the mistakes of others and avoid those same mistakes. I want to hear all about!
@Account Closed not insisting that my PM do regular inspections! New tenant or inherited tenant every 6 months first year, or longer if required. Every 12 months after that.
@Bijou Diaou. In a broad sense, investing in a turnkey property out of state was probably up there. It was a good learning experience but you have to understand there’s nothing about real estate that’s passive
@Account Closed not insisting that my PM do regular inspections! New tenant or inherited tenant every 6 months first year, or longer if required. Every 12 months after that.
Hello Bjorn, Just out of curiosity, Why was that such a big mistake?
@Account Closed the place was completely trashed the teenage son was out of control and the single mom could not deal with him. Holes in ceiling, doors smashed, etc. Tenant move out in the middle of the night, son broke back in set off fireworks, got drunk and arrested. Long story short inspections are vital, make notes and take pics. We now self manage and video every unit before moving in a tenant, and again when they move out. We also screen inherited tenants as necessary. Thorough screening and no compromises is vital to sleeping well!
@Account Closed the place was completely trashed the teenage son was out of control and the single mom could not deal with him. Holes in ceiling, doors smashed, etc. Tenant move out in the middle of the night, son broke back in set off fireworks, got drunk and arrested. Long story short inspections are vital, make notes and take pics. We now self manage and video every unit before moving in a tenant, and again when they move out. We also screen inherited tenants as necessary. Thorough screening and no compromises is vital to sleeping well!
Thank you Bjorn, For the shared story, Definitely will do.
I bought a property several years ago before I knew about BP, or really anything at all about real estate investing. I thought rent covering the mortgage was great cash flow. It's worked out OK as I'm in a high appreciation area, but could have been better. I then proceeded to buy another property to live in and then eventually rent out years down the road. Moved on quicker than I thought, rent was $1K less than I thought I could get because I failed to do any research, and I can't sell it without taking a loss at this point....so I eat $1K each month praying for appreciation LOL. I actually run my numbers now....
For me it was not vetting the people working for me. My first agent was only interested in making a sale and sugar coated all the issues. My inspector must of known I was new to this and inspected a 1400 sqft property in less than 60 minutes and the inspection was about 1 page long. In spite of all my ignorance, I got some good renters (stayed 4 years) and I learned to do most of the repairs myself. I ended up making money but not without learning some hard lessons.
Biggest mistake was giving discounted rent in exchange for putting off capex (flooring). The tenants stayed four years at $150 off market rent. Flooring cost me 1k out of pocket. Nearly 6k in lost rents.
I was worried about finding a tenant even though history told me my house would never be empty more then two weeks
@Bijou Diaou. In a broad sense, investing in a turnkey property out of state was probably up there. It was a good learning experience but you have to understand there’s nothing about real estate that’s passive
Hello Caleb, I am actually looking to purchase a turnkey property out of state, If you do not mind can you elaborate on why it was a mistake.
@Bijou Diaou Not using my contractor for every aspect of the job and using random stocks do the job takes longer and not as good of quality trying to save a few hundred dollars
@Bijou Diaou As a Canadian, I started investing in US real estate in 2010 during the Great Recession. The Canadian Dollar was at parity with the US dollar and I had no competition. My biggest mistake was that I should’ve bought a lot more
@Bijou Diaou First investment when I was 21, cost me tons in legal fees. The lawyers took advantage of me but I was young and intimidated so I paid. Just be sure you ask any type of professional you use the amount they are charging for each new situation that occurs. Second mistake in a later investment, slightly older but not much, was underestimating income taxes. Those killed me financially and emotionally. The sticker shock gave me PTSD which I feel every year when filing. Third mistake, (well not really but more of a lesson), was for a property I purchase last year. New construction in a C class neighborhood but I didn’t put a cover/lock on my water spigot so the homeless/drug dealers/addicts...I don’t know who...would walk into my alley and used my water at their leisure. The tenants told me about it or else I wouldn’t have known. Cameras would have helped too but it isn’t “that bad” of a neighborhood where my tenants requested them.
Oh my favorite mistake...which I want to physically assault myself when I think about it...was also when I was younger and uneducated. Owned a condo unit and my neighbor in the next unit asked me to let her know if I wanted to sell. I kept the unit for about 9 months and just with life being the way it was at that time, I had it listed. The same neighbor bought it! Lost so much in commission payment. I cough it up to the young party life...but what an idiot I was for not slowing down and remembering small conversations in the hallway.