Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
19y
My biggest failure was getting in over my head in my first rehab. A project that I expected to take 4-6 months (I was living in the house) took over two years. There was so much wrong that I overlooked. There was a reason why so many people had passed on the house even though it was selling at approximately 60% of after repaired value. Everything that you could imagine was wrong with it and it was so far beyond my ability. I muddled through it because I had no choice. The upside was that I learned a tremendous amount about rehab by doing that deal and look at them so differently now. I haven’t had a disaster since. I kept doing them even though most people would have quit. The funny thing is that it was still profitable, I was lucky and the market appreciated tremendously after I bought it
Boonies, PA · Member since 2008 · 333 posts · 15 votes
19y
I bought a house for a rental. I accepted a job traveling. I wanted to buy in an area that I have never dealt with. So before I could get together a team I found a house and bought it. I thought I would still have time to get a team together but to find an honest contractor was hard. Plus I didn't know a property manager or nothing. The house was 1.5 hours away. So I kept it for about 6 months. I kept saying I will get to rehabbing it soon. after insurances and paying people to up keep the yard It ate my profits up. I did sell to another investor. I lost about $500, and MY TIME. I honestly thought it would be worse. I am not mad I lost money I am mad I did something that I would never do. BUY OUTSIDE OF MY TERRITORY. It wouldn't be so bad if I had a team together. The house is in a great location. It is the ugly home on the block. Live and learn. :beer:
Real Estate Broker · Jacksonville FL & Middletown CT · Member since 2008 · 1k+ posts · 632 votes
19y
I actually have a few failures, but the worst had to be my first rental. I had lived in it for a few years and when I bought my new home, I convinced myself rent=mortgage was a break even situation, and lets keep that condo for "appreciation". Sure enough it was nowhere near a break even situation, I had negative cash flow for 6 months until they stopped paying altogether. Then it was bigtime negative cash flow. It took me months to evict, and then I've been carrying it since April with no income. It should finally close Monday, after a huge nightmare sale...when I will walk away with a big old profit of....NOTHING. Likely I'm in the negative, but you know I dont want to actually put the numbers together of what I've actually lost over the course of the charade. I'd rather not really think about it.
I consider myself lucky to walk away without paying out of pocket at this point.
Lesson learned-be realistic with yourself when getting into rentals. The 2% rule and 50% expenses may sound crazy and you dont want to believe it - but guess what- they're true, and solid. Don't fool yourself.
Real Estate Investor · Mont Belvieu, TX · Member since 2008 · 85 posts · 35 votes
19y
I bought a house I fell in love with-- and felt sorry for the little old granny who lived there and paid too much. Lesson learned-- love is fickle and when that puppy quit making money, I was no longer amused.
So really two lessons--
Its amazing how much love you can develop for a property that's profitable and...
I'm not rich enough to be a charity just yet :crazed:
Rental Property Investor · Twin Cities, MN · Member since 2008 · 94 posts · 10 votes
19y
I forced a marginal deal to meet a portfolio goal I had made years earlier. I thought it must be a good deal, due to an investor selling 40 properties. Thank goodness I didn't buy more of them. I ended up with a true landlording experience...including, section 8 inherited tenant, not paying her portion, 4 kids, doesn't pay bills, no phone, gets garbage pickup turned of by not paying...puts garbage in shed until code enforcement finds it. I have to do the grossest thing in my 30 years of life in taking garbage out of a shed in the middle of summer wreching as I put it in the back of a pickup...Then evicting her only to get an emergency assistance check to cover her back rent, only to evict again, all the way to physical eviction, finding out that she was in jail the week during the eviction process...left all her junk in the house. The house was truely in need of a match.
My wife, in her infinite wisdom, told me, just put it on the market, fix it up as you have time, but just get it out there. It sold in 30 days to a sucker even bigger than me. My overall net result, approximately $6000 in tuition for the class "Urban Section 8 Landlording 101". It could have been far worse. I now feel fortunate to have had the experience and realized and confirmed that suburban rentals are for me. Urban section 8 housing is not a business I am interested in.