overcoming obstacles in real estate

[Maria Checchin]

Curious to know what were some pitfalls that you ran into getting started in real estate, real estate investments or flipping and how you overcame it? 

[Eliott Elias]

Hiring bad contractors and being lenient on screening tenants. 

[Scott E.]

The biggest challenge when you first get started is building up the courage to do your first deal. EVERYTHING about the process is intimidating in the beginning, no matter how many books you read and no matter how many podcasts you listened to.

When you're ready to do your first deal, just make sure you are surrounded with high quality people who will help "hold your hand" a bit through the process. You should have a great real estate agent, general contractor, designer, lender, and title company all by your side. And try to connect with another local experienced investor who can help you navigate the inevitable challenges when they do come up.

[Chris Davidson]

@Maria Checchin trying to do everything myself starting out slowed me down. Would of brought on more professionals and not tried  to bootstrap everything. Overcame it by spending hours to fix little things that shouldn't of wasted time on. It taught me a lot, but knowledge is only valuable if you put it to use. No need to learn everything about screening tenants if your are going to use a PM just let them do it.

Best of luck!

[Billy Smith]

What is the BIG one is finding the right tradesman to do the work .That means you need to network ask questions of other investors who they used etc....

You need to micromanage to a degree never lose sight of what is going try to  catch the issue before they get HUGE .If you don't have those skills find some one then follow them around .

[Mike Dymski]

Contractors.  Period.  Having a business with no scale, particularly in this job market, makes it hard to find and keep good affordable contractors.  We have to buy deals with fat profits to absorb inefficiencies from contractors (and 3rd party PM).

We just had a TV wired and mounted in our primary residence.  Guy would never get on a phone call, did not say who would supply the mount, did not tell us what kind of mount, who would supply the cables, what type of cables were needed, we had to ask all these questions...via text and he got annoyed that we were asking, did not hook up our gaming system or sound system, left a bunch of unused cables/stuff in the cabinets (it was a disaster/mess)...and he was highly recommended by a ton of customers on a local Facebook group and did $1.5 million in installs last year...  This is the world we currently live in.

[Sherief Elbassuoni]

biggest pitfall for me was not doing a ton of due diligence for one of my early deals. 

It turned out just fine because market appreciated a lot, but I will not do that again, and prefer to be conservative in my numbers from the beginning

[Albert Bui]

Quote from @Maria Checchin:

Curious to know what were some pitfalls that you ran into getting started in real estate, real estate investments or flipping and how you overcame it? 

 Pitfalls were:

- lower appraisals when it came to exiting a BRRRR (take out refi or cash out refinance after the 3rd "R" in BRRR)

- Rents were lower than anticipated

- ARV values not coming in similar to above except it was when I was trying to sell

in western markets there may be different challenges but in knoxville im sure the RV ratios are a lot better even when it comes to MLS deals however in WA state the RV ratio is .4-.6% of the price when looking at it from a monthly gross rent to price perspective so the cash flow typically has to be forced to even get any at all.

[Ray Hage]

My biggest pitfalls when I started in 2015 were not taking it seriously enough (I had a W-2 job that I was focused on), being too easy on tenants and not trying to build a good team (that means RE lawyer, handyman, plumber, etc). Honestly, the team is probably the most underrated item of importance in RE. No way to succeed in RE alone.

[Ke Nan Wang]

Quote from @Mike Dymski:

Contractors.  Period.  Having a business with no scale, particularly in this job market, makes it hard to find and keep good affordable contractors.  We have to buy deals with fat profits to absorb inefficiencies from contractors (and 3rd party PM).

We just had a TV wired and mounted in our primary residence.  Guy would never get on a phone call, did not say who would supply the mount, did not tell us what kind of mount, who would supply the cables, what type of cables were needed, we had to ask all these questions...via text and he got annoyed that we were asking, did not hook up our gaming system or sound system, left a bunch of unused cables/stuff in the cabinets (it was a disaster/mess)...and he was highly recommended by a ton of customers on a local Facebook group and did $1.5 million in installs last year...  This is the world we currently live in.

I think I understand the experience. From a contractor's standpoint, contractors are in the business to make money. There are two types of good/successful contractor business model IMO, one that do super quality work and have great customer service but they charge a premium for what they do; then second one, maybe it's the one that you encountered, one who's very efficient at achieving an end result (I'm gonna deliver a quality mounted TV for you but don't ask questions) for a customer and charging a very affordable price but expecting to get-in and get-out fast with no hassles, that's how they can offer the affordable price in the first place. Contractors I know who do not fall under these two categories, in general, tend to not run a profitable business and either not getting business at all or get too much business with not enough money and get burnout. 

So if you are hiring and pay for the second type of contractor and expecting the service of the first type of contractor, then maybe you are up for some disappointment.  

That was my experience when I started out and now I've adjusted my expectations and my way to handle contractors and we are having great relationship with everyone. I have no problem with finding the right contractor for the right price and achieve a reasonable result. 

[Mike Dymski]

Quote from @Ke Nan Wang:

So if you are hiring and pay for the second type of contractor and expecting the service of the first type of contractor, then maybe you are up for some disappointment.  

That was my experience when I started out and now I've adjusted my expectations and my way to handle contractors and we are having great relationship with everyone. I have no problem with finding the right contractor for the right price and achieve a reasonable result. 

This is not an expectation challenge...it's a real challenge for most part time landlords.  I've been hiring contractors for a subscale flip and rental portfolio for over 15 years and others have the same issues.  You have no problem because you have scale.  I am scaling up to help mitigate the challenge.