Your Biggest Gaf in Real Estate - share your story

Real Estate Deal Analysis & Advice

9yFollow

Your Biggest Gaf in Real Estate - share your story

Alex Russo

Flipper/Rehabber · Tucson, AZ · Member since 2014 · 36 posts · 17 votes

What is your biggest gaf/stupid mistake that you have made in your career so far?

It may include you ending up with egg on your face, missing something extremely obvious, or making a beginners mistake.

I am sure we all have one, lets hear it!

2 Reply

98 views

Most Popular Reply

Chris Egan

Real Estate Agent · Omaha, NE · Member since 2016 · 43 posts · 46 votes

Not screening tenants! My first rental house I bought about 8 years ago. I saw it thought it was a good buy, bought it cleaned it up and put it up for rent, how hard can this be really?!?!? So this nice young couple comes to look at the house and told me about their hard luck in the past but now they are back on track and they will be the best tenants I ever had. So I think they seem nice enough should be able to pay the rent (I hope). I didn't run a credit check, background check, employment verification, Ok I didn't check anything. So they move in the first month a check comes in the mail on time for the full amount no problem. The next month the 1st rolls around and no check. I wait a few days still no check, a few more days still nothing. So I'm not quite sure what I am supposed to do now so I figure I'll call. Both numbers are disconnected. Hum, well I suppose I will stop by. So I go to the house in the afternoon. There are 3 cars parked out front and one in the back alley. I park next to the car in the back alley where there are two people in the car. I rolled down my window and asked if they were visiting Mike the tenant. She says to me who's Mike? I told her that Mike is the tenant that lives here then she says no my son lives here and his name is not Mike. Then she rolls up the window and drives off. So I am thinking this does not look good. I go up to the door and knock. A girl opens and says who are you? I tell her that I am the property owner and ask who she is. She then tells me that she is a friends with Mike and that he rented the house to her a few days earlier before he went to jail. So I go in the house with her. She tells me her boyfriend, his brother and their other two friends that are a couple are living there along with the 2 pit bulls, 3 snakes, and a cage full of hamsters All in my 2 bedroom, 1 bath 800 square foot home. I talked to an attorney the next day and he advised me to get them out asap, and they did move within a few days. Needless to say my tenant screening is much stronger today.

21 Reply

See this reply in the discussion

58 Replies

Jump to latestLatest

Sort by

Alex Russo
OP
Flipper/Rehabber · Tucson, AZ · Member since 2014 · 36 posts · 17 votes
9y
I just had my BIGGEST gaf on a MONUMENTAL scale that you can tell your friends and grandchildren in the long future, to teach them a lesson. Its not a good idea to share - yet - because its a such a freah wound. I will be sharing in the future though!
3 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
Not moving to Oregon full time in 1992 when I new exactly what was happening in the Export log business and the local realtors and land owners did not... I only worked for a few months a year then coasted.. if I would have just not thought this would last forever I would have move up .. jumped in and have been retired by end of the 90's no sweat and would be simply logging a stand every year for my cash flow... No tenants No Toilets and huge MONEY.. oh well.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
3 Reply
Alex Russo
OP
Flipper/Rehabber · Tucson, AZ · Member since 2014 · 36 posts · 17 votes
9y
Originally posted by @Jay Hinrichs:

Not moving to Oregon full time in 1992 when I new exactly what was happening in the Export log business and the local realtors and land owners did not... I only worked for a few months a year then coasted.. if I would have just not thought this would last forever I would have move up .. jumped in and have been retired by end of the 90's no sweat and would be simply logging a stand every year for my cash flow... No tenants No Toilets and huge MONEY.. oh well.
Aw man! Life is full of shoulda - woulda - coulda. Very interesting about the log business as well. Are you involved still?
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
No I did have a 700 acre tree farm that we bought way back when got a offer from Stimson lumber a few years back and took the cash...
The log business by far was the most rewarding I have ever done.. ( when the Japanese log market was at all time highs)..
WE would buy a 150k property log it get 200k in NET logging proceeds.. get a building permit on the land or split it into 4 lots ( short plat) and sell it for 100 to 300k.... and get this... WE pre sold the logs to the exporters on a timber deed.. they advanced 100% of the money.. and CHARGED zero for this .. I only paid for escrow and title insurance on the timber deed.. talk about OPM...
We got the logs to the mill within 30 to 45 days of closing and got paid every two weeks.. so we would make usually 50k on the logs and end up with the land free and clear.. then sell it off over the next year or so... sometimes on contract then I would hypothecate that note with my local commercial bank and pull 50% of the note out in cash TAx deffered.. payments from my contract buyers were greater than my monthly payment to my bank so we got cash we paid no tax on at the time ( like a refi) and we made positive cash flow on the delta...
First to admit we just never thought it would end.. my partner would leave right after Elk hunting season for Maui for the Winter I had a home in the Napa valley and would hang there playing golf most days and working a few hours a week on new sales for the coming year.. but when it was sales and logging time.. it was 7 days a week for about 4 months... Oh the good ole days..
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
12 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
In hind site not starting younger/taking greater risks, or maybe getting married. Both are intertwined.
No on second thought.....Defiantly getting married, more a life error than a career mistake.
10 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
Listened to my 'poor dad' and didn't buy my first rental house while in college in 1994. I was qualified for it and was going to house-hack before I knew what that was. Set me back over a decade and that $75k house I was gonna buy in Missoula is a $300k house now.
Consider who is sharing their opinions when you seek advice for your business. A lifetime government worker may not be best, even if they're family.
16 Reply
Chris WaltersPro Member
Montreal, Québec · Member since 2016 · 133 posts · 19 votes
9y
I honestly feel that my biggest gaf was to not have started 10 years ago. I've always had business sense and was attracted to making money, but real estate was never on my mind. Time is money!
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Steve Vaughan like the updated photo !!! Mission Ridge ?
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
0 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y
Originally posted by @Jay Hinrichs:

@Steve Vaughan like the updated photo !!! Mission Ridge ?
Thanks, Jay! Actually a small hill in MT called Lookout Pass.
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Steve Vaughan I should have known to much snow LOL...
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
2 Reply
Peter A.
Investor · Cranston, RI · Member since 2015 · 2 posts · 1 vote
9y
I'd say my regret so far is not starting earlier also. I had the money and time while in college but managed to continually squander it. Now at 25 just closed on my second deal but feel as though I am years behind the 8 ball, having missed the fallout from the recession.
1 Reply
Chris T.
Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes
9y
Buying a "pre-construction" condo in 2006 and hoping to flip it quickly!
8 Reply
Alex Russo
OP
Flipper/Rehabber · Tucson, AZ · Member since 2014 · 36 posts · 17 votes
9y
One story I can think of is when I first started wholesaling, having one buyer who - was pretty legit - did multiple deals with him, but soon to realize that this person would work would be to tell you they were going to buy it for the fee you wanted, wait until about 3 days before closing, give you a call then proceed to squeeze you. Some of the terms to do said act would be, "just looking at the numbers, I dont think this thing will work, what will you REALLY take for this thing?", "I dont know man, thing is in rough shape, if you dont like what Im giving you, you can take it to someone else" etc. Keep in mind this would happen 1,2 or 3 days before hand. They would have everything sent to title, on their account/escrow so it would act as good faith. Then sign the assignment the day of or before.
Needless to say, I have learned a lesson there.
2 Reply
Alex Russo
OP
Flipper/Rehabber · Tucson, AZ · Member since 2014 · 36 posts · 17 votes
9y
Originally posted by @Chris T.:

Buying a "pre-construction" condo in 2006 and hoping to flip it quickly!
AW MAN!!! You didnt know though, look how many people didnt.
2 Reply
Alex Russo
OP
Flipper/Rehabber · Tucson, AZ · Member since 2014 · 36 posts · 17 votes
9y
Originally posted by @Thomas S.:

In hind site not starting younger/taking greater risks, or maybe getting married. Both are intertwined.
No on second thought.....Defiantly getting married, more a life error than a career mistake.
Youre still 10,15, 20 years ahead of some poeple.
3 Reply
Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
9y
Not being more aggressive when I first started investing in the USA. It was so scary being a foreigner in the middle of the GFC. I bought 1 home in Phoenix, 1 in Atlanta and 1 in Memphis.
2 years later we sold the Phoenix property for more than double what we paid. I could have bought 50 houses when I bought 1, the whole city had doubled in price.
2 Reply
Chris Egan
Real Estate Agent · Omaha, NE · Member since 2016 · 43 posts · 46 votes
9y
Not screening tenants! My first rental house I bought about 8 years ago. I saw it thought it was a good buy, bought it cleaned it up and put it up for rent, how hard can this be really?!?!? So this nice young couple comes to look at the house and told me about their hard luck in the past but now they are back on track and they will be the best tenants I ever had. So I think they seem nice enough should be able to pay the rent (I hope). I didn't run a credit check, background check, employment verification, Ok I didn't check anything. So they move in the first month a check comes in the mail on time for the full amount no problem. The next month the 1st rolls around and no check. I wait a few days still no check, a few more days still nothing. So I'm not quite sure what I am supposed to do now so I figure I'll call. Both numbers are disconnected. Hum, well I suppose I will stop by. So I go to the house in the afternoon. There are 3 cars parked out front and one in the back alley. I park next to the car in the back alley where there are two people in the car. I rolled down my window and asked if they were visiting Mike the tenant. She says to me who's Mike? I told her that Mike is the tenant that lives here then she says no my son lives here and his name is not Mike. Then she rolls up the window and drives off. So I am thinking this does not look good. I go up to the door and knock. A girl opens and says who are you? I tell her that I am the property owner and ask who she is. She then tells me that she is a friends with Mike and that he rented the house to her a few days earlier before he went to jail. So I go in the house with her. She tells me her boyfriend, his brother and their other two friends that are a couple are living there along with the 2 pit bulls, 3 snakes, and a cage full of hamsters All in my 2 bedroom, 1 bath 800 square foot home. I talked to an attorney the next day and he advised me to get them out asap, and they did move within a few days. Needless to say my tenant screening is much stronger today.
21 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
9y
Read all about here: https://www.biggerpockets.com/renewsblog/2015/08/26/5-lessons-i-learned-from-real-estate-disaster/
Or some of the many smaller ones: https://www.biggerpockets.com/renewsblog/2015/02/04/confessions-serial-mistake-makerreal-estate-success-failure/
Podcast Guest on Show #121
3 Reply
Account Closed
South Bend, IN · Member since 2014 · 318 posts · 156 votes
9y
@Chris Egan
How much was Mike charging for the "rent"? LOL
5 Reply
Alex Russo
OP
Flipper/Rehabber · Tucson, AZ · Member since 2014 · 36 posts · 17 votes
9y
Does anyone else think this should be a sticky in the success stories?
1 Reply
Lena Claybon
Investor · LA, TX · Member since 2014 · 93 posts · 46 votes
9y
Okay, here goes... When I first 'attempted' wholesaling, I was in such a small market in Louisiana that I thought the smart thing to do was look for properties in the largest market near me which was New Orleans (and 5 hours away). I jumped on Craigslist, put the first property in N.O. that looked like a good deal under contract and thought I was on my way. The asking price was $70,000 and the ARV according to neighborhood prices was $150,000. Also, according to the seller, estimated repairs was only $15,000-$20,000. So, I figured, there was plenty of wiggle room between $90,000 and $150,000 for profit. So, I drove down to New Orleans and spent a week on my own dime showing the property to potential buyers. What I found was (a) the street the house was on was very nice but the neighborhood surrounding it was not (b) the estimated repairs was way off. The house would require more like $80,000 in repairs, not the $20,000 the seller quoted! (c) As if that wasn't enough, the house was in a flood zone! Needless to say, I left New Orleans with no deal, no house, and I was out of several hundred bucks spent on hotel, gas, food, etc. On the bright side, once I got home and recovered, I found a property two blocks over from my house, got it under contract and made $10,000 off it. Moral(s) of story: a. Know your market; b. Don't just go with quoted numbers, do your own due diligence, and; c. Its okay to start where you are. Sometimes the best deals are in your own back yard.. literally!
13 Reply
Chris Egan
Real Estate Agent · Omaha, NE · Member since 2016 · 43 posts · 46 votes
9y
@Anthony M I am guessing he gave them a good deal hahaha
0 Reply
Mary Magdaleno
Vendor · Mesquite, TX · Member since 2015 · 2 posts · 1 vote
9y
My big mistake was not having a private lender to lend me the money to buy a house that hardly had any repairs and had 2.5 acres in a very desirable area, and loosing 60k by not having the funding! , how upsetting!.
1 Reply
Chris Egan
Real Estate Agent · Omaha, NE · Member since 2016 · 43 posts · 46 votes
9y
Originally posted by @Chris Egan:

I am guessing he gave them a good deal hahaha
0 Reply
Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
I have yet to make my biggest mistake I'm sure.
3 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.