How can I avoid the mistakes that YOU made??

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How can I avoid the mistakes that YOU made??

Megan Roche
Mokena, IL · Member since 2016 · 22 posts · 7 votes

Hi everyone, I'm going to try to make this short and sweet!

I'm moving back to Chicago in 6 days and I'm ready to jump into Real Estate (finally!) I have not done any deals/taken any action yet in Real Estate because I knew this move was coming. 

What I have done is read, studied and listened. I've listened to any/every Real Estate Investing podcast there is and experienced investors always talk about all of the mistakes that they made. How can I avoid those? I know I will make mistakes, but I want to make as many correct moves as possible. 

Successful investors- If you had to start over, what would you do different? What would you do the same? What was a waste of time and what was the best move that you made? Did you start out solo or have a partner? 

Just so you know what my plan is to better frame your answer- I'm going to go for my real estate license right away to learn more in depth about purchasing/selling properties- I learn best in a classroom/organized setting so I think this will be best. 

I want to purchase a small multi-family unit in/around the Southwest Suburbs within 4 months of the move. I'm working on a personal loan with a family member and will do a FHA or 203K loan. We will most likely do a 203K to have room for repairs.

I want to get into a situation where I'm living rent free as quick as possible so I can save for my wedding and purchase more property! The end goal is to be a full time investor within 18-24 months of next Monday! (right now I work full time in travel) 

Any advice/thoughts will be incredibly helpful! (especially from investors in the same area) 

Thanks for the time

Megan 

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Robert T.
Investor · Cameron Park, CA · Member since 2015 · 64 posts · 72 votes
9y

Megan,


When I first got started more than 10 years ago I asked the same question, but didn't get answers from experienced people.  I got a lot of opinions, but no one willing to be vulnerable.  So, here's some of the things I would recommend:

Don't worry about LLC/Corps until you have enough equity that your insurance isn't sufficient.

Cash flow is King.  My first investment property was negative on the cash flow.  But, because I had a six figure job, I wasn't worried about it.  Then the Recession came and I lost the house.  It's hard to lose a house with solid positive cash flow (50-65% of gross).  It doesn't take much of a hiccup to lose a house with negative cash flow.

Repairs will almost always be more than you expected.  My partner always says, "I hope to buy a house someday where the repairs will be less than what I expected."

Don't be in a rush.  Be patient and make sure it's a deal.  It's better to not buy a house than to buy a bad one.  There's a lot of hype and gurus going around that make the business seem like a no brainer.  It's not.  You have to kiss a lot of frogs to find a prince.

Master a neighborhood and stick with it. You will do better sticking to a neighborhood that is close than one that is far away.

Deals are found when someone makes a mistake.  Either the agent, the seller, or the buyer.  An agent or seller can not know their market and misprice a home.  


HTH,

Robert

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  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y

    @Megan Roche

    Went through school of hard knocks and lost my shirt

    Don't give money to contractors upfront.  Ever

    2Reply
  • Jordan Ursino
    Mount Laurel, NJ · Member since 2017 · 5 posts · 3 votes
    9y

    @Ben Leybovich honestly that's exactly what OP asked for, it's up to her to actually take the advice that was given. I don't know much about the Chicago area but I do know that over-inflated areas attract investors with much higher buying power than the average investor, so there's little room for entry for those trying to secure $100k-$300k cash flowing properties.

    0Reply
  • Stefanie K.
    Investor · Chicago, IL · Member since 2014 · 50 posts · 13 votes
    9y

    On the whole, I am not scared of investing in Chicago for the long run.  Speaking specifically about the city, yes, It certainly has it's problems but it's always going to be a city people will be renting in.  So long as you buy right, don't over extend yourself financially, and run numbers from worst case to best case and can weather the worst case, you will be ok in the long run. I generally agree with what @Brett Goldsmith advised.   As a Chicago investor, I am a bit thrilled people are scared of the city, just means fewer competing offers if I find a good deal (but they are hard to come by these days) ;) 

    1Reply
  • Chris LumLee
    Investor · Honolulu, HI · Member since 2017 · 187 posts · 108 votes
    9y

    I would've focused my goal on investing in real estate. Before buying the rental I have now, I saved a little bit here and there for a purchase and then saved some more in my brokerage account. If you want to get into real estate, go for the gusto and put your efforts all in.

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    9y
    Originally posted by @Megan Roche:

    Hi everyone, I'm going to try to make this short and sweet!

    I'm moving back to Chicago in 6 days and I'm ready to jump into Real Estate (finally!) I have not done any deals/taken any action yet in Real Estate because I knew this move was coming. 

    What I have done is read, studied and listened. I've listened to any/every Real Estate Investing podcast there is and experienced investors always talk about all of the mistakes that they made. How can I avoid those? I know I will make mistakes, but I want to make as many correct moves as possible. 

    Successful investors- If you had to start over, what would you do different? What would you do the same? What was a waste of time and what was the best move that you made? Did you start out solo or have a partner? 

    Just so you know what my plan is to better frame your answer- I'm going to go for my real estate license right away to learn more in depth about purchasing/selling properties- I learn best in a classroom/organized setting so I think this will be best. 

    I want to purchase a small multi-family unit in/around the Southwest Suburbs within 4 months of the move. I'm working on a personal loan with a family member and will do a FHA or 203K loan. We will most likely do a 203K to have room for repairs.

    I want to get into a situation where I'm living rent free as quick as possible so I can save for my wedding and purchase more property! The end goal is to be a full time investor within 18-24 months of next Monday! (right now I work full time in travel) 

    Any advice/thoughts will be incredibly helpful! (especially from investors in the same area) 

    Thanks for the time

    Megan 

    You sound like you have a good plan. Pairing your investing with a real estate sales business is the way to go. The two play so well together. Doing one makes you that much better at the other & vice versa. 

    The idea of pairing investing with real estate sales was the cornerstone that led me to grow Holton-Wise's portfolio to $40M+

    As for mistakes, you are going to make them, I know I have made plenty. None have been catastrophic tho. Ghetto properties, hiring the wrong employees & being under capitalized for certain situations have been the things that have caused me the most headaches in my real estate career. Wouldn't trade the experiences tho. As a matter of fact I've also made a ton of money off of certain deals that I was way under capitalized for. Sometimes you just gotta jump. Maybe it works out, maybe it doesn't.

    My biggest advice to you is to always keep your eye on the prize, remember your fortune won't be created overnight & always keep moving forward, even after the setbacks.

    2Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    Without the mistakes, I would have never made it to the place I am today.  $25000 to a Guru can never replace nor prevent mistakes

    Unless I have total control, I have never gone "all in" except when I have a golf club in my hand

    0Reply
  • Mark H.
    Investor · Grapevine, TX · Member since 2014 · 88 posts · 75 votes
    9y

    My biggest mistake was relying strictly on conventional mortgages around 2010-2012 at the bottom of the market. I was buying SFRs for buy and hold in nice suburbs and my goal was to RAPIDLY GROW my portfolio. Commercial loans offer a higher LTV (85-90) than conventional loans (65-80) and are easier to close on, so they could have helped me accumulate more properties with my limited cash on hand.

    0Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    It is a really smart question to ask and a very hard one to answer.  Everyone will have their bullet points to avoid but somethings just have to be learned by experiencing them.  Learn to market and learn your market would be my first suggestions.

    0Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    @Megan Roche Congrats on taking the decision to jump in once and for all!

    I think mistakes are technically learning experiences and I'm glad you admit that mistakes are inevitable. 

    Now, if I were to start again. I will deploy the FHA or 203k mortgage to buy a 4-unit, REFI, do it again. However, you mentioned your wedding, so make sure you move quickly because as your family grows, multifamily living can get complicated trust me, I know, our baby is 5 weeks old.

    Continue to learn and I'm sure you'll do just great! Good luck. Thanks! - Ola 

    0Reply
  • Giovanny Garcia
    Rental Property Investor · San Angelo, TX · Member since 2017 · 113 posts · 60 votes
    9y

    @Megan Roche thanks you so much for starting this thread and thanks eveyone for your input.  I also have been reading, listening, and researching for quite some time and am finally jumping into it!  I am started off in San Angelo, Texas best of luck to you!   

    0Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    9y

    Understand and have in place a good contract for whatever you buy or sell.

    Franklin

    1Reply
  • Megan Roche
    OP
    Mokena, IL · Member since 2016 · 22 posts · 7 votes
    9y

    Thank you, thank you to everyone for all of your input! I know I've learned a lot and so has everyone else that has seen the thread!

    0Reply
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