How I learned to say NO the hard way in Real Estate
Finding a Mentor...or So I Thought
Last year I wanted to get into real estate after listening to Bigger Pockets for several months. So I met with a property manager that was referred to me. I told him I wanted to do the brrrr strategy with small houses. 3 bed 2bath max. He said he had a wholesaler he worked with and that would be no problem.
So over the next couple months he presented me with a couple deals. One I accepted but something went wrong with the bank short sale and I was out money on the appraisal. One year later he eventually he paid me back for that. I was new to the game so I just went along with the way he did things. I should of asked for my appraisal money back right away. Anyway he was very knowledgeable which is one reason I liked working with him.
Some time after that he presented me with a section 8 4plex. I did not want to do it! I told him I wanted to start small and take steps. He insisted it would help me cashflow. He showed me some big numbers that got my attention. I thought wow that's a lot of cashflow!
Should of Gone with My Gut
So I went against my grow slow plan and bought it. First off the it didn't appraise quite what was needed to meet the brrrr strategy. It was about $15k under what he thought it should of appraised at. So everything started off on wrong foot.
He was supposed to meet me out at property the day after closing to go over repairs with his contractor, but he let me know last sec he couldn't make it. So I went over everything with the contractor that I wanted done. I then made the mistake of paying the contractor up front. The property manager said this was okay cause he needed money to pay his workers on a daily basis. So once again I went along with it. After about a month later and $8,000 dollars I wasted on this contractor I told him no more!
Made Out Okay Thanks To Being Handy
I hired a more qualified contractor to finish the job and I did all the tile flooring myself on remaining unit to save money. If I wasn't handy I would of lost money on this deal bigtime!
So after all the units are ready it took the property manager another 3 months to fill all the units. This was so disappointing because he said he could do it in a few weeks after work was complete. So it was around the time that 3 units were full that I went to interview another property manager. I almost switched over but I had a reasonable buying offer come in that seemed like a win win so I accepted it. I didn't make much money at all on this deal, but I learned a lot! It cashflowed okay but not what was promised.
The lesson I learned is don't let anyone in real estate pressure you into their idea of a good deal. Figure out the numbers yourself and if you don't have peace with it then just say NO! But if you do make a regretful decision just work with what you got, learn from it, and if you do it right you can still make a little money! I spoke with a local investor this week and he said I will have some dud deals along the way but just keep doing deals and it will pay off!