Thinking back to the early 1990s I recall my first foray into the real estate investment jungle. I had a very good working knowledge of a few areas of the business, primarily finance and home renovation. In the areas where I wasn’t as strong I sought out experts who were. I learned what I could from books, but mostly I learned from Hard Knocks University. I did a lot of things right but I certainly made my share of mistakes as well.
At the time I was looking to buy a couple of investment properties in Las Vegas but I lived in New York. I did have a number of excellent connections in Nevada and I asked them for referrals to good real estate agents and property managers. I carefully selected one of each and started my investment search. It was here that I learned a very good lesson that has served me well to this day. I found that a large factor in the success of your real estate business is remembering that agents, mortgage brokers, attorneys, title officers, home inspectors, and others work for you – don’t let them act as if it’s the other way around.
The agent I selected was a veteran who knew her way around the real estate jungle. She had a reputation for being ethical and treating her clients well. I certainly had no complaints in that regard. I gave her the criteria for my investment properties and she went to work. I flew to Las Vegas for a week to look at the assortment of homes she had selected. They were in the right price range, proper number of bedrooms and the right age and square footage. There was one problem; I had requested a specific area that I had chosen because of research I had done. She had a couple of properties there but the bulk of her selections were in areas that she preferred.
She wasn’t deliberately trying to steer me away from the area I wanted. What happened was she had her own farm area that she was so intimately familiar with that she naturally chose properties there. She wasn’t going to make any more because she wasn’t double-siding any of the transactions. I wound up purchasing one property in the area I had selected and one from the area she insisted was better. Five years later when I liquidated the properties the one from my chosen area had performed beautifully and had the same tenant the entire time I owned it. The property in her favorite area had only minimal appreciation, though still profitable. The big problem was that I had four different tenants in five years and greater periods of vacancy and higher repair costs. That wasn’t her fault – it was mine for not remembering who was in charge.
Stick to Your Guns
I did learn a valuable lesson from that experience. Even though I had made a good choice of agent based on many important factors, I didn’t manage the relationship well. Today when dealing with industry professionals or contractors I will listen to what they have to say and factor it in to my decisions. Many of them have wisdom that comes from experience that I would be foolish to ignore. However, I make certain to remember that it is my business and decisions are up to me and me alone. Ultimately we all bear the consequences of our decisions – why let someone else make them?
Know when to tune out, if you listen to too much advice you may wind up making other peoples mistakes. – Ann Landers