From week to week, I struggle with what to blog about. I was talking with a friend and he told me, “Stop trying to write a text book and write what you know.” So here goes…
I got started in real estate in 2003. It has been a wild ride thus far. I look back at where I was then to where I am now, and I am just amazed at the journey. I was a pimply faced kid with delusions of grandeur. Now I am balding, approaching middle age—and still have delusions of grandeur. (Some things will never change.)
Through all the highs and lows, I have learned the most from my mistakes. If there was a mistake to be made, I made it, probably more than once. This is my greatest hits of mistakes.
How to Purchase Real Estate With No (or Low) Money!
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The Top 3 Real Estate Investing Mistakes I’ve Made
Mistake #1: Paying Too Much/Under-Estimating Rehabs
Even to this day, I can’t kick this habit. I’ve gotten a lot better, but I somehow think that by sheer willpower, I can take a bad deal and make it good. I have no evidence that I ever have done this, but for some reason I still jump on the marginal deals despite the facts staring me in the face.
Solution: We start with the assumption that we have to fix everything, and for the most part, we do (this prevents work orders later on). If we can’t see it, we assume it needs to be fixed. This has caused us to be more selective, but it also has helped produce a better rental product. It is very rare for us to salvage any kitchens and baths. It is cheaper for us to handle all of this during construction than during a late night phone call where we learn something broke because we didn’t replace it from the start.
Mistake #2: Not Seeking Legal Advice Often Enough
I’m sad to say that reruns of Law and Order did not put me in the position to provide myself sound legal advice. I created many problems in my own business by being too cheap to seek out legal advice. Eventually, it ended up costing me more money fixing my problems than it would have cost getting the advice in the first place. It also cost me a lot of mental anguish thinking about all the possible problems that might arise because of not having a contract or having a bad contract.
Solution: Whenever I have a legal question, I call my attorney. I also call my attorney just to let him know what I am up to and ask him if there is anything that I need to watch out for. As my business continues to grow, I am no longer in position to not do it the right way. There is too much at risk. We want to protect ourselves as much as we protect our business partners and private lenders.
Mistake#3: Not Networking
Up until a couple of years ago, networking was never very high up on my list of things to do. I did what I did, and I would say I was pretty successful at it. I’ve bought and rehabbed over 200 properties mostly in a vacuum. I was so busy that I never saw the benefits of going to networking events or meeting someone I didn’t know for coffee. I wonder where my business would have been right now if I made it a priority.
Since I’ve really focused on networking, I’ve met business partners. I’ve met private lenders. I’ve met contractors and vendors through referrals. My access to deal flow has never been better. Networking has opened up new segments in my business that I didn’t know were possible, like selling rehabbed and tenanted properties to other investors. My business is growing faster now than it probably ever has because of the connections that I continue to make through networking.
Solution: I now make it a point to meet with at least one new person and touch base with three others every week. I’ve worked it into my daily routines. At least three times a week, I am going to stop for coffee or lunch out. Now I add another 30 minutes or so to include someone else. I also spend more time on BiggerPockets. It is a great place to meet other investors of all experience levels. I wish I would have known about this years before I found out about it. So, if you are a Chicagoland investor, feel free to reach out and we can grab a coffee. If you aren’t in the Chicagoland area, feel free to PM me.
I could go on for pages of all the mistakes that I have made, but I think not making these three mistakes, along with my first post, have had the largest impact on my business.
What mistakes have you fixed that have had a profound impact on your business?
Let me know by leaving a comment!