These Two Lethal Mistakes Cost Me $500k+ in the Past 4 Years

by | BiggerPockets.com

Today, I’m bringing you a vlog post about how I lost $500,000 over the last four years of my journey as a real estate investor.

There are two key components to me losing all this money. I’m going to touch on that in a bit, but I want to start with a quote that I actually made up. It goes like this: “Every experience is a good experience as long as you perceive it to be a good experience.” Now, I know that sounds pretty philosophical, but I honestly believe that when you lose money like I did, you have to try and find something good in that negativity, and you have to feed yourself with that good in order to continue moving forward. Otherwise, if you can’t do that, you’re going to get scared, it’s going to bring you down, and you’ll probably never invest in real estate. We all lose money. It’s not a bad thing as long as you can learn from those mistakes and never repeat them again.

Not Being Patient

Now, the biggest mistake that I have ever made—and I’ve referred to this mistake many times in the past—was not being patient. I would just buy properties for the purpose of adding them to my portfolio without having any justifiable reason for why I was purchasing all of these properties. I bought 13 or so properties in six months, got into a ton of debt, and built a large portfolio back home in Australia. The media was referring to me as this whiz kid even though they didn’t know I was losing money on my monthly mortgage payments. So yes, it was great having that status as the whiz kid real estate investor, this awesome entrepreneur, but there was really nothing there. It was absolutely fake.

My message to you is this: There are many strategies to investing in real estate—wholesaling; buy, fix, and flip; buy and hold. Whatever it may be, pick your strategy and stick with it. Do not get caught up in other potential strategies that could make you more money. Become an expert in one thing. Don’t be a jack of all trades and a master of none. Just be a master in one thing and figure out what your end goals are. Once you figure out what your end goals are, pick a strategy, stick with it, and then make sure that every property you are adding to your portfolio is getting you a step closer to your end goal.

Related: The 3 Dumbest Mistakes Buy & Hold Real Estate Investors Make

I lost a lot of money because I was committed to buying these properties for the purpose of buying them and adding them to my portfolio. They weren’t making me money, and I had to sell at a loss. But once I figured out why I really started my journey as a real estate investor, it was too late. At the time, there were deals coming across my desk that I could not purchase, and that’s where I lost a lot in terms of opportunity—because I already had my money tied up in other investments.

The first thing I would suggest is to be patient, pick your strategy, know what your end goal is, and then only add properties to your portfolio that are genuinely getting you closer towards achieving your end goal.

Choosing the Wrong People

There is a saying that goes, “Business is easy. People make it difficult.” Thinking back to how much money I’ve lost to working with the wrong people is absolutely mind-boggling. Business partners have sold me their own properties in crappy areas where I’ve lost a lot of money. Other business partners have had me do 90 percent of the work even though they got 50 percent of the profits, and still others have not paid out on a couple of deals. Then I’ve had former employees try and use our company card on out-of-state purchases and contractors who have squandered our money. Tenants have tried to sue us for no reason.

Overall, my advice to you is to take things slow. Whenever you’re looking at entering a new relationship, be it a business partnership or hiring someone to help you with your real estate endeavors, do not jump in. Remember, “hire slowly, and fire quickly.” Ultimately, real estate is not a one night stand. It’s going to take 5, 10, or 15 years for you to get to where you need to be with your real estate endeavors, to achieve financial freedom or create a company that allows you to leave a legacy. So take things slow and get to know and respect each other.

Related: The 6 Most Common Mistakes New Investors Make (Including Thinking It’s Easy!)

Regardless of your past experiences, don’t lose hope. Even if you’ve been burnt in the past like I have, pick yourself up and continue to buy properties, but tweak your strategy. In my case, when people have screwed me—which is still my fault because I trusted the wrong people—I still haven’t lost hope. In order for that relationship to truly flourish, you can’t enter it with a closed mind and heart. You have to be vulnerable. You don’t want to miss out on that gem partner or gem deal because you got burnt in the past and now you’re scared and hesitant.

Conclusion

I’ll end it by saying that it doesn’t matter how many times you’re wrong as long as you’re right when it counts. So learn from your mistakes and try not to repeat them. That pretty much summarizes how I lost $500,000. But I’m still here doing better than ever. I’m focusing on growth, and I’m not letting that negativity drag me down.

What bad business habits have you overcome in your real estate career?

Share with a comment!

About Author

Engelo Rumora

Engelo Rumora “The Real Estate Dingo" is a successful property investor, motivational speaker and serial entrepreneur that quit school at the age of 14 and played professional soccer at 18. He is also a soon to be published author along with becoming a TV personality in his very own real estate house flipping show. To find out more go to engelorumora.com . Engelo Rumora has been involved in over 400 real estate deals and founded five businesses in Ohio. The most successful is Ohio Cashflow, a company that specializes in providing turnkey properties in several Ohio markets. The newest venture is List’n Sell Realty, a real estate brokerage based in Toledo, Ohio and soon to be known as the #1 discount broker in the country.

12 Comments

  1. Many people want to give advice and tell you that you are doing it wrong because you are not building an empire quickly and leveraging your portfolio to its full potential…missing opportunities.

    Your story is a nice reminder that if the method I have chosen is working for me and I have achieved full financial independence with it, then that is all that really matters.

    • Engelo Rumora

      Thanks Steve,

      There are many ways to make money in real estate.

      There is no “one size fits all”

      Most folks pushing a particular strategy have a hidden agenda.

      I had someone no too long ago that sells mortgages completely troll my blog just to be seen lol

      Thanks again for your comment and have a great day

  2. Charles Borrelli

    Good video. Everyone does things a little differently in the niche they carve for themselves. I think it kind of forms naturally out of the strengths each investor has. Branching into new areas is always risky. I have found that if you take on a partner, ALWAYS leave your self a way out the situation if the partner does not fulfill his or her obligation.

    • Engelo Rumora

      Thanks for your comment Charles,

      It’s hard to get yourself out of a situation if your partner is not doing the right thing.

      It will still come back to bite you as most likely your name is plastered all over the business.

      Do your best in picking the right people from the start.

      I stopped taking on business partners.

      Nowadays it’s just me, great employees and minority equity partners where I call all of the shots lol

      Much success

  3. Luis Vilar

    Great advice. I am by nature very impatient but for some reason, I’ve noticed that I am taking my time to get my first deal. I am carefully analyzing every single property I came across. I really want to avoid starting my investing experience with the wrong foot.

    • Engelo Rumora

      Thanks Luis,

      There is also a fine line of overcomplicating and turning things into “analysis paralysis”

      When it feels right, pull the trigger and if you make a mistake.

      Learn from it

      You will do better 2nd time around.

      Much success

  4. Jared Ackerman

    I can relate to every situation of your story. Moving too fast to have quantity versus quality and picking the absolute worst people and ignoring my gut feeling because I thought I would be “missing out.”
    The best lessons learned are the ones that are physically and mentally painful and that’s a better tuition than any university can offer. I’m saving this article in ,ynreading list to remind myself to remain patient and never get carried away with my successes and always appreciate the lessons failure teaches me.
    Thanks for sharing Engelo!

    • Engelo Rumora

      Hi Jared,

      Thanks for your comment mate.

      Working with the wrong people will almost always be the cause of financial loss.

      It’s great to stay humble and to this day I carry around a print out statement of by bank account balance with just $33 in it lol

      Keep the dream alive mate and much success

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here