Don’t Make This Mistake: My Real Estate Investing Nightmare
I’m not going to lie to you - real estate investing is a career that will bring the best and the worst out of you. No matter how well-educated or prepared you are, things can always go south. One small mistake can set you back weeks or even months in your progress. Why am I telling you this? I’m not trying to terrify you or get you to quit real estate (no way)! I just want to make sure you never have to make the same mistakes I made in the past.
Here’s the Lesson
One thing you need to remember when investing in real estate is that you make the money when buying the property, not when you’re selling it. What does that mean? Well, you will be making room for profit in the process of purchasing the property - that’s when you try to get the best price possible and send counter offers to lower the price based on property condition. Knowing how to negotiate the right deal and use walkthroughs and property inspections to fuel your counter offers is crucial to your profitability at the end of each project.
Besides knowing how to close the deal, it is equally important to build the right relationships and let the members of your power team help you through the purchase. Speaking of which, you need to have the right people at the right place at all times, if you’re not able to do certain tasks yourself. I once made the mistake of not being there to do the walkthrough before closing on a property and I ended up in quite an unfavorable situation.
Namely, I found this property online and it was about a 6 hour drive away from my location. I thought it would be just fine if I did the walkthrough via a video call on Zoom. Yes, I had the seller give me a tour of the property on video and I called it the walkthrough. You can already tell what mistakes were made here. I trusted that the seller would be honest and show me everything there is to know about the property, which was mistake number one. Among several minor issues, the major problem with the property was the condition of the roof.
Even though the seller did mention that the roof would need to be replaced, he said it is going to be a minor expense of only a few thousand dollars. Little did I know that the roof actually had four layers of shingles in horrible condition and that the repair would cost me over $25 000… If I had been there on site to do the walkthrough myself, I could’ve seen the issue and either give up on the deal or ask for a major price reduction through a counter offer.
The lesson: always be there in person when purchasing a property. If for some reason you cannot make it there, send someone experienced to take your place. This is where it’s good to have a property inspector on your team or just someone who knows what to look for during property walkthroughs. The moral of the story - don’t trust that the seller will be completely honest as they do have their own interests to look after.
What to Expect Going Into Real Estate
No matter where you are in your real estate journey, just know that things won’t always go to plan. There will be plenty of lost deals and missed opportunities, you will have to deal with stubborn tenants and late payments, not to mention the unexpected repairs and renovations that take longer than they should. However, none of these are reasons to quit real estate.
Instead of letting these hurdles get to you, think of what you’re getting with all this hard work. The benefits of building an active portfolio, the passive income and the ability to ditch the 9-to-5 and be your own boss. Most importantly, the ability to choose who you work with and how you get your work done. This level of freedom is worth the effort you need to put in to overcome the obstacles.