In my blog I help people learn about real estate by sharing what has worked well for me. Many times you can learn more from mistakes than from success and I have made a lot of mistakes! Those mistakes may have been more valuable than any success I have had. Mistakes are not something you should be ashamed of, but something to help you learn and do better next time. Many people are afraid to try something new because they may be bad at it or fail. The truth is most people are bad at new things and it takes time to get good at something. The best way to become proficient at anything is to do it and learn from experience what works and what does not. You can learn a lot from my mistakes, but you are still going to have to take chances and make your own mistakes to become successful at anything.
For more information on my successful real estate investing articles check out my complete guide to long-term rental properties.
The biggest mistake I made in real estate was having no plan
When I became a Realtor I was lucky that my father was an agent and could teach me the business. I got a head start over many new agents by having a great mentor. However, I think joining my fathers team also hurt me and stunted my growth. My father had a great system that he did very well with, but it wasn’t for me. I tried to make that system work for years, but my heart was not in it and I never took any initiative to create a plan or system. I did not have to create a plan, because I was making a living and nothing was forcing me to take action. If I had been a brand new agent with no help, I may have taken action to create a plan and system much sooner because I had no other choice.
Once I had a plan, something to get excited about and a clear vision of what I wanted, I had great success. The plan I chose was to become a REO and BPO agent. I don’t know if the path of becoming a REO agent was the most important decision I made or the act of planning and vision of something was more important. I had no vision and no idea what I wanted out of real estate when I first started. Once I had a vision and plan, I had great success and it has continued.
My number one mistake was waiting for something to happen to me, instead of making it happen. I thought I would automatically be successful without a definite plan or vision. Once I had a vision and plan, I had more success than I dreamed of. I learned how important it is to make goals and have a vision for where you want to be in the future. Here is a great article on my goals and plans for 2014.
The second biggest mistake was trying to complete repairs on a fix and flip myself
I wrote about a fix and flip I tried to repair myself a few weeks ago here. That fix and flip cost me thousands and thousands of dollars, and it was a huge mistake doing the work myself. It took me three times as long as it should have to fix the house and I didn’t do as good of a job as a pro would have done. That decision cost me time, caused frustration and killed the rest of my business. From that point forward I always used a contractor to repair my rentals and fix and flips. Time is money and if you use up all of your time trying to save a few bucks, you are actually costing yourself much more money than you are trying to save. Here is a great article on how to find a contractor.
The third biggest mistake I made in real estate was waiting to invest in rental properties
I didn’t buy my first rental property until December of 2010 even though I had been around real estate my entire life. I had always wanted to invest in real estate, but I never had a definite plan for how to do it. I thought once I start making a lot of money I will be able to save more and buy some rental properties. Once I created my plan for investing, my savings started to grow, I started to spend more time researching the market and pretty soon I had my first property!
I will admit I had pretty good timing for starting to buy rental properties. Prices were low in 2010 and I got a great deal on my first rental property. If I would have started investing earlier in my career, I would have paid a lot more for a property. However, If I would have bought properties below market value with great cash flow I would still be in great shape. The sooner you buy investment properties, the sooner you start paying down mortgages and making money.
The fourth biggest mistake I made was not setting goals in real estate
When I started out in real estate, I never made goals because I told myself I was smart enough and good enough that I didn’t need goals. The truth is I was probably scared that I would not reach my goals and I would be a failure. This is a horrible attitude to have and we should never feel bad about falling short of our goals. Goals will almost always make us accomplish more than if we had no goals and that is what is important.
Goals help create a plan and vision, which is what I was lacking when I started in the business. If I would have set goals for myself in the beginning I know I would have had much more success. Now I create goals for everything, like my plan to purchase 100 properties.
The fifth biggest mistake I made in real estate was buying a house that I could not afford
When I bought my first house, I could afford it according to my lender. I qualified with no problem and I could make my payments. However, I had bought a house with a payment that was almost 30% of my income. I had very little money left over after my house payment for savings. I ended up saving very little money until I started making much more money from REO. I write much more about this subject here, but I feel homeowners need to spend much less than they can qualify for on a house. It is very difficult to save any money when you spend the maximum amount of money you can on a house payment. Saving money is a key to creating wealth and I waited way too long to save anything.
We should not be afraid to make mistakes because that is the best way to learn. All the mistakes I listed may have caused me short-term problems, but in the long run they taught me great lessons and helped me get to where I am today. Anytime I make a mistake now, I try to look at how that mistake will help me, not dwell how dumb it was.