064: My 5 Biggest Real Estate Investing Mistakes… So Far

SHOW NOTES FOR EPISODE 064 –  MY 5 BIGGEST REAL ESTATE INVESTING MISTAKES… SO FAR

Every real estate investor makes mistakes.  In fact, it’s an important part of the learning process.  What’s important is what we learn from and do with these mistakes and how they help make us better investors.  In this episode, Bill shares his personal top 5 real estate investing mistakes to-date.

Introduction

• Every investor makes mistakes
• Don’t be afraid of mistakes – learn from them
• Mistakes are your best education!
• Try to avoid mistakes as much as possible but also know mistakes will happen!

Here are my top five mistakes:

# 1 – Not Having a Mentor

• Had done much research and felt I was ready to just get started
• Didn’t want someone else’s feedback
• Looking back, I see most of my mistakens could have been avoided if I, first, had a good mentor to bounce things off of
• Trusted that my first “turn-key” properties were OK and skipped much of the normal due diligence.  If I would have have a mentor I could have run it by him first

#2 – Not Vetting Property Managers More Carefully

• I just accepted that the property management that came with my turn-key properties was OK without checking them out first
• Turn-key property managers should be carefully checked out in the same way you would hire in non-turn-key situations

#3 – Not Checking Out the Market Better

• What are real estate prices doing in the area?
  • Going up
  • Declining
  • Stagnant
• What is the local job situation?
  • Job growth percentages up or down
  • Are new employers coming to the area
  • Is the market dependent on a single employer or industry
  • Get unemployment stats and trends
• What is the overall local economy?
  • Are businesses closing or moving out of the area?
  • Are commercial real estate values and office occupancy rates increasing
  • Are there “redevelopment plans?”
  • Does the city have a major “growth initiative?”

#4 – Wasting time with the wrong funding source

• One of my first big mistakes
• Don’t think because it is a big name bank that that is your best source of money
• Know their funding requirements before applying
• Have a good back-up source if you are not approved
• Make sure the lender is compatible with you and your plan

#5 – Not having sufficient operational reserves

• Have 6 month reserve or back-up funding source to cover expenses
• This can be costly as you struggle to cover expenses by creating additional debt

These are my “Big 5” and you may well have your own, but hopefully, you will learn from my mistakes.  Either way, try to avoid mistakes as best you can but understand — mistakes will happen.  The important part is learning from those mistakes and how you bring that knowledge into your next deal.

Until our next podcast, keep moving forward and God bless!

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