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SHOW NOTES FOR EPISODE 280: REAL ESTATE INVESTING ROCKSTARS’ BIGGEST MISTAKES – PART 1
It has been said that we learn from our mistakes but, on the Old Dawg’s REI Network, we also learn from other people’s mistakes. In this unique podcast episode, you’ll hear from some of real estate investing’s biggest rockstars – Joe Fairless, Michael Blank, David Lindahl, Jake & Gino, and Brandon Turner – as they share some of their biggest real estate investing mistakes, followed by Bill’s take on how you can benefit from their goofs.
“Failure is the key to success; each mistake teaches us something.”
The Old Dawgs Podcast as A Resource
- Every guest on the Old Dawg’s REI Network Podcast is asked “What is Your Biggest Mistake?”
- With nearly 300 podcasts, we have a lot of great answers from a lot of great real estate investors who have really been in the trenches
- I have had some amazing guests – many of which you may know and some you haven’t
- The reason I have them on is not so they can brag about how great they are and make you feel discouraged but so we can learn
- And one of the reasons I even started this show in the first place is to share my own personal real estate investing mistakes (the good, the bad and the UGGGGLY) so you, hopefully, you will learn from my mistakes and not repeat the same
- But, besides hearing my endless flow of mistakes… I also have our successful real estate investor guests share their mistakes as well
- I ask them, “What is your biggest mistake and what have you learned from it?”
- For the next two podcasts, I will be showcasing some of my guests answers
- Today, you are going to hear from some of the best. Names like Joe Fairless, Rod Khleif, Ken McElroy, David Lindahl, Brandon Turner, J Scott, Jake & Gino, Michael Blank and others
Joe Fairless
Joe Fairless controls over $400,000,000 of real estate with a specific focus on value-add multifamily acquisitions. He’s also host of the popular podcast; Best Real Estate Investing Advice Ever show, which is the world’s longest running daily real estate podcast. Past interview guests include Barbara Corcoran and Robert Kiyosaki. Joe is the author of real estate books, including Best Real Estate Investing Advice Ever Volumes I and II, which feature guidance from some of the sharpest minds in real estate. His third book, BEST EVER Apartment Syndication Book, provides a proven step-by-step system for completing a first apartment syndication deal. He is on the Alumni Advisory Board for The College of Media and Communication at Texas Tech University and the Board of Directors for Junior Achievement.
- Poor due diligence on the property inspection with 168-unit deal
- Realized later that there were things he would need to fix
- Raising extra money for down payment but not setting funds aside for his operating budget or improvements to the property
- He almost put no money into the deal until this happened! So he ended up putting in his own money in to cover operating expenses and property improvements
David Lindahl
David Lindahl has rehabbed over 820 houses in just under 10 years and currently owns over 7,400 apartment units. Starting out as a struggling landscaper with no experience in construction. Within the first 14 months, Dave’s apartment buildings created a positive cash flow of over $10,300 a month for him and his family and with in three and one half years Dave became a multi-millionaire. Dave Lindahl, author of 2 #1 bestselling books, Emerging Real Estate Markets, and Multi-Family Millions. His third book is through Donald Trump’s organization, and is called Commercial Real Estate Investing 101: How Small Investors Can Get Started and Make It Big. Among other publications David has been featured in Reader’s Digest, Creative Real Estate Lifestyles, AOL and Kiplinger Magazine. Dave Lindahl, with no Real Estate experience, created systems that allowed him to create enough monthly positive cash flow to retire within 3.5 years.
- Launched into too large a deal with not enough experience – a 420 unit “repositioning” property in Huntsville, Alabama
- Went from 40-unit to 80-unit to 420 unit!
- Needed to upgrade property and tenants
- Not in the right part of town
- 42% occupied when he purchased it
- Launching 2 other businesses at the same time and was not focused enough on the deal
- One of his first investor deals and wanted to make sure they did not lose money
Jake & Gino
Jake & Gino are the authors of the best selling book Wheelbarrow Profits. Gino Barbaro is a licensed realtor, investor, business owner, and entrepreneur. He has been investing in real estate for fifteen years and has grown his portfolio in excess of 500 units. Gino has teamed up with Jake Stenziano to create JakeandGino.com, a real estate education company that offers coaching and training to those looking to get their start and seasoned professionals alike. He is also a graduate of IPEC (Institute for Professional Excellence in Coaching) and the author of the best-selling cookbook Family Food and the Friars. He currently resides in New York with his beautiful wife and their six children. To learn more about Gino, visit www.ginobarbaro.com or www.ginosfamily.com —- Jake Stenziano is a former award winning Sales Specialist for GlaxoSmithKline, with an MBA in marketing from Mercy College in Westchester, NY. Jake built a large multifamily portfolio while working as a sales specialist and was able to retire from corporate America at age 33. Jake is currently the asset manager for 502 multifamily units and is also the founder of Rand Property Management, which is responsible for managing the day-to-day operations of his group’s investment portfolio. It is also the first property management company with a focus on “modern affordability.” Jake now enjoys running his property management company and coaching students on how to buy, manage, and finance multifamily properties in their pursuit of financial freedom. He and his wonderful wife currently reside in Knoxville, Tennessee.
- Gino’s Mistake
- Bought commercial property not knowing what he was doing (mixed use – retail – office – industrial)
- Didn’t know class
- Didn’t know niche
- Didn’t understand leasing
- Didn’t understand market
- Jake’s Mistake
- Hiring the wrong people as they scaled up
- Too interested at first about saving money, so didn’t get the best people
- He now knows it’s all about attitude
Michael Blank
Michael Blank is a leading authority on apartment building investing in the United States. He’s passionate about helping others become financially free in 3-5 years by investing in apartment building deals with a special focus on raising money. Through his investment company, he controls over $24 million in performing multifamily assets all over the United States and has raised over $6M. In addition to his own investing activities, he’s helped students purchase over 1600 units valued at over $55M through his unique “Deal Desk” and training programs. He’s the author of the best-selling book “Financial Freedom With Real Estate Investing” and the host of the popular “Apartment Building Investing” podcast.
- 12-unit in Washington DC
- One tenant was calling government agencies and ended up costing a lot
- Rent control but can increase rent on section 8
- Property manager did not like section 8 yet they had many section 8 tenants so had to fire property manager
- Difficult in DC to get bad tenants out
- The experience matured him
Other Mistakes
- Getting into Pizza business
- Believing that there is really “passive” income – he thought that his pizza could be passive but the less attention he paid the more he paid in another way
- He transferred this thought to real estate and now still stays very involved with his property managers
- It’s important that your get good referrals for property managers
Brandon Turner
Brandon Tuner is an active real estate investor and the co-host of The BiggerPockets Podcast! He has been actively involved in real estate since he was 21 and totally and fully in love with the whole business. He also wrote “The Book on Rental Property Investing” and co-wrote “The Book on Managing Rental Properties.” Also wrote “The Book on Investing in Real Estate with No (and Low) Money Down.” He also writes blogs, books, and hosts weekly LIVE webinars at BiggerPockets.
- Confusing an inexpensive property with a “good deal”
- Didn’t analyze his deals in the beginning
- Especially did not account for Cap-X (capital expenditures) like roofs, aging items
- Bought a duplex to fix ‘n flip. Converted it into a single family home. Took 12 months to rehab. Sat on the market for another 12 months. Ended up losing $10,000
- If he would have kept it as a duplex, with light rehab, he would have made $24,000 in two years
Stay tuned next week for Real Estate Investing Rockstars’ Mistakes – Part 2 with more mistakes by top real estate investor superstars.
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