We’ve all heard the saying, “If I only knew then what I know now.” Well, that saying certainly holds true in real estate investing.
When I bought my first investment property nearly 4 years ago, I didn’t know anything about real estate investing. Hey, we all have to start somewhere, right? Needless to say, I was really excited to own my very first rental property, and to officially hold the title of “real estate investor.”
2 years later later I owned nearly 40 rental properties.
Well, I’ll be honest. I made some big real estate investing mistakes along the way that cost me dearly financially and emotionally. I’m sharing 5 of my big blunders in this post, so you can hopefully avoid them.
Real estate investing mistake #1: I had no clue what I was doing
The tough part about real estate investing is you just kind of have to learn the hard way. You can’t really know what’s it’s like until you do it yourself.
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However, you can better equip yourself by doing lots of research. You see, I didn’t do that. I just dove right in without studying up on real estate investing a whole lot.
Don’t make that same mistake.
In fact, that’s exactly why I created this blog. I want to help educate real estate investors just like you. Subscribe, and come back often. New content is regularly added to help you succeed.
However, RealEstateHacks.net isn’t the only good blog out there. Here are a few other blogs on real estate investing that are worth checking out:
Real estate investing mistake #2: I grew my portfolio too quickly
Like I said, I bought close to 40 properties in under 2 years. Btw, if you’re wondering how I pulled that off financially, I did via cash-out refinancing.
Anyway, the problem with growing too quickly, in my case, is that all my rookie real estate investing mistakes were experienced on a massive scale.
With that being said, my recommendation for you, especially if you’re just starting out, is buy one smaller fixer upper – like a 2 or 3 bedroom – and go through the entire process of fixing it up, getting it appraised, financed and rented before you go out and buy another one.
Experience the full process of owning a rental property, and learn your mistakes on a tiny scale. Trust me, you’ll be very glad you did.
Real estate investing mistake #3: I didn’t screen tenants well
If there’s only one thing you take away from this post, let it be the importance of screening tenants well.
I don’t even want to think about how much money I’ve lost on bad tenants. I know it’s in the 10’s of thousands. I’ll say it again. Screen your tenants WELL.
To do this, I strongly recommend you subscribe to Buildium. Buildium is a property management software that has built-in tenant screening along with other great features like online applications and the ability to collect rent payments.
Real estate investing mistake #4: I hired the wrong people
Buying so many properties so quickly meant I was oftentimes rehabbing 4-5 properties at once. I built up a construction crew of 14 full-time guys to make this happen. Just like you want to screen your tenants well, you also want to screen your workers well.
Again, I can’t tell you how many guys I’ve had to fire because they wouldn’t show up for work, or showed up high or drunk or whatever. What a nightmare. Have your guys fill out applications. Do drug testing. Call on previous employers. Do your due diligence.
Real estate investing mistake #5: I had delusions of grandeur
Don’t be swept away by the fantasy that cable television creates around real estate investing. It’s not all sunshine and rainbows. While I do believe it’s a worthy financial pursuit, it’s also not for the faint of heart. Be sober-minded.
I believe wholeheartedly that real estate investing can be a solid way to create long-term wealth and even short-term supplemental income. Proceed with caution, though. Move slowly. Learn as you go, and be extra careful who you choose to work with along the way. If you follow those recommendations, you will avoid a lot of real estate investing mistakes and headaches.