Many of you also know that I started investing in real estate in 2003, and since that day the insurer bought the first duplex that I bought and kept millions of others, and helped others get much more. During those investments, I made many mistakes, some smaller than others. And I am contemplating those years, and I am trying to make sure I have a thorough knowledge of the lessons taught by the Hitting School, which I would like to transfer to other new and experienced investors. You have reached your 10 main mistakes and how you can avoid them. (I will also write the 10 best smartest decisions I’ve made.)
This is not in a specific order:
1. Always believe the seller or real estate agent in the account items. After my first investment property, I learned this difficult lesson when I realized in these expense numbers that it did not include the vital elements that were making money. The most important were maintenance and legal expenses. Also, I always suggest getting general service bills, as well as averaging those bills throughout the year in previous years. For each expense, they state proof of this and then ensure that it includes legal reserves, maintenance, replacement, vacancies and more. Remember that the seller is looking to put your property in the best way, as is the case with operational numbers and 95% of real estate agents have no idea and only offer what the seller tells them.
2. Like number 1, vendor certification of all income items listed can be disastrous. In the first duplex unit, the landlord stated that although one of the units was vacant for a tenant to align and even offered a lease, the lease was not signed … duh. Well, the broker had no idea like most agents and I was so green that I missed it. Then, after we closed, we called the tenant and told her that she changed her mind and, of course, we fought with the vendors to compensate us for about 6 months after closing, but we haven’t seen a penny. I also suggest obtaining evidence that all tenants are up to date as mentioned in the operative statement. If you do not receive the rental credit in the form of funds at the end.
3. Do not use a real estate broker. You do not need to use a real estate agent to find great deals, but if it is new, I suggest you use a dedicated real estate agent that not only specializes in real estate investments, but is also a real estate investor. For many people, they use family or friends who are brokers to find them as an investment property, and wonder why they lose money every month after the purchase because the agent has little or no experience as an investor. We see it all the time. You will not go to the dentist to adjust your back, you will go to the chiropractor. In the same way with real estate investment, as I always tell people … be sure to use a real estate investor in first person and a second real estate broker.
4. Call the local police department or ask your neighbors about the property in question. This is something that I prioritized after my first duplex. I was working in the garage when a neighbor came too fast to fear and said: “I can’t stay looking at each other for a long time, tenants in the basement run a drug house and prostitution from there, I have to go.” With what I said, I called the police department. The town and I talked to a detective who interrogated the tenants while reporting that they had been doubly interrogated about 6-8 times in the last 12 months of calls to 911, transmitting the information that the neighbor told me and gave him according to the tenant raid. Yes, I agree to assault my investment properties. They got many illegal weapons and many drugs. Then I managed to expel them. So basically I inherited the problem from the previous owners instead of knowing in advance and negotiating better terms or moving to the next property.
5. Do not convert vacant units fast enough. This is the main lesson, but this is the lesson I have taught time and again to other real estate investors, especially new investors who have full-time jobs. It took me about 30-60 days to be “ready.” Why Well, I decided to do it all alone and do it only on weekends, which led to a 90-120 day vacancy. The treatment for this is if you do not have enough time in your day for the unit to be “ready” within a maximum of two weeks, I suggest you rent the exercise. Yes, it will cost a little more, but it will save you time. Time really is money.
6. Vacant units are not marketed immediately. I used to wait until the unit was fully profitable before marketing; I would lose 30 days. Therefore, start marketing as quickly as possible, and clean this unit as quickly as possible, and if there is an update that sells to the tenant, act as if you were already there and the best next to Chuck Norris!
7. No criminal background check operation. Leaving the first tenants without criminal background checks was a mistake because one of them was a drug addict and drunk violence. I never check the credit because most people who rent have had some financial problems in the past. For me, the most important things are not criminals and a work that is currently verifiable.
8. Do not use a company specialized in property management. Like finding a competent investment broker, finding a property management company was a very difficult topic and task. Once I got to the point where I realized my best skills and found new offers instead of managing everyday tasks, a property management company decided for us. Well, since that day, I launched 6 management companies, all of which pushed my belongings to Earth. The truth about using a common property of a management company is that it doesn’t look at your property the way it does; They only see one way to earn money with administration fees instead of investing and how to maximize it. Maybe I could have made a list of 50 stupid mistakes made by property management companies that cost me thousands of dollars. The solution? Or you get to the point of being able to have an internal real estate administrator that concentrates 100% of your interest in your property or through the use of a property management company that is priced at CPM or ARM. These are given by the Association of Real Estate Administrators of IREM. To get the appointment, the person or company must take extensive lessons and have some experience.
9. I would have tutorials to learn how to deal with contractors, but this list is a way to expand your reach and then just a number. I will write a full article on this topic in the near future. Instead, it will be the state of the units that you rent. This will also go to my best list of decisions. But I contradict many other real estate investors with a mentality … from just tenants to separate the place of the white contractor for everything and not update anything. I think it’s a big mistake because I don’t know who the tenant base is, what they want and how to give them. There are some facts in mind that if it is not broken do not fix it, but when you turn on the unit, the end user remembers, who attracts you? Personally, I made the decision to use the modernization of modern color systems at home, making 1-3 different colors followed by white weather and updating lighting fixtures, outlets and door handles. Most of the time, I could have left floors, bathrooms, countertops and safes as they were or just once fast. Learn about modern colors and combinations that bring a slightly different tenant according to the region. It really plays the mood of loneliness. I love going to real estate that know my plan and build that slight increase in costs when buying. Your tenants will love it, and you can request a better tenant at the highest rates in the market. This is a mistake in not knowing my market and minimizing the group of tenants in front of the highest group of tenants in the market.
10. Lack of property reserves. I am a great defender or I have property reservations and I leave those reservations alone … don’t touch them. I often heard about people who got into financial problems, because after closing, they transfer money to another investment and then they need a large part of the money for repairs, but they deplete the capital. I also did this; We close the deal and then transfer those reservations to the next deal. This also applies to rehabilitations. Please take your hands off! This could make or break your investment.
Well, they are there, and after reading them, I think I can easily reach another list of 10 people, but with high-level errors from an operational point of view, as well as marketing and lead generation. However, the intention of this list is to learn from some very powerful lessons immediately that you can now face your current real estate or are considering investing and weighing the pros and cons. Often, new real estate investors are excited after reading a book and want to move to rehabilitation centers or buy multifamily properties, but soon discover that it can be time and money. I’m not here to scare anyone who invests in real estate, it’s really the best investment there is; I just want to make sure everyone is fully aware of every step of the way to financial freedom.