Real Estate Investing Turnaround > Failures to Profits
Like any failure it is about learning from past mistakes. (Please note these do not necessarily need to be your past mistakes) There are literally thousands of real estate investors who have made mistakes within their negotiations or their renovations or their exit strategies that they would consider a big failure. These failures can be expensive but the biggest expense contributed to any failure is giving up. A failure means you learned a big lesson. Think about it, have you ever made a mistake and said to yourself “ I will never do that again” That is what you call failing forward. The lesson has been learned so use it to your advantage. So if you can use a failure as a means to move forward then what if you cut out some of the pains of failure by learning what other real estate investors have failed at and learned from their mistakes. This can save you some pain and lots of money.
Study peoples mistakes: Every real estate investor wants to tell you of all their great successes. What you want to learn from these investors are what are their mistakes. Most people do not voluntarily tell you of their mistakes. This may be considered an embarrassment and may be considered by many as a person you do not want to take advice from. Get serious: we are humans and humans make mistakes.
As the famous real estate investor himself (Donald Trump) says, he would much rather learn about your mistake than to learn of your success. You can learn so much more about moving forward by learning to dodge the challenges.
My biggest real estate investing mistake: Skimping on hiring a property manager. Since I started investing at age 16 I managed all my properties. I essentially was known by all my tenants as “Larry Landlord”. In 2003 my wife and I decided to move from the cold Midwest state of Minnesota to the sunshine state of Florida. I have sold some of my properties but kept 12 of them that I wanted to retain. My mistake came from the mindset I did not want to forfeit any profits to the cost of a property manager. While the average property manager fees run 10% I decided to hire a friend to manage them for only 4%. Wow I thought I cheated the system and saved 6%. This was a scarcity mindset, fearing I would lose money if I paid the 10 percent. O.K. the short version is he billed me for repairs that were never done. The units went and stayed vacant due to lack of maintenance. I rapidly started bleeding (running negative cash flow) to the tune of $12,000 each month.