Top 8 Mistakes YOU Could Make When Investing

What’s up, everybody? So I’ve been in the real estate game over a decade now, which is crazy because time freaking flies and the last six years I’ve been an active investor. But I still vividly remember my first couple of years out as an investor. And in hindsight, let me share a not so humble brag. I’ve only ever lost money on one deal out of I don’t even know how many, but I’ve still made a ton of mistakes over the years.

So if that’s something you can do, that would be awesome. And with that here are my top eight faux paus in real estate investing. So my first year out, I started with a live in Flip Brrr House hack. So if you don’t know what that means, go check out my videos on Brr’s and House Hacking. Our whole family lived inside this home. It was a shit show when we moved in. Wife, kids and all are there and I’m working on the house nights and weekends to fix up the primary house. But here’s the thing. It also had a detached in-law suite and it was in extreme disrepair. And at the time I was so cheap or what’s probably more accurate is I was so fearful and like risk averse that I didn’t want to borrow the money to fix up that ADU.

That leads me to number seven, which is actually similar and somewhat related. I did all the work on that first investment myself. I’m not opposed to doing your own work sometimes, particularly in the beginning, but I really should have started hiring some stuff out very early on. Sure. Painting a wall sounds good. Or you can tighten up a toilet. And as a matter of fact, even as recently as this summer, D-Mac, you could refer to the video of me cutting down limbs on a rooftop and giving my wife a coronary. Right. I still get sucked into this weekend warrior thing occasionally, but it was a really big mistake early on as a rookie because I was still working a full time job and I was just putting too many things on my plate. So number seven, I didn’t hire help enough quickly.

Number six, this one is brutal in hindsight because it’s actually a killer. But once upon a time, I bought a house without running really, really good numbers. Now, I’ve always had a really good feel for real estate and values, but feel should not be the only thing that you are basing for future value, especially when an appraisal is coming at the back end of the deal and it’s paramount to success of the deal. So you’ve got to learn how to do the math and run the numbers. Don’t use just your gut. I don’t care how experienced or familiar with the area that you are, make sure that either you know how to do the math or you have someone very experienced at running comps, helping you along with that.

Number five, I counted money before it was in my hand. And this one is also funny to reflect about. In some cases, we actually spent it before we earned it. And so what I mean is there were several times where we justified expenses knowing that we had an upcoming deal that we were waiting on to close and pay us out that money. There was one time in particular we had a great flip in escrow. We decided to take a three day week into Atlantic City and had a good time and spent some money. Once we came back, you can probably guess the end of the story. Once we were back from Atlantic City, the deal fell apart. I ended up having to drop the price several times in order to resell it. So do not count your money until it’s in your hand. In the words of Kenny Rogers, there’ll be time enough for countin when the deal is done, baby.

All right, number four. I didn’t find private money or hard money early enough. So the reason this was a mistake is that some of the best deals I’ve ever, ever found are off market deals. And it’s not easy to get traditional loan funds for them. So I started getting really good at doing some marketing to attract motivated sellers to me directly. I could have done way, way more deals, but I didn’t have the cash to buy them. And these were the types of deals that banks wouldn’t give me financing for. So if I would have connected with a private money lender or a hard money lender early on, I could have captured way more of those deals early on. And I’d probably be making this video from like Cosmo Mexico instead of my home studio in Carrollton, Virginia.

Number three, I didn’t always have a backup exit strategy, so in the first couple of years I was really optimistic and it was a lot of just flipping houses, and I just figured I would flip it and sell it and do well. It never occurred to me that if the first plan didn’t work out, that maybe I should have a backup plan. So today I always have at least two exit strategies for any real estate deal that I do, and I make sure that the property is conducive to either exit strategy, and I’m still happy with it.

Number two, I didn’t build a deal funnel in the beginning. I didn’t think in terms of deal flow. Now, on the bright side, along with having pretty good feel for real estate, I’ve always been kind of a deal maker. So whenever I’ve put my boots to the ground and really like tried to find and make a deal happen, I always have been able to do it and pull it off, but that takes a lot of outward effort. What I should have been doing is building a business that generates deal flow, deal after deal. Right. We talked about another video tapping a pipeline like a water main line. Instead of having to go to the store to buy a bottle of water, every time you get thirsty, tap into a pipeline and just turn on a faucet. So I should have been building consistent leads because here’s what happens.

And the number one mistake that I made the first year this is truthfully the best thing that I’ve learned ever since was mentorship is a good thing. Now, thank goodness there are a lot of online resources. There’s podcasts, there’s YouTube, channels, there’s a lot of places that you can learn from and point you in the right direction. But a mentor or coach is something else altogether, like the one on one attention. What I’ve learned since I started is that a person can learn from their own mistakes and experiences, or they can learn from someone else’s mistakes and experiences. And today I know that a good mentor even if they’re expensive monetarily, is still cheaper than paying for your own lessons via your own mistakes.

Now, I don’t want it in the video on like only negative. So let me leave you with one parting thought. One thing that I did right even coming out that first year was that I stuck with it. I never gave up. I set goals and I worked hard and I just kept going. I refuse to give up. It wasn’t always easy, but I can look back now and say with a full heart and with a smile that it was all worth it. And to be honest, it’s still hard. And I’m still taking lumps because I’m constantly seeing what’s possible for me and my business. And as a mentor recently once told me, for every new level, there’s a new devil. So reminder again, if you like this video, please smash the subscribe button and hit the like. I’m Jonathan Beasley with That Fit Team. We are professionals in real estate and passionate about people. We’ll see you next week.