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Updated over 3 years ago, 05/26/2021
If you started all over again, what would you do differently?
I've come across a lot of different stories on Bigger Pockets, and there are people who come from all different types of backgrounds. Everyone has had a different starting point. If you were young again, where would you start and what would you do differently? Is there anything you'd avoid right away, or something in particular you wish you started doing earlier?
Originally posted by @Viola Enfield:
This an informative forum thread. Thank you to everyone who contributed. @Taylor Nunn thanks for getting the conversation started.
I agree. As a new investor, I have gained quite a bit from shared wisdom. Thanks to all who contributed.
@Taylor Nunn I live in Australia! Lived here my whole life, hence the AU reference. Moving to USA real soon though
I would've started earlier, bought more, never sell, utilize leverage, network more, find experienced mentors, skip college, taken advantage of market cycles, educate & immerse myself with people smarter than myself.
Many of us purchase a "starter" home & later sell & trade up. When we move from home owner to investor we look back at that first home & realize it would've made the perfect rental property.
I think first and foremost, I probably would've house hacked in a nice little multi-family. Not really in a position to do that now with a young family. Also, I would've utilized brrr on my first rental instead of buying it turnkey, which I only realized after the fact. And in general, I would've gotten into everything a lot sooner - summer of 2010 was when I had finished all my schooling and entered into my current career. Really enjoy what I do for a living now, but I also could've started the investing journey back then as well. I didn't know any better, never even came close to realizing how great of a time it was to start.
As a whole, conduct due diligence like crazy as well - even more than you think is necessary. I am high on due diligence, but I've discovered especially over the past year how much more I need to do (not at the expense of ultimately taking action of course), specifically with various businesses within the industry - track down third party testimonials, general public reviews, BBB reviews, etc as much as you can. Suffice it to say, it's been quite a learning experience - I can't start over now, but I know how to better move forward with what I have learned.
@Jenifer Popenhagen and @Ryan Ingram, I'm not the best person to answer this, but since no one else is, I figured I would. The best place I can think of to find worn out landlords is on Craigslist. Brandon Turner recommends we search Craigslist for rentals we are interested in owning, then contacting the owner.
I'm buying again in 2018, so am currently compiling a list of addresses I'm interested in, plus the owner's name and address (found on the tax assessor's website) so that when I'm ready, I'll have months worth of searching data I've acquired since most will probably turn me down. But this way I'm ready with my targeted list when I'm ready with my money. (I have a house to prep for sale before looking at another purchase.) :-)
As for where to find retired investors/financers? On BP is my only guess. lol
Thank you, @Aaron Norris. That is wisdom. "Don't get stuck in education land! Pull the trigger!" Love it.
@Chris Jensen what is BRRRR? And why did you guys feel the need to use your own money to buy those SFHs in high-demand areas? Have you found a way to remove some or all equity in those homes yet? RSVP
@Carl Handy, BRRRR is just a creative way to describe the process of buying a fixer-upper, fixing it up to be worth more than before, cash-out refinancing it to get some/most/all your cost back, renting it out, and doing it all over again. It's a brilliant strategy for recycling your hard-earned money over and over to acquire properties. Conversely, buying a nice updated home, where all the value has already been added, you don't have the opportunity to build that sweat equity, and all you're hoping for is for the home to appreciate enough to be able to refi and get some of that cash out. It's just a very long process, generally.
I would learn more about financing / private money lenders and get a mentor. I learned a little and started on m own but with my own money and now I'm hurting. I was never taught how to get financing or how to make make money from different deals.
So much enjoy RE Investing and want to be successful in my dealings.
@Daniel F. Harb I only know because I was late in starting. I got shiny object syndrome and was researching every buying strategy possible. I kick myself but I started.
Thank you for your response, Jody!
Originally posted by @Aaron Mazzrillo:
Originally posted by @Taylor Nunn:
Originally posted by @Aaron Mazzrillo:
Avoid all out of state investing. I went to 5 states and they all turned out to be the worst performers in my portfolio. The lost opportunity cost of not using that money to invest locally is incalculable.
Never partner with someone with less experience and money. What a complete waste of time.
Sell off my worst performing properties immediately. Never wait and expect it to get better. It doesn't. Drag them out behind the woodshed and beat them mercilessly into the ground with a big wooden club.
If it doesn't feel right, just don't do it. Your gut is much smarter than your brain. You'll be surprised. Live by, "It isn't the ones I don't buy that hurt me."
Avoid niche properties like condos and senior anything (houses, mobiles, condos). In a good market I will do them, and am doing one now, but in any other market these types of properties just take a ruthless beating and are next to impossible to sell.
Focus on cash flow needs today and get that covered ASAP. I still have a Post-It Note stuck above my desk from my early years that reads, "3 IDEAS to increase income $20 and decrease expenses $20." Do this once a month, especially when looking at the credit card bill. Those $40 gaps in the beginning make a big difference over time. I had another one, long gone now, that said, "$100 net income per month." Every month my goal was to increase my net by at least $100. If I did $150, I did not get $50 credit for next month. If I missed my goal that month, I owed it the next month. Once you meet your monthly nut, every other dollar is an extra point you don't need to win. You've already won and now you're in bragging rights territory.
Focus 1/2 to at least 1 day a week on actively building a private money network. This is what really allowed me to grow my business beyond my yearly goals year after year. With good private money lenders at your back, what you can accomplish will surpass even your craziest dreams. Several years ago I wrote down some wild goals that I thought I'd surely disappoint myself with by December, but by June I was rewriting them because I had knocked 7 of my 10 out already all because of one private lender.
Every December spend some serious time thinking, really thinking about what you want to accomplish over the next 12 months. Put these on paper. I put these on a big white board directly above my desk. I have several paper copies as well. I keep one next to my bed and try to look at it before I go to sleep and once I wake up. I keep another tacked to the wall above the toilet paper in the master bath. As my good friend likes to say, "When I'm stinking, I'm thinking." I have my goals numbered and at the right side of the page a line I can write the date on that I complete the goal.
I could go on and on, but these are some of the habits I picked up along the way which I had in the beginning.
Wow! A lot of good information here, thank you. I love the way you literally surrounded yourself with your goals. I keep a notebook by my bed that has lists on there, but I will definitely be taking it to the next level as you have so that I am locked in.
The cash flow needs you speak of, are they needs you calculate to replace your everyday expenses, to love financially free? Or were you strictly speaking on cash flow returns of the property to make a profit?
Why do you stay away from condos?
If you were actually able to be present in those states you tried investing in, do you think you would've found greater success?
I'm a little confused by what you mean when you talk private money lenders. Are these people you actually knew, or did you have to go out and find these People? Or have you developed a relationship with a private money lending company?
I bought Quickbooks and tracked my personal expenses for 1 year. That really helped me understand what I need to make passively to cover my monthly expenses. Tracking things over a year catches all those small items you might not think of like trips to the dentist for teeth cleaning and oil changes on the vehicle.
I don't avoid condos. However, in a flat or downward trending market, these are tough sales. Condos in every market take a bath when the prices are falling. They go the quickest.
I think one can always find great success in their own backyard.
Just going to lunches and meetings and trying to discover who the real whales are in the room. My best lenders are retired landlords who sold off all their rentals and my 2nd best are landlords who are no longer acquiring new rentals. Older investors who have millions in equity, enough cash flow to drown a Ferrari dealership, and nothing to do with their money. They understand real estate. They like to invest in it, but they don't necessarily want the headaches of new properties and more tenants. They do however enjoy the ride investing along with you and I often get 100% financing on anything property I intend to hold. They all have a similar mantra; I don't want my money back. In otherwords, they like the interest income and having the luxury to be able to pick up the phone and bend your ear as often and for however long they like. Keeps them in the game without actually having to sit at the table.
Where can I meet these people?
Originally posted by @Christy Gaines:
Originally posted by @Aaron Mazzrillo:
Where can I meet these people?
Maybe start with meetup.com and look for real estate clubs. That is where I started. Those big, generic monthly clubs typically have a few people doing their own smaller versions that are less formal without a speaker and an agenda. You just have to get out there and talk to people. I can't tell you where the gold is and dig it up for you too.
"If you were young again"...
That's an incorrect assumption that people who start out in REI are young. Not everyone who starts out in REI is in their 20s or even younger. We didn't start until our 60s and used retirement money. That means that without all those years to right a wrong, we've had to be very careful. It's paid off.
I also would say to have some dispassion toward the properties themselves. That said, realize that those of us who are lucky enough to deal with real estate and large sums of money can forget the work that goes in for most people to save for their money down. For many people, owning any piece of property is still a dream.
I would have started earlier.
@Alex Vargas, house hacking is where you live in the property you are also renting out. Either you live in half a duplex and rent out the other half or you live in a house and have roommates paying rent for the other rooms...something like that. It's a great way to have a place to live and not have to pay all (or hopefully any) of the mortgage.
Awesome @Jody Schnurrenberger, currently reading @Brandon Turner blog about house hacking 101! I believe that is exactly what I will be doing when buying my first property. Thanks.
@Phillip Faries Wow @ 7! Can you talk about that a little more please? TIA
Originally posted by @Wendy Black:
"If you were young again"...
That's an incorrect assumption that people who start out in REI are young. Not everyone who starts out in REI is in their 20s or even younger. We didn't start until our 60s and used retirement money. That means that without all those years to right a wrong, we've had to be very careful. It's paid off.
I also would say to have some dispassion toward the properties themselves. That said, realize that those of us who are lucky enough to deal with real estate and large sums of money can forget the work that goes in for most people to save for their money down. For many people, owning any piece of property is still a dream.
I wasn't trying to assume everybody was young when they started investing. Thank you for opening me up that perspective, though. It never crossed my mind that people don't start until later in their lives. Everybody in this business truly does come from different backgounds and entry points. I love it.
You made a great point on how that that has benefited you.
With that being said, do you ever wish you couldve obtained information about real estate earlier in life, and started investing sooner?