Dose of Reality, please... I need to read the Bad and Ugly..

[Lee Lockhart]

Hi Bigger Pockets, I need to read about both sides of the real estate investment coin. The overwhelming majority of posts appear to illustrate that investors are making the right moves all the time: every property is flipped for profit, rented with good tenants, or refinanced with a pocket full of cash at closing. I hardly ever read about the horror stories. I met an investor from BP. Her partner hired crummy contractors and their group have no money to continue. I'm trying to refinance out of a HML but my credit suddenly dropped. I'm sure we will figure it out. We can't be the only one with issues... But, what are the other horror stories people on here have experienced or are experiencing? How are you getting back on track? How did you get achieve your goals? What is/was your solution to your problem? This is what I want to hear a read about. I want to hear about the setback, the struggle, the hustle, the plan, and the path to success...

[Cara Lonsdale]

I used to house hack my way through investing, elevating the property slightly each time, either by selecting a bigger property, or a nicer area.  Once, I jumped a few steps ahead to get a really nice house in a really nice area.  I was worried about being priced out of the area if I waited, so that's why I jumped ahead a bit.  Sure enough, the market crashed, and I was sitting on a property that was worth $200K less than I bought it for, and wasn't cash flowing enough to support itself because the rental market crashed also.  That was a huge loss in which I learned that you establish a plan and/or a strategy for a reason.  It is okay to re-evaluate your plan/strategy and throw other options into the mix for consideration, but should always move forward with an exit strategy in mind.

As another example (and lesson learned put into practice), I purchased a property at trustee sale with the intent to flip it. However, after rehab costs and surprise expenses, the numbers were not going to be as profitable as expected, and hoped for. However, because we had made a good exit strategy for the property before purchasing it, we ended up keeping it as a rental. Now, it is our 2nd highest cash flowing property. Because there were all these unknowns about the property (since we couldn't look inside before the trustee sale) we decided that we were only going to buy in neighborhoods that I knew very well (floorplans, rental rates, values, etc), and that we were going to run the numbers as both a flip, and a BRRRR, and whichever one would bring us the best result, that is the exit strategy we would employ.

So, having that first lesson learned, I could put it into practice years later, and avoid yet another big loss if I had put all of my eggs in that "flip" basket.