Common mistakes newbies make? What to look out for

[Ian Jackson]

Hey guys, I see a lot of experienced investors here who have at least had one deal under their belt. Everybody has been a newbie at one point. What is one thing you wish you had known when you first started out, what would you advise to look for, and what are some common mistakes and misconceptions you see a lot in newbies? I appreciate you guys taking the time to read my post. Can’t wait to see some of your insights 

[Jim K.]

@Ian Jackson

The two things I hear most now are, (1) overreliance on the MLS to look for deals, and (2) a misplaced certainty that this is all about numbers.

1. I have never bought a property off the West Penn Multi-List. I make sure I have access to my target zip code in it through a local realtor to keep my eye on the retail market, to see how people are selling houses at and at what prices in my area. In the last four years that I've been doing this, with about 2-8 properties going on the MLS in that zipcode EVERY DAY popping up in my inbox, I have seen maybe TWO deals worth going after on the MLS. And these were not fantastic deals, extraordinary deals, deals to die for. They were...meh deals. If you think that's where you're going to find the bucks hiding in plain sight, you're wrong. Everybody and his brother has access to the MLS. In an economy like this one, you need to look elsewhere for deals.

2. I am a control freak, I freely admit. When it comes to buying a rental property, I do my best to buy properties that have a decent chance of lasting the twenty years I intend to operate them with minimal upkeep after the initial turn. I look hard at the structural soundness and mechanicals of a building. I poke at the siding. I go up on the roof. Before I'm in the bedrooms I'm in the basement. This is how you check out a building.

But here on Bigger Pockets, every third day, a newbie thread pops up that reads like: "Hi guys, look, my first deal! The owner won't let me go onsite but he's offering me a price that makes the property I'm looking at beat the 3.1415926535% rule! I'M ON MY REAL ESTATE JOURNEY!!!! (#don'tstopbelieving)"

Who cares about the rules and calculators if the place if falling off a cliff or a basement wall is severely bowed or if the roof has a hole in it? How does math save us from a need for common sense?

There's money in real estate. There is very, very, very, very, very little getting-rich-quick for the ignorant and the inexperienced in real estate. I wish more people would understand that.