What NOT to do in Real Estate Investing

Clyde, TX · Member since 2018 · 109 posts · 94 votes

If you could offer one word of caution.

If you could help save the new real estate investor from making a huge mistake that could cost them thousands or even their business...

Just one word of caution, based on your own experience or that of a colleague on what NOT to do in real estate investing...

WHAT would you say?

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Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Don't listen to the gurus and over-extend yourself. The more you borrow, the more risk you take, and the more you are enslaved to the lender. Save up, sacrifice, make wise investments.

The DIY Landlord Book4.7248 Reviews

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Shmuel Waldman
Member since 2018 · 124 posts · 53 votes
7y
@Miranda Simon I will share a mistake I made. Don’t assume the just because the neighborhood sells at a certain price per SF, that the equation will work on all houses. If the house you are looking at is way bigger or way smaller then the house will comp out totally different
17 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
@Shmuel Waldman interesting. I wouldn’t have thought of that. Thanks for sharing Shmuel. I appreciate it.
2 Reply
Matthew Perry
Developer · Boston, MA · Member since 2017 · 125 posts · 137 votes
7y
Do not let fear get in your way. Do not let excuses dictate your actions. Do not deviate from your plan for success. Do not it presssure on short term goals.
37 Reply
John LaBanca
Investor · Atlanta, GA · Member since 2018 · 59 posts · 78 votes
7y
Do not ignore your gut feelings.
45 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
7y
Don't assume your partners feel you are putting in equal amounts of work and effort just because you do, don't assume that your partners put the same value on your contributions as you do. Especially if you believe you come up with all the good ideas and all the other person is good for is making your high-quality ideas work -- your partner may instead believe that he moves heaven and earth to turn all the hare-brained notions that he's forced to put up with out of you into something usable.
7 Reply
Ken NyczajPro Member
Investor · Grasonville, MD · Member since 2017 · 453 posts · 415 votes
7y
@Miranda Simon don’t try to be perfect, take action, that’s how you get results. “Ready, Fire, Aim”
22 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Remember this phrase ; the deal must be able to stand on its own two legs . Real estate can not be reduced to algorithms or simple calculations however the numbers do still have to make sense on the deal or it’s no deal at all . To put that in a practical sense ..so many people will do mental gymnastics to try to rationalize a lousy return on a property by saying things like “ maybe I can get 30% more in rent when that amazon distribution center comes to town in a few years “ or “ there’s a lot of growth in the area and it’s going to experience gentrification soon” or “ once I add a few shrubs and paint I can brrr this house and get 50% more money out of it “ the point is a lot of people are banking on things that are in essence speculation and wishful dreams . If the numbers suck then it sucks . Don’t buy based on stuff that can’t be proven . Buy based on numbers . If the numbers don’t work and there’s no cashflow then move along to the next one . A few arborvitae shrubs and new gutters is not going to make your neighborhood go from a d class to a b class and new flooring or fancy sink isn’t going to make a negative cash flowing house put 400 bucks a month in your back pocket all of a sudden . The deal must stand on its own two legs !
52 Reply
Linda S.
Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
7y
@Miranda Simon
I would say don't get emotionally involved in any aspect.
Some people (even after intensive screening and passing all your tests) will treat the place like a dump, some people will pay late even if it's obviously most advantageous to pay early... their choices. Some people are just straight up disgusting. Leave the emotions at bay, you're here to run a business-- nothing is personal.
Also-- with contractors and recommendations-- Do NOT be too trusting. Do NOT pay early- have everything in writing. Do NOT pay early!
47 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
@Linda S. thanks for sharing. I learned the “do NOT pay early” with contractors the hard way too.
9 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
Don't listen to the gurus and over-extend yourself. The more you borrow, the more risk you take, and the more you are enslaved to the lender. Save up, sacrifice, make wise investments.
The DIY Landlord Book4.7248 Reviews
Website View Page
58 Reply
Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
7y
Don't adjust your buying criteria just because you want to be in the game. Figure out your long term goals, work backwards on how you get there and do not waiver.
16 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
@Nathan Gesner thanks for sharing. Reading your comment I hear, “know your limits and gradually work your way up”.
@Corby Goade Appreciate you sharing. In summary I get, “map out a plan and stick to it.” I like that.
8 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
@Alex Franks here you go. Do share when time permits.
0 Reply
David H.
Madisonville, LA · Member since 2018 · 125 posts · 71 votes
7y
Follow the big rules and follow your gut. The first deal I did was just prior to the 08 crash. I knew as it was happening I should unload it but went against my gut. I made it work but it was such a struggle I sat on the sidelines for 7-8 years. And the first couple tenants I let in my first 2 rentals were a major struggle. I didnt really screen them and one struggled to pay, the other was in the midst of getting caught in a real estate scam so he started doing heroin and trashed the house. All easily avoidable had I just followed the basic rules.
4 Reply
Travis C.
Investor · Jamestown, ND · Member since 2017 · 32 posts · 32 votes
7y
If you are playing the landlord game, don't let tenants get behind on rent. I burned myself twice listening to sob stories.
9 Reply
Jason Smith
Flipper/Rehabber · Kalamazoo, MI · Member since 2015 · 34 posts · 22 votes
7y
@Miranda Simon I would make sure you verify all parties that is going to be involved in the transaction...make sure the seller is the seller as well as the buyer is the real the buyer...to many folks out hear “playing around” with peoples time and it must stop...so my advice is “trust but verify”
6 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
Originally posted by @David H.:
Follow the big rules and follow your gut.
The first deal I did was just prior to the 08 crash. I knew as it was happening I should unload it but went against my gut. I made it work but it was such a struggle I sat on the sidelines for 7-8 years.
Thanks for sharing David. One strength of mine is following the rules. I’ll be sure to remember not to forget about my “gut” feelings. Appreciate the advice.
1 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
Originally posted by @Travis C.:

If you are playing the landlord game, don't let tenants get behind on rent. I burned myself twice listening to sob stories.
Yikes, we can all learn to be unmoved by the usual sob story. That’s a tough one to easily slip on. Thanks for sharing Travis.
2 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
Originally posted by @Jason Smith:
@Miranda Simon I would make sure you verify all parties that is going to be involved in the transaction...make sure the seller is the seller as well as the buyer is the real the buyer...to many folks out hear “playing around” with peoples time and it must stop...so my advice is “trust but verify”
Great advice Jason and note taken. Time is valuable. Thanks for sharing.
0 Reply
David H.
Madisonville, LA · Member since 2018 · 125 posts · 71 votes
7y
@Miranda Simon Haha, and I obviously am not good at that. I often think rules are stupid so go with my gut. Which can be ok but when it comes to basic stuff it's best to learn from people that have made it work and follow that versus reinventing the wheel. And realistically your gut probably isnt that good when you have no experience so best listen to the rules. Sounds like you already have that pegged. Anyway, I've learned my lesson lol...
0 Reply
Jay M.
Contractor · Fairhaven, MA · Member since 2018 · 167 posts · 159 votes
7y
Originally posted by @Linda S.:

@Miranda Simon

Also-- with contractors and recommendations-- Do NOT be too trusting. Do NOT pay early- have everything in writing. Do NOT pay early!
By saying "do not pay early" I take that to mean do not pay before the job is complete or punched out? I have been in the construction / design end of this business for a few decades. While you do not want to pay early as soon as everything is done and punched out and you can verify that everything is complete and correct - pay quickly.
Especially in this market if a contractor / sub-contractor has 6 jobs going, they're living paycheck to paycheck and all 6 of their employers are calling and screaming at them whose job do you think they'll go to first? The one who writes the check (upon completion / verification) immediately or the one who you submit a bill to and they put it in their "payroll system" that takes 3 weeks to issue a check?
10 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
Originally posted by @David H.:
@Miranda Simon
Haha, and I obviously am not good at that. I often think rules are stupid so go with my gut. Which can be ok but when it comes to basic stuff it's best to learn from people that have made it work and follow that versus reinventing the wheel. And realistically your gut probably isnt that good when you have no experience so best listen to the rules. Sounds like you already have that pegged. Anyway, I've learned my lesson lol...
Yes, I’m glad it’s behind you now. I always say, I’m not trying to reinvent the wheel so I’m with you there. To me, rules give me the power I need to succeed. I save time and money following the rules. :-) I’m enjoying this journey David.
1 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
Originally posted by @Jay M.:

Originally posted by @Linda S.:
@Miranda Simon
Also-- with contractors and recommendations-- Do NOT be too trusting. Do NOT pay early- have everything in writing. Do NOT pay early!
By saying "do not pay early" I take that to mean do not pay before the job is complete or punched out? I have been in the construction / design end of this business for a few decades. While you do not want to pay early as soon as everything is done and punched out and you can verify that everything is complete and correct - pay quickly.
Especially in this market if a contractor / sub-contractor has 6 jobs going, they're living paycheck to paycheck and all 6 of their employers are calling and screaming at them whose job do you think they'll go to first? The one who writes the check (upon completion / verification) immediately or the one who you submit a bill to and they put it in their "payroll system" that takes 3 weeks to issue a check?
Jay, from my experience, I’m personally not paying no contractor before completion of the entire job.
Now, I have paid some money upfront in the past, which is okay, but paying the full amount? No way.
Once the job is done, I have no problem paying right then and there via check or card as long as I have an invoice in-hand, right then, saying paid in full.
I understand your point though. I’m sure you can tell I’ve had a negative experience. No fault to the contractor...I take full responsibility for my stupidity.
0 Reply
Jay M.
Contractor · Fairhaven, MA · Member since 2018 · 167 posts · 159 votes
7y

Jay, from my experience, I’m personally not paying no contractor before completion of the entire job.
Now, I have paid some money upfront in the past, which is okay, but paying the full amount? No way.
Once the job is done, I have no problem paying right then and there via check or card as long as I have an invoice in-hand, right then, saying paid in full.
I understand your point though. I’m sure you can tell I’ve had a negative experience. No fault to the contractor...I take full responsibility for my stupidity.
I'm not sure where you got the idea I'm advocating paying before the job is complete?? I pretty emphatically stated you shouldn't. Perhaps you were reading someone else's post while replying to mine?
0 Reply
Miranda Simon
OP
Clyde, TX · Member since 2018 · 109 posts · 94 votes
7y
Originally posted by @Jay M.:

Jay, from my experience, I’m personally not paying no contractor before completion of the entire job.
Now, I have paid some money upfront in the past, which is okay, but paying the full amount? No way.
Once the job is done, I have no problem paying right then and there via check or card as long as I have an invoice in-hand, right then, saying paid in full.
I understand your point though. I’m sure you can tell I’ve had a negative experience. No fault to the contractor...I take full responsibility for my stupidity.
I'm not sure where you got the idea I'm advocating paying before the job is complete?? I pretty emphatically stated you shouldn't. Perhaps you were reading someone else's post while replying to mine?
My apologies Jay. I apparently misunderstood your comment.
1 Reply

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