Lesson Learnt from Each of your Properties?

Question

Hi BP

I would like to start a thread that chronologically outline  our growth as real estate investors.

please think back to your portfolio and pick out the ones you learn big lessons on.

please list in chronological order investment number, type of investment, state/location, status (active/sold), lesson learnt, year acquired

ex.

#1, flip, MA, sold 1990

Lesson: I learnt...

#2. rental, CA, active 1995-Present

Lesson: I realized

etc.

looking  forward to hearing your stories. ill have think about mine and post asap

Jennifer Lee · Answer

A quick note about me, is I started young, and without much guidance. I grew up with real estate. My initial investments were just testing the ground to see if I can do this...

#1, Primary Residence-Rental-1031 Exchange, Condominium, Brookline MA, 2001-2015 SOLD

LESSON:

#1: I learnt the POWER of EQUITY and HELOC in an APPRECIATING MARKET.  This condo took part in buying 7 future properties. In the end I did a 1031 Exchange and exchanged it into a 6 unit commercial bldg. Upgrading from a 4%condo rental to 14% cap rate commercial rental.

#2: I learnt CONDO INVESTING: the good, this condo had inhouse management, so when I moved 10hrs away, it was easier management. The bad, was UNEXPECTED ASSESSMENT. We got a double increase in fee to fix all the HVAC unit, in 3 yrs time frame.  Luckily, I had a tenant all three years to cover the fee.

I had 3 properties in 3 different states, all 10 hours away. all possible bc of condo investing.  but I sold the long Distance ones due to condo drama.

#2: FLIP, Condo, Brookline MA, 2003-5 SOLD

LESSON:

#1: I learnt the importance of BUYING RIGHT. This was my first Flip, I made all the rookie mistakes. Over renovated, Priced too high. Had to become an instant LANDLORD. But I bought right and when we finally sold, we made $1000 hahahaha

#2: I learnt my first lesson in VALUE ADD! I looked at why we couldn't sell in the first round. NO PARKING! There was a parking garage in front of my unit, I secured a spot and sold  the parking lease with the unit ;p SOLD!!!!!!!!

#3: I Learnt my first lesson at STUDENT RENTAL and LANDLORDING

#3: TENANT, Rental, Jacksonville, NC 2006

LESSON: It sux to be a TENANT ;p  BUT I learnt that can learn markets very quickly.  What I learnt in Boston researching this new area, was CORRECT. I was nervous, so I did the RENT before you BUY route ;p  I bought where I rented ;P Because I was correct it was the GRADE A area ;p

#4: LIVE IN FLIP, New Construction, Jacksonville, NC 2007-2010 SOLD

LESSON:

#1: I learnt to RESIST THE URGE TO DESIGN TO MY TASTE, I was the only one to have sold my house in the area b/c I built this house according to the builder's idea of current markets. Appeal to general masses.  The market was turning when we sold.

#2: I learnt STAGING. I paid a consultant the fee to not just stage my house, but teach me the art ;p I think I sold quickly b.c my house was VACANT but it had staged pictures online ;p The staged pics showed the house potential, and VACANCY showed they can move in quickly.

#5. OFFICE CONDO, Commercial. Jacksonville NC 2008-2011 SOLD

LESSON:

#1: I learnt COMMERCIAL REAL ESTATE is just like any LANDLORDING.  The only difference is I feel I contribute to the community, through their services.  What I do effects what they do.

#2: I learnt NEVER AGAIN WILL I INVEST IN OFFICE CONDO SITUATION! In short, too many COOKS in the POT! The association had a say in everything, they needed to approve my tenant. Since this was a strip of mostly OWNER OCCUPIED OFFICE/RETAILED SPACE, they want a monopoly. Landlord and Business owner don't' see eye to eye.  I let the other landlord buy me out. he only bought me so he can have majority of the votes.  I HATE POLITICS IN REAL ESTATE!

#3: Created my FIRST of many LLC! And BETTER BOOKKEEPING

#6 STAND ALONE RETAIL, Commercial, Hampton Township PA 2010-Present

LESSON: I learnt the importance of BUYING IN THE RIGHT TOWNSHIP!! This township just gives landlord and businesses a hard time.... To be continued (hahaha)

#7 FLIP, SFR, McCandless, PA 2012 SOLD

LESSON: I found BP..

#1 I learnt that Getting a REALTOR LICENSE was the best thing I could have done, and timing was prefect. I used my license to sell my flip.

#2 I also found my GENERAL CONTRACTOR, and learnt from all my past mistakes to build a new working relationship with him.

#8 BUY/HOLD, 5 mixed used, Westview, PA 2013-Present

LESSON:

#1: I learnt to just PUT OFFER IN! I learnt to KNOW MY MARKET AND NUMBERS, I offer almost 50% their original asking price. I learnt how to talk and negotiate with sellers as investor and realtor. Im almost 4 yrs in and my numbers have been true, and my projections has been realized.

#2: I Learnt to outfit a RESTAURANT! After that a Salon, a Dojo Office space is "Easy"

#9 BUY/HOLD. Duplex, McCandless PA 2015-PRESENT

LESSON:

#1: I always learnt this, but this reinforced the MULTIPLE EXIT PLANS!  this was supposed to be a FLIP, and "it" decided it rather be a BUY/HOLD.

#2: I learnt the IMPORTANCE of SWINGING WITH THE PUNCHES.  You have to be able to think on your feet, pivot, reverse and run as fast as you can sometimes.

#10 BUY/HOLD, 6 Commercial units, Richland PA 2015-Present

LESSON:  This is not one with lessons, but putting everything I know into this unit.

#1: I learnt how to do a 1031 Exchange!

#2: I learnt to NEVER BE AFRAID OF NEW THINGS : split utilities, handle sprinklers, elevators

#3: I learnt about Commercial financing

#11, Primary Residence, SFR, Richland PA 2010-Present

LESSON: WORK in PROGRESS, this will be our new HELOC, to finance our future deal

Olivier Mader · Answer

Before I started buying homes officially as "Investment" homes, I used to buy fixer upper homes as primary residence and fix them up while I was living in them and after 2  years, I would sell them for a huge profit.. capital gains tax free. I was single and moving every 2 years didn't bother me.

I did well throughout the 90's to the mid 2000's, making tons of money that way, and best of all, my profit was capital gains tax free. I had accumulated enough cash to buy my primary residence in cash without any loans. So, in 2004, I purchased a fairly expensive, large home with cash in a nice golfing neighborhood. I loved the layout with a 30 x 30 Great Room with very high ceilings and a sunken area with wet bar, 4 bedrooms, 4 bathrooms and over 3000 sq ft. It needed a full upgrade and some repairs. (Home was stuck in the 80's)

I ended up spending a ton of money in remodeling the house and by 2006, when I started to get ready to sell it, the home appraised for about $200k more than what I had invested. Everything looked great until the RE bubble started to burst. In late 2006, there were tons of houses for sale in my neighborhood and therefore there was lots of competition.. So, my home didn't sell. Market started dropping in 2007 and I kept dropping the price.. By 2008, I still didn't have a buyer by it and the value of my home now was about what I had into it.. I was still trying to get the maximum $$ for it and waited, hoping for the market to stop dropping.. In 2006, I had taken out a HELOC on the property to buy a Ferrari.. which I sold in 2008 to use that money as a down payment on another property that I was purchasing (the one I'm living in right now). Since I had the HELOC, I was required to carry insurance on the house. Insurance was about $5k per year and property taxes about $9k per year, so, $14k of expenses per year, not including regular maintenance. By 2010, my wife was pregnant with our first child and I had large expenses coming my way and I ended up dumping the house for $500k below the appraised value in 2006 and $250k below the money that I had invested, not counting the property taxes and insurance that I had to pay... I could not give the house to the bank and walk away from my mortgage as the house was still worth more than my HELOC, so I actually took a $300k loss when I sold it ($500k if counting the maximum value of the home during I owned it)

Here are the lessons that I learned from it:

Don't put all your eggs in 1 basket

Don't go for the layout  that you personally like but a layout that sells.. It appears that many buyers did not like the great room layout.. The preferred separate dining/living and family rooms. The house behind mine with 700 less sq/ft and no upgrades sold for $50k more than mine because the buyers liked the layout.

If the market is dropping with no end in sight, sell low to get rid of it as otherwise, you'll lose a lot more..

Since then, I decided to buy cheaper homes in decent neighborhood and have not had a single bad experience. Made good to great money on all of them and or great ROI as a rental.

Ann Bellamy · Answer

I'm not going through the whole litany of mistakes, there are too many lessons!

But here are a couple

5 Unit building in Milford NH, 2002 to 2004-5

Lessons:

When you buy a new building, the fastest way to clear it out is to raise everyone's rent at once.  OOPS!   If that was not your intent, then stagger them and wait for some attrition, some people will move just because it's time anyway, and some people won't like a change.  Raise one or two, see what happens, and move forward slowly unless you want your cash flow to drop like a stone.

Modular spec house, Greenfield NH  2004

Lesson:

Get more involved and learn what you don't know.  When you are new in construction, you don't know squat.  My contractor did not have the lot marked properly, and as a result, the house was built 2'7" over the 100' set back from the road.  I had no idea this was even something I should have insisted on, and as a result it cost me time, money and lost sleep.

Lesson:

The importance of a good attorney, and the principle of equitable waiver.  He saved me tens of thousands of dollars and saved me from having to actually move the house.  He knew the law, exactly how to apply it, and when to push and when not to.

There are plenty more lessons, but I'm afraid I could write all day.  :-(

Account Closed · Answer

@Jennifer Lee

Thank you for the post! As a novice to the REI world I'm going to keep in mind and write down some of those lessons you learned. In my area of Boston I noticed there were a lot of rents that were well below market and if I obtained one of these properties would be worried if I raised all of the rents to market price at once. A lot of landlords will keep the rents slightly lower to keep the tenants and have less turn around.

Jennifer Lee · Answer

@Ann Bellamy I love the rent raise idea! so true,!

as for lesson number 2, I don't even know what you said, guess there is a ton I need to learn still, HA!

and you are too funny, come back and post your other lessons when you have time!

I love BP because of its' collective learning ;p thanks for sharing

@Anthony Angotti looking forward to your story, I see your name everywhere, but I haven't the time to ready your story. I hadn't intended for this to be a get to know one another thread. but I guess it's true!!

Lesson Learnt from Each of your Properties?

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