Question your basic assumptions and don't do what I did

[Patrick Britton]

many years ago, before I got involved in rental properties I, like most of you educated myself as best I could. I read all the bigger pockets books from all the “gurus” and “non-gurus.” I did significantly more due diligence than what was comparable to my peers at the time. A large portion of my background involved investment analysis.

unfortunately, although my homework was correct the underlying assumptions were not. let me explain…

I should be making around $600 a month net income per property but that gets eaten away thanks to a $10,000 expense here or $20,000 in clawed back rent, or a $1500 expense there or multiple $250 inspections and visits and other nonsense.

Since these sorts of expenses never occurred to any house that I actually lived in I began to wonder if there was something inherently wrong with these houses in particular.

And there is something wrong with the houses I bought: they're all too old

Sure, I thought if I just got a home inspector and a contractor I could trust that all would be fine. A property management company should also be able to assist in this regard. Well, if I had to do it all over again I would buy a $350,000 house in a cul-de-sac in an area where the median income is at least $70,000 and i'd manage it personally. That's a safe investment. Buying a $50,000 house, putting $40,000 into it, and then renting it to people whose median income is near the poverty level is not a safe investment. sure, I wasn't out of pocket when I bought it (BRRR) but I certainly will be out of pocket when stuff starts breaking down.

The protections you believe you have through property managers, home inspectors, attorneys and real estate agents are all a façade. There is nothing there.  Keep that in mind when making high risk investments.  Building up your “team” in an area is an absolutely pointless endeavor.  

I do not believe I am particularly special so I have to assume that my experiences are on par with others. I empathize for those in similar situations as I feel that I have been deceived. Not necessarily by real estate agents, but more by this culture.  

In short, my mistake was assuming that I had various protections built in that would allow me to invest in higher-risk areas but with less total risk.  

I recognize it's a little more expensive, but I would buy new builds only.