What's something nobody tells you about Real Estate Investing, but should?

[Katie Miller]

Title says it all: What's something nobody tells you about Real Estate Investing, but should?

I'll go first: THE MAIL! and the TEXTS! It's overwhelming. I've never gotten more snail mail in my life (mortgage statements, bank statements, invoices, etc.) and it seems like every time we turn it to "paperless" options, the mortgage is sold and then I get all new mailed statements to turn off again. Also, all the texts/calls from people looking to buy my properties... I'm not selling! 

What's something YOU learned that nobody talks about in Real Estate?

[Becca F.]

Mine is:

1) Out of state investing is much harder than it looks

2) Chasing cash flow and doors hasn't been a good experience and be cautious if doing this.

I'm not going to sugarcoat this. 

#1: I invest the Bay Area with a SFH (solely owned) and a multi-unit (co-owned). I also have a SFH in an Indianapolis suburb with great schools (long story but I left California for many years moved to Indiana them moved back to CA). All Class A properties, everything was going well until I decided to scale by buying more properties, which were Class C and cash flow positive on paper or at least not negative. Looked at dozens of SFHs online and ran the numbers, ARV not high enough, renovation costs going over, and making offers based on video tours, sight unseen has been challenging. I did a local renovation on my Bay Area SFH where I was onsite at least once a week if not multiple times a week, walk-throughs with contractor, electrician etc. I thought I could do this OOS. I've been pretty lucky that I wasn't ripped off by any Indy contractors (compared to another CA investor who lost $20,000 when her contractor didn't finish the renovation and disappeared). You place a lot of trust in a team of people from 2000 miles away.

#2: After watching many videos, podcasts and reading some of the BP forums I went for cash flow, talked to turnkey companies who had properties in Cleveland, Detroit, St. Louis and Memphis. I went with Indianapolis since I used to live there. I closed on 2 Class C SFHs in 2023 in "up and coming areas" in Indy. It's been a huge headache - I'm losing money each month, should have bought Class A or B where at least the property would appreciate more. I'm trying to find a solution. I will never buy another Class C property again anywhere. I would rather have 4 Class A properties than 20 Class C properties (20 roofs to replace, HVAC, more tenant issues, property management fees, AC unit stolen, etc).

Wealth from real estate is built on appreciation and equity - look at all the multi-millionaires in coastal California whose property values have gone up dramatically over the years and our property taxes increase 2% a year from the base value (Proposition 13) compared to other states whose taxes go up a lot. I learned a big lesson.