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Updated almost 7 years ago, 12/19/2017
Mistakes when starting out
I agree with @Account Closed
The Nike's "JUST DO IT" would be fitting here. Do your homework but don't over do your homework. You really can't learn everything unless you go out and start putting things into action.
Also I wish I had set reasonable, actionable goals from the very beginning. Now, I prefer setting goals like "I will spend 2 hours networking and analyse 2 deals everyday" VS I want to make $10,000 in passive income by the end of the year." You can't really control the outcome of your efforts but you CAN control what kind of actions you take everyday which will eventually affect your outcome.
@James R. Copeland that's all great advice! I will definitely implement all of those.
I'm still a newbie, but so far, the biggest mistakes that I made are using cheap contractor. You ended up pay more to repair after them. Expensive contractors are not always good either. Get references.
Originally posted by @Garrett Vita:
@Dawn P. are there any small rehab jobs that you would do personally ? if so, which ones?
Absolutely! We do all interior painting, flooring (laminate, LVT, occasionally tile), tile backsplashes and tub surrounds, finish trim, light fixture and ceiling fan replacement, minor plumbing and toilet replacement, small drywall patches. I have the tools for this stuff, enjoy doing it (well, not the plumbing!), and can get it done quickly. I also have a background in electricity so I'm comfortable working with it.
Never again will I tackle an entire room of drywall (I'm not great at taping/finishing), sagging floor joists, concrete or brick work, major exterior painting, or heavy landscaping/clearing trees and brush. I don't like it, I don't have the proper equipment, and a pro can do it in much less time than it would take me. I had to learn that the hard way!
A lot of good advice here.
One thing that I don't think I've seen yet. Make sure to have enough reserves for (within reason) the worst to happen. For me, since I invest in Arizona, that would be the AC dying in the middle of summer. Which, mind you... It did. 6 months into my first rental property at the end of May, early June. Not the best time for AC units to die. We didn't have the reserves set aside, but luckily, we had enough to cover it.
For different locations, the worst could be something entirely different. (Heater in the winter in the midwest / NE for instance).
As you scale up, it becomes easier to stomach, but having 1-2 properties, a big ticket item can really put a dent into your plans.
I'm not advocating going overboard and saving 20K a property etc (as that would quickly eat into your purchasing power for more property), but make sure you have some money set aside and a plan.
Such great advice, am learning a lot as I keep going too as am still new to this. The think I would add is, yes treat your investment as a business but also do not forget to be human/compassionate/empathetic to your tenants. You will have much better retention by allowing your human side to show once in a while. Nice but firm is the way to go. Additionally don't "smother" your tenants, step back and treat them like the adults they are and show them that you trust them to care for the unit/property and often they will, all of them? No, not always, but it is a safer way to go and saves you time and heartache vs. being all up in their business particularly when house hacking, which makes it very easy for you to smother as you are right there. Good luck and great thread, I learned a lot and @Dawn P., I actually wrote a note to self because of your response. I tend to want to Do it all myself, but I have to learn that one wastes precious time trying to do everything themselves and often times we do not put enough value on time like we should, so thank you for your response and thanks to all others for their input too. Definitely following this thread to see what all else I can learn. Cheers!
Figure out how to not waste your valuable time: Look at enough deals "on paper" (usually online) to know if it's even worth walking into a property. If I am SEEING a property, I already have a general sense of a price where it's worth it, I am just visiting to see general condition, immediate neighborhood, etc. By the time I walk out the door, I will be able to make a decision by EOD with either an offer or not. I've heard of people visiting over 100 places before they buy 1 (this seems CCRRRAAZZZY to me!). In my opinion, these kinda people either have no idea what they want, unrealistic expectations about price, or just REALLY like to window shop. I haven't looked at even a fraction of that many places in persona and I have a nice little highly cash flowing portfolio going. Know your numbers, know your risk tolerance, don't fall into the analysis paralysis trap and be ready to execute when you find something that works!
@Albert Ng what's wrong with expensive contractors? I figured you'd expect better quality.
@Anna M. you make a great point about being compassionate/empathetic/ human to tenants. I think we tend to forget that our tenants are humans sometimes because we get so caught up in the rent, management, and other things. You're right, treating your tenants like they're adults is necessary. thanks for your input!
@Stefanie K. wow! 100 places before they buy 1. I wonder how much time that took. We're so lucky now to have access to the internet that allows us to analyze so many deals from the comfort of our home. You make a lot of great points as well!
Originally posted by @Garrett Vita:
@Albert Ng what's wrong with expensive contractors? I figured you'd expect better quality.
Expensive contractors are expensive :D ... and while the quality is generally better, it's not a guarantee.
Originally posted by @Garrett Vita:
@Nick M. How did you find out what was going in the college, if you don't go there anymore? Because I would figure the school wouldn't post that type or rule publicly.
@Garrett Vita, I knew about the new apartment buildings that were built on campus because there were plenty of articles written about them in the local paper. I didn't find out about the change in the housing policy until one of my tenants mentioned it to me. I should have been following events on campus using the student newspaper (they have an online version I could have gotten access to).
@Garrett Vita I set up an account with Realtor.com and posted pictures immediately. When people would come to see the house I would just tell them this is the "before" and I'm working on the "after". I told them what I was going to do and showed them pictures of other houses I fixed up so they would know the kind of work I do. I'm sure some people walked away and thought there is no way I'm going to trust that this guy is going to do what he says. I wasn't concerned about it because I was looking for the people that trusted me. The couple that rented from us kept coming over every few days to check on my progress and everything ended up being fixed prior to them moving in and they were very happy with all the work. A neighbor came by to see the house and they said it looked like a new home on the inside.
Nick M. It's a good thing your tenant mentioned it to you haha
@Alan ahh I see. I'll definitely implement that into my practice!