We spend a lot of time at the end of each year celebrating our successes in REI and planning for an even better year next year, but sometimes we forget to take stock of our worst move of last year. Understanding what was our worst blunder in 2019 and why it happened can only help us upgrade our business in 2020. So, what was your worst REI blunder of 2019 and what would you do differently today? - - - My worst blunder in 2019 was hiring a new contractor that my friend was using and said was "good." I failed to have the upfront discussions about how I work and what I expect and it was a personality and style clash from day one. I ended up firing him after four days (and $7,500 of work), but my friend had him finish her job. He finished 60 days late on a 30-day renovation. However, the work itself was decent, even though she did like a 1/4 of it herself. But moving forward I need to make sure my personality and expectations will match with anyone I hire so that we can be an actual team and not waste time fighting which takes away from the project completion.

Well let's see I dunno if this was a blunder or not but I got sued for $7.2 Million in 2019 due to a documentary I made on turnkey scam allegations...That was kind of lame, however it's just a SLAPP lawsuit from some clown so I wouldn't do anything different.

@Jonathan Greene Honestly, mine is not doing enough deals... Because I read too many: "what if there is a recession coming in 2019" posts on BP! 😝

My "regret" each year is always the same....it's the deals I DON'T do. Even on the deals that I wasn't as profitable on in past years...I still am glad I did them. It's always "the one that got away" that bugs me.

What Was Your Worst REI Blunder of 2019?

Jon Hill

Real Estate Agent · Firestone, CO · Member since 2018 · 124 posts · 115 votes

6y

@Jonathan Greene I love this idea. I agree that all too often we spend too much time celebrating the success where you can learn a lot more from the failures. If you don't spend time realizing what you did wrong then you are bound to repeat.

Mine was on a house hack. We rented out a room to a friend because it was easier than having to go through the screening process. We allowed our relationship with her to cloud our judgement. We still put together a solid lease, but within the first of couple of weeks problem started to arise. She was not following the house rules and was extremely dirty. It created a lot more stress than we had wanted and expected. We were able to make it through the lease thankful because we had done a short one. The lesson learned for us was that renting to friends still requires us to do the screening work and not allow them to cloud our judgement. Don't make the assumption that because you have a relationship outside of your home that they will work as roommates.

5 Reply

Jonathan GreeneBusiness Member

OP

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

6y

@Jon Hill that is a great one and a good heads-up to all house hackers. Do you think it would be safer for new house hackers to treat that room rental as more of a business and keep it that way? Anytime I have mixed friendship in deals it has softened the line on the business.

[email protected]Podcast Guest on Show #667

Zen and the Art of Real Estate Investing59 Reviews

Website View Page

0 Reply

Jon Hill

Real Estate Agent · Firestone, CO · Member since 2018 · 124 posts · 115 votes

6y

@Jonathan Greene Absolutely, because at its core you are running a business as a house-hacker. I believe had I approached it that way and done my research I would have noticed the red flags. I took the easy way and hoped for the best which is a horrible business decision even though at the time I did not see it as that.

I am the same way when mixing friendships with business. The line because a lot lesser clear because, for me at least, I feel that they will have a better idea of what I expect so I don't communicate it as well.

1 Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

6y

I will add to the theme about not mixing business and friendship.

We rented to our handyman that was also the son-in law and daughter of a good friend. From the get go they were messy, broke/bent rules, late more times with their rent than all of our other tenants combined but we tolerated it.

2 months ago, that tenant started a fire with her careless smoking (she was following the rule of outdoor smoking only) and caught the unit on fire and damaged the adjacent unit. Original estimate to repair was 6 months but now is 8 months and I suspect will no be complete in 8 months.

On the positive, we no longer have the issue of having them as tenants. We likely have lost our handyman as they wanted to come back but we told them no. Stupid once is bad enough.

This was by far our worse mistake of 2019.

We also had an issue with our long time plumber; I suspect he just got too complacent and was taking advantage. So we are need of both a handyman and a plumber. Building a trusted team is required, but so is maintaining the trusted team.

7 Reply

Jonathan GreeneBusiness Member

OP

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

6y

@Dan H. been there as well. And your last point is another good one. It's not just friends as renters that become complacent, sometimes our relationships with our "team" can get too comfortable. I've found that as well and end up switching out my contractors and specialists too often.

[email protected]Podcast Guest on Show #667

Zen and the Art of Real Estate Investing59 Reviews

Website View Page

0 Reply

Mark F.Pro Member

Rental Property Investor · Elgin, IL · Member since 2016 · 326 posts · 270 votes

6y

I'll jump in - letting my contractor do complete renovations on T&M and not giving a bid, said my jobs were "too big to bid" - 3 month renovation took 4.5 months and a 2 month renovation took just under 4 months. Lesson learned, never again!

2 Reply

Jonathan GreeneBusiness Member

OP

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

6y

@Mark F. I've done that too. You would think when you give freedom like that the job would come in quicker and reasonably priced to foster future jobs, but they never do in my experience either. I think it ties in to other posts above about keeping all parts of our REI business business-like. The second we allow a more lax approach to tenants or partners, it seems to come back to haunt us.

[email protected]Podcast Guest on Show #667

Zen and the Art of Real Estate Investing59 Reviews

Website View Page

2 Reply

Mark F.Pro Member

Rental Property Investor · Elgin, IL · Member since 2016 · 326 posts · 270 votes

6y

@Jonathan Greene - yeah we've done several houses together in the past and I had 3 back to back but then it ended up costing me much more for renovations then it should have as well as holding costs because the houses were sitting waiting for him to finish the previous one. I bought them each 2 months apart so that we could move from one to the next but the time overages just kept compounding, current one sat for 3 months not even touched because he dragged his feet on the last two. Absolutely no incentive to finish quicker, in fact the longer he took the more he made - ate way too much into my profits. I wont even say how much he was getting paid per month!

1 Reply

Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

6y

Still the neverending duplex reno I'm in. Just a few thousand more to lose...there was nothing really BIG this year, but the necessity of not biting off more than my business model can chew is very important.

4 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

6y

with our volume we always have ups and downs.. so nothing sticks out.

getting out of some markets that are just too tough to deal with on the lower end props.

but biggest blunder was not going Long on Tesla when it hit 180 because of all the shorts.

Podcast Guest on Show #222

JLH Capital Partners51 Review

Website View Page

9 Reply

Nick Barlow

Warsaw, IN · Member since 2017 · 229 posts · 270 votes

6y

@Jonathan Greene my biggest blunder was being too inexperienced and accommodating at managing late-paying tenants. I had a tenant miss paying rent most of the month of July. My pay or quit notice should have gone up then, but I continued to let the situation linger,getting commitments to pay, and received partial payments up to the full sum owed every month, always late, and often not fully paid until about the 20th. Until November. No rent. Tenant out in end of November. Unit rehabbed in early December and now trying to fill over Christmas and New Year Holiday. The inevitable Pay or quit notice happened two weeks before Thanksgiving. Unpleasant situation all around, that probably would have had better timing if I did it right the first time.

Lesson learned.

3 Reply

Gabriel Edgar

Contractor · Dover, NH · Member since 2019 · 28 posts · 11 votes

6y

My wife and I got informed of an off-market land deal last year.

The price was cheap and the seller was motivated.

We spent almost the entire year going through negotiations, working with attorneys, engineers and the city to make it work.

This was going to be for a sfh for ourselves.

In November we finally saw the writing on the wall and called it quits after about a year of working on this.

There was some emotional attachment to it because of the location. It had some acreage and was a simple walk in the woods to my parents house and my kids school. Because of the acreage I could do some outdoor hobby stuff like shooting and such.

The city wasn’t working with our engineer or attorney very well, which was expected a little. Some of the offsite improvements I suppose may have been too much for us if we only did a sfh, and much of what we wanted was probably too much for the city to wrap their head around.

2 Reply

Daniel Umstead

Realtor · Philadelphia, PA · Member since 2009 · 107 posts · 69 votes

6y

Not leveraging my contacts properly. I had my 1st wholesale deal ready and I made the mistake of letting the woman know that I couldn't get $1k for an earned money deposit and instead of asking how to get around it, I just let it go and the woman sold the home and I would have had $6k from my first deal. But I am networking more and taking advantage of all connects that I make with everybody.

4 Reply

Courtney Jones

Rental Property Investor · Dayton, OH · Member since 2016 · 210 posts · 160 votes

6y

My Mistake for 2019 was not considering that things change. I have done 3 transactions/ mortgages with a bank, and the last one was in July. I started working with them again last month and when I received the documents to esign their fees had doubled. Apparently they were bought out and with change comes CHANGE. In any case, my bad for going with what I was comfortable with instead of shopping around each time.

4 Reply

Jonathan GreeneBusiness Member

OP

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

6y

@Jim K. that last point is gold. We all get to the point where we outpace our business model and then we end up scrambling around finding all the spare bits we bit off when we shouldn't have.

@Nick Barlow that's something that any landlord has done. I've let tenants go six months before, but they were long-term and had a job loss. They are still there, six years later, and have been there more than fifteen so sometimes the decision is even harder. When we've had a property manager in some areas that helped because we didn't have to feel bad.

@Gabriel Edgar that sounds like an overall win in the end, but one of those that you really wish had worked out. I've always had trouble pulling the trigger on land because of all the things you mentioned.

@Daniel Umstead wholesaling is always a mess in the beginning. I think you are on the right path with advancing your networking because then, at the very least, you have more people to bounce ideas off as to how to solve things in advance.

@Courtney Jones that's a big one we were talking about above in a different context. Getting too comfortable with tenants and even banks, expecting the relationships we built to stay the same. At least it was only one more deal.

[email protected]Podcast Guest on Show #667

Zen and the Art of Real Estate Investing59 Reviews

Website View Page

2 Reply

Christopher Sparacino

New to Real Estate · Sarasota, FL · Member since 2018 · 82 posts · 49 votes

6y

My biggest blunder for 2019 was having too much fear to put anything under contract for a wholesale deal. Also making it too theoretical and complicated instead of taking action. I could’ve just hired a contractor to go out and estimate repairs, but I didn’t. I ended up doing a lot of marketing, getting a lot of leads across the country, but no closed deals.

Now what I do is I JV with some people in their markets, I have them place the properties under contract, with both our names on the P&S agreement, then we work together to calculate repairs, ARV, and find buyers. Works for me. They handle negotiating, I work on what I'm good at. Which is getting leads.

5 Reply

Matthew Anderson

Rental Property Investor · Pittsfield, NH · Member since 2019 · 93 posts · 32 votes

6y

@Jonathan Greene Great thread. My biggist blunder of 2019 was not being on top of my lender. There was a miscommunication that exstened the closing from 30 too 45 plus days costing me $ 850.00. This was a good lesson for my wife and I on how we need to check in with our when team more regularly. The good news is we should be closing at the end of the month!

2 Reply

Clifford Paul

Rental Property Investor · Member since 2018 · 483 posts · 956 votes

6y

My biggest blunder was letting my contractor build another fence. His guys are great at everything else but building fences. I will have to pay to have the fence redone but on a good note his bid on the fence was so cheap that there's no way it covered the material cost.

1 Reply

Dennis M.

Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes

6y

Mine was reluctantly taking on a tenant that was a former drug addict . He had a great job and by all accounts had turned his life around a little rough looking fella but friendly ... Then the late payments came every month now He stole the rent money from the apartment above him and blew all his rent on cocaine due to a relapse . I’m out around 1600 ( I also missed some former evictions he had on his record) . Oh he also took in a stray dog or two and was letting “friends “stay there . Absolute nightmare tenant That now refuses to leave . I filed eviction last week and they Hit the roof this week when he got the papers . Live and learn .trust your gutt . Keep your head down .. keep moving forward

4 Reply

Scott Passman

Rental Property Investor · Batavia, IL · Member since 2018 · 452 posts · 672 votes

6y

My biggest and costliest mistake this year was overlooking a terrible flooring installation on a SFR I purchased earlier this year from a turnkey operator because the intangibles all looked great (excellent school district, great location, ability to add a bedroom). I put my blinders on and hoped I could ride it out for a couple years before needing to address it, yet here I am 9 months later tearing up and reinstalling a new floor throughout the entire house. The errors I made in my due diligence process by not following up on a couple issues I noticed have cost me ~8k this year to remedy. Lesson learned.

2 Reply

Mark Fries

Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes

6y

@Jonathan Greene

Worst 2019 REI blunder....was spending too much time on biggerpockets reading posts and writing replies when I could have been searching for more deals.

12 Reply

Account Closed

Rental Property Investor · Glens Falls, NY · Member since 2016 · 176 posts · 169 votes

6y

Originally posted by @Mark F.:

I'll jump in - letting my contractor do complete renovations on T&M and not giving a bid, said my jobs were "too big to bid" - 3 month renovation took 4.5 months and a 2 month renovation took just under 4 months. Lesson learned, never again!

I have never heard that one before, "too big to bid"? lol. T&M is always in the favor of the contractor, you'll get milked like you're on a dairy farm. Sorry you experienced that.

2 Reply

Charlie MacPherson

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

6y

Not mine, but a rehabber client. I found him a great deal on a property needing a full gut rehab in a *very* upscale town. It was his first rehab, but he's a commercial construction guy.

Comps said $600,000 ARV on a $233K acquisition and $150K rehab and maybe $25,000 in lending / carry costs. He should have made a very nice profit.

But he was working full time at his day job and let the carpenter design the rehab (!!!) - and the rehab was awful. Floors remained out of level - you could even see gaps between the mop board and floor. He used only mid-grade kitchen appliances. The two bathrooms were just a tub and tile - no walk-in showers. Nothing at all fancy. Not even sliding glass doors.

Worse, he rehabbed it to the original 1920 floor plan, which meant 4 *very* small beds along the outside walls and a bowling alley shaped kitchen across the top. The master bedroom would not fit a king size bed and a queen would make it very hard to walk around it.

In the middle of the house was a massive (and useless) 750 sq ft great room and not only were there no closets except for the tiny 8' X 2' closets in each bed, there were no other rooms. 4 beds, 2 baths, kitchen, great room - and there was *zero* storage anywhere.

I worked my butt off to try to sell it including showings, 16 open houses, about 3,000 miles on my car, tons of paid advertising. He ended up close to $200K in rehab/financing costs due to an unforeseen foundation issue and very high carry costs due to not being able to sell quickly.

In the end, we cut the price 8 times and finally got an offer at $425,000. He decided that he was coming out so upside down in the deal that he pulled it from the market and declared bankruptcy.

His big mistakes were not looking at other $600K homes and getting an idea of features and finishes and not bringing in an architect to lay out a much more functional floor plan.

As much as I'm heartbroken for him - and I really am - I watched what should have been a very nice paycheck for me evaporate too.

Thousands in expenses, an enormous amount of work, no income to show for it and a broke client.

So no, not my screw up per se, but when working with first-time rehabbers, I'll be a lot more attentive toward making sure they know what they're doing.

4 Reply

Ryan L.

Member since 2018 · 5 posts · 7 votes

6y

I bought a single family home for a rental and completed my own inspection. I noticed the plumbing had been replaced with new pex supply lines and drains. The house had a partial basement.... when I opened the access door to the crawl it was thick with spider webs like something out of the Munsters. Instead of going in I was lazy and just inspected it from the opening. After buying the house and getting the sewer line cleaned out we noticed the toilet still was not flushing properly. Long story shorter I went into the crawl to make sure it was vented and found out the laundry room drain, shower and kitchen sink were draining into the clay pipes that lead to the drainage tile. The clay pipe had broke and the water had eroded so much soil in the crawl it looked like the Grand Canyon!

1 Reply

Tim Rostro

Rental Property Investor · Centralia, WA · Member since 2017 · 75 posts · 85 votes

6y

This just happened in time for Christmas. I just closed on my recent property, a duplex, in Pittsburgh, PA. This is another out of state property for me but this one has already given me problems compared to my others and this has no tenants yet. After a review of the property, the contractors from the PM inspected the place and came up with close to $10,000 worth of repairs. The home inspector, although he did his job, failed to put into his report the minor stuff which eventually add up. These repairs, deficiencies that were fixed by the previous owner, passed but with the most minimum of standards. It's rentable right now but I'm sure problems will come up if they don't get addressed immediately.

I was initially expecting $2000-$4000 worth of work to be done but not $10,000. I was blown away at first, rolled my eyes, and muttered to myself, "Merry Christmas." After the initial shock, it was time to roll up the sleeves, pucker up, and get this place livable. This is a buy and hold property I'm keeping for a long time. I also consider the first year or year and a half of any new property lost time and income due to deferred repairs from the previous regime that I had to correct. This is nothing new.

Plan Of Action:

I had to shift money around several accounts in order to free up the cash for the repairs as well as the first mortgage payment due in Jan 2020. I prioritized the most urgent repairs to be done first this month and next month. With this being the holidays, most work won't begin until the beginning of the year. If possible, the contractors can at least get one unit ready to go at the end of Jan.

The next set of repairs follow the next month and the least essential ones a month after that. Hopefully, everything will be done by mid February/March, with maybe a tenant already in one of the units. I figure, by the Spring or early Summer, this place will be up and renting out, with all repairs and issues addressed.

As Real Estate Investors, we are in a position that most people will never be in. To be able to hold multiple properties in our name, shrug off thousands of dollars in repair costs as if you're buying something from the McDonald's Dollar Menu, and preparing for the next deal that comes along.

Merry Christmas and Happy Holidays to the BP Community! And here's to a great 2020! (after the repairs are done)

6 Reply

What Was Your Worst REI Blunder of 2019?

What Was Your Worst REI Blunder of 2019?

Most Popular Reply

73 Replies