Successful REI's Learn MORE from Their Mistakes than Their Successes
I read an article the other day speaking about entrepreneurs (me, and you) and the question was "What does it take to make someone a great entrepreneur?" That got me thinking ..."What does it take to make someone a Great Real Estate Investor?"
I know many try real estate investing because of a late night infomercial (Yes, I know, that guru still uses me on his infomercial). In my history, I had great success on my first deal - a $30k profit...so yes, I could taste the sweet feeling of success. However, that initial success was probably the worst thing that could have happened. Why?
- I got complacent.
- I thought every deal would be this easy.
- I was too trustworthy.
- I expected people to do the work they said they would do.
- And worse, I lost money on the next deal.
The answer to the question is really another question: "Have you learned from your mistakes?"
The answer to that can be painful. It's easy to say, "someone screwed me", or "they didn't tell me about the foundation problem", or "The contractor walked off the job" or "my investor backed out at the last minute"...
All of these things happened to me. Some may decide to give up, some ask "How could I have prevented these things from happening?" I had a responsibility in these things. I have since learned what I need to do to prevent these from happening in the future.
For example, in the "my contractor walked off the job"...I ignored the warning signs...there were delays, there was previous evidence of shoddy workmanship... and I know this about myself, that I can be too trusting. This guy didn't have the resources to finish the job. He underbid, got cheap labor, kept putting me off until I yelled at him...then he walked off.
- Lesson learned: It wasn't because I yelled at him, it was clear that he couldn't fulfill the commitment and I should have insisted on a more detailed quote from him so we both could know what it would take to complete the project. I should have tightened the controls when the shoddy workmanship was discovered with timelines and deadlines.
In the "my investor backed out on me at the last minute" - We had a great few weeks of conversations. I tried to help him out of a bad real estate investment as much as I could. I utilized my technical knowledge to try to sell a bad investment for him, thinking that this would make him more comfortable investing in my deal. He had the funds, but with all the other drama in his life we didn't really sit down and look at the numbers until the day the funds needed to be wired. Once we looked at the numbers, he backed out leaving me to scramble for a 24 hour delay and look for other investors at the last minute (or lose the deal and my deposit).
- Lesson learned: Go through the numbers line by line with the investor weeks prior to closing and get a deposit to covers your deposit, no matter how sure you are or how close it is to the closing date.
The real key in success as an entrepreneur and real estate investor, is to learn from your mistakes. Question how you in your role could have changed the outcome. Nobody is perfect. And if this business was as easy as we thought going into it, we would all be wealthy and successful real estate investors.
Your thoughts?
Comments (2)
As much as we all join sites like here at Bigger Pockets to learn from others experiences, things usually don't ring a bell until it happens to you. Even when things do go wrong many are in denial because they just will not believed it happened to them. That is life so just embrace it and move on.
Chris Brown, over 12 years ago
Thanks Jean Norton for the reflections. I like your active learning attitude. Whole heartedly agree - learn from mistakes. I'm currently winding down a failed business experiment that I was stepping into. I'm taking a small loss because the experiment exposed some unforeseen problems. Glad I have some small failures under my belt and know 1) not to invest my ego AND 2) no repeating mistakes.
Al Williamson, over 12 years ago