What I have learned about Real Estate Investing in 2 years

Hi all. It has been almost 2 years since I did my first blog on Bigger Pockets, Overcoming my fears in Real Estate Investing. I have learned so much!! Mostly the bad part of Real Estate Investing, the people to watch out for and mistakes that I will never make again.

I have done 4 projects and all 4, although strategically planned out, have had issues from the contractors to the sale of them. Some of the issues I should have taken care of when I first noticed there may be a problem but many were unforeseen. I am writing this blog so that hopefully others will learn from my mistakes and learn what to watch out for.

The first project was a condo that I fixed and flipped. The project turned out beautiful and it was put under contract by the buyer in a matter of days after it hit the market. The lender that the buyer was using ended up in total, holding up the sale of the property for 3 months. There were 6 addendums altogether for extensions before we finally closed on the property. When my realtor asked why they needed so many extensions and that I was being held up from doing my next project, the lender explanation was "tell the seller, welcome to the wonderful world of flipping". Now I put a clause in the contract  of $100.00 a day for extensions and I'm more than happy to sell extra days if needed. I haven't had to use this clause since but know that I can exercise it if I need to.

The second project was a house in a 55 plus community. It was a foreclosure and started the project in early Sept. I negotiated the purchase of the house, as well as the financing of the property with a hard money lender. The contractor assured me he could have all the work done in a 30 day period. Since he came highly recommended and it was the first time I used him, I trusted in his word. I should have fired him the first day on the job. He showed up at 11am, worked until 3pm, and was on the phone for half of the time he was there. The job was a basic paint inside, carpet, and floor tile. After week 3, I knew he wasn't going to finish on time and asked him when he would be done. He said he would need an extra week to finish. It took him another 3 weeks to finish and I ended up doing a couple of the repairs myself like new roof vents and replacing some of the vinyl siding that was broken.When I told him I wasn't going to use him on the next project, he assured me he could bring in a crew to make sure it would be done in the month timeframe so I gave him the second job. 

I listed the first house with a little known Realtor that promised me he would have it sold in no time at asking price. Since the house was listed for a little under market, and he had been what I call "courting" me for over a year to try to get one of my properties to sell, I gave him the house to sell for me. He listed it on the MLS and that was it. For 3 months I was watching houses all around me being sold for comparable prices and they weren't as nice as my house. He used the excuses of the holidays but I was still watching houses being sold all around me. Finally after 3 months, and 3 additional months of holding costs, I took the contract away from him and gave it to the Realty agency that was selling all the houses around me. We had a full price offer in 2 days. The buyer somehow had an "Approval letter" for a mortgage from one of the major lenders in our area so we accepted the contract. After a month of him dragging his feet to get the necessary paperwork to the lender. we found out he had a bankruptcy the year before so that deal died. The Realtor relisted the house and had another buyer in a couple of days but I had to FIRE SALE the property as we were going into the middle of March and if a property in a 55 plus community is not sold by the end of March in Florida, you will most likely be holding on to the property until the following October and I didn't want to absorb anymore holding costs.

My third project was in the same 55 plus community. It was a probate situation and all of the paperwork on the sale was done by an attorney handling the probate for the seller. I had the same issues with the contractor and it took him 7 weeks total to do the job. So now I was 6 weeks behind in going into the fourth project as well as having the additional holding costs because of him not getting the job done like he promised. I fired him after the third project and found a new contractor to help me with the fourth project. In the meantime, I put the third project on the market with a different Realtor who also promised me that she could sell it in no time. I gave her the listing. After I gave her the listing, she retired!!! She never told her broker she was retiring and never let any of her clients know she retired. It was really a bizarre situation. I tried for 3 weeks to get ahold of her on her phone and then another 4 additional weeks to her Brokers office. They finally sent a Deputy to her home for a wellness check and she told the deputy, " I don't know why they are concerned. I've retired". Her agency was very embarrassed to call me and let me know the situation and she was fired from the agency but now I had an additional 2 months of holding costs as well as coming up on the middle of March so I once again, "FIRE SALE priced" the property instead of holding on to it until the following October.

The same Realtor who sold my second project got the third project under contract again in a couple of days. After a week went by, she called me to tell me that I couldn't sell the house as I didn't have a clear title to the property. I asked her how that could happen as an attorney did the paperwork. She told me that the attorney made a mistake in doing the title work and in her 25 years in Real Estate Sales, she never ran across this issue and had no idea what to do. In the end, after another month of chasing this issue, we were able to sell the property with contingencies but I almost lost the buyer for this house and had another month of holding costs added.

I went into the fourth project 6 weeks later than I had planned. I hired another contractor who I was really happy with. He worked on the project for 4 weeks and then found out he needed surgery for prostrate cancer right away. I lost him for 3 months and did what I was able to do to keep the project on track like taking down wall paper and patching walls and doing the landscaping on the property. I also ran into issues with the building inspector for the town. He held up the permit process for almost 4 months because he wanted install instructions on 2 windows that the manufacturer didn't supply. In the end, this project turned out beautiful. This house was sold in a couple of days and I actually made a little money on the project despite the extra 5 months of holding costs.

It is hard for me to believe that so many issues could come up in only 4 projects. Even with the best laid plans, issue, unforeseen, come up and make seemingly easy projects difficult to deal with. All in all, I lost a lot  of money but have had one hell of an education of what to look out for. Because of all of the money I lost, I am currently looking for private investor for any new projects. I have also hired a well known local Real Estate Coach to help me with my future deals.

I know a lot of people making money in Real Estate. It can be a great business and I plan to continue in it. Hopefully I do better in the next 2 years than I have in the past 2 years. We'll see what my next blog has to say.