While this is going on in the background maybe this is a good time to share my experience on here and highlight my catalog of huge blunders and mistakes.
So I picked up 3 properties free and clear a few years ago (2015) and the plan was to turn them around really quick (6 months) and then move on to more units. That was the plan. On paper. Specifically Excel.
MISTAKE #1 - I instead wandered off to other projects overseas and tried to manage these projects by proxy and made a huge mess of them all. No matter where you are on this planet, managing a project from another continent is next to impossible. Video calls, whatsapp, monthly visits, etc., will not make it work. Contractors will tell you what you want to hear and when you become a pain, they simply won't pick up your calls. Flying all over the place just to raise your voice is not the way to go and is not cheap either!
MISTAKE #2 - Against my wife's cautious advice, I started work on all three rather than one at a time. I have a full time job so funds were pretty much only available at the end of the month. Needless to say, I was chasing my tail half the time. Maybe my wife should do the investing :-)
MISTAKE #3 - I did not educate myself one bit on the types of financing I could have used to start the repairs. Transferring funds from left to right has additional costs and the banks don't make it any easier either
Properties were in limbo for some time and the mother of all mistakes was not paying the taxes on time until taxes got sold! Ended up having to deal with the tax buyer and paying over $10,000 just to avoid the sale of one of my units. A $9,000 tax bill has now cost me approximately $25,000
MISTAKE #4 - Not using credit. I also left my credit to one side - with high scores (700+) and failed to grow that even further. I could have used that to fix the houses much quicker rather than running around half-crazy. I am not a big fan of using friends and families. Another post for another day.
When I finally got back to my senses, I started from scratch and reached out to my previous contacts. I have been in the real estate space for over 20 years and know the systems and processes but for the life of me, I have no idea why these sweet deals went pear-shaped or maybe the points above are the answers. Thankfully, the properties had appreciated considerably and I had bought them all for cash. All I had to do was pay the bills and this would have been a home run
ADVICE #1 - REAL ESTATE IS A BUSINESS!!! I think I got very comfortable with watching all these shows on TV and so on that I got to the point where I started to think that I could just jump in and out anytime I wanted to. If you do not handle your projects efficiently, they will destroy you. There is a lot at stake when you buy a property and embark on this journey to 'fix and flip. The reality when you attempt to transfer your figures on paper to drywall, permits, electrics, plumbing, is totally different. There are deals out there and there will always be deals but if you don't understand how this works and educate yourself, you are going to be an also-ran story.
ADVICE #2 - ALWAYS ADD HOLDING COSTS. Not going to list out all these items as I am sure you already know the ones I am referring to but these are the items I should know about but still ended up dropping by the way side. They always come back to haunt you and now it is costing me a fortune. Needless to say that any profit money I make after this debacle is simply a consolation
ADVICE #3 - EXCEL IS NOT REALITY!! I am going to go against the grain here and say that I do not factor any of these fancy values anymore (ARV, LTV, DSCR, 1%, 2%, 65%, 70%, etc.). These are just a complete waste of time in my opinion. If you cannot buy right, fix right, and sell right, this exercise in flipping will be very painful. I had all kinds of spreadsheets and figures but the reality has been totally different
ADVICE #3 - Stick to your plan. One minute I was going to fix and flip. The next minute I wanted to become a landlord. And then on a bright sunny day, I was just simply going to buy deals and hold. Of course I forgot about advice #2.
I am now in the process of sorting this out (hence this thread) and have finally gotten to the point where I can comfortably do real estate full time and sensibly. I hope to get this projects sorted out before the end of the year and will share more of my experience on here
