The Biggest Real Estate Investing Mistake I Made That Cost Me $125k
“Your best teacher is your last mistake” – Ralph Nader
Best believe when I came up with the title of this article I was thinking two things:
“This title will definitely make people want to read”
“I can’t believe I made this mistake”
Before I dive in I want to explain there is a MAJOR difference between cost and lost. You can lose money in real estate and you can also have an opportunity cost that is missed. If I lost $125k then I probably would have been “dis-engaged” from my fiance.
(She wouldn’t, hopefully lol).
Nonetheless, please don’t make the same mistake I did. Please don’t make the mistake of not having the simple discipline of patience especially in a world where everything moves at lighting speed. I’m an extremely patient person, but for this situation, my patience was not strong.
Ok, into the story:
As a multifamily loving investor, I missed the opportunity to own a 10 unit building….. 12 minutes away from my home.
“Anyone who has never made a mistake has never tried anything new” – Albert Einstein
The deal was literally in my possession to make an offer and start raising money. Don’t get me wrong, I looked into the numbers, spoke to a few people about funding, but I could never get a clear project outlined.
I didn’t try hard enough. I didn’t look at every angle, I didn’t have the patience. Don’t make that mistake. Exhaust all options before giving up. ALL OPTIONS. I could have worked for 3 months straight, day and night for a financial opportunity like that, but I didn’t. I knew I could still make money by wholesaling it to another investor, but I gave up on owning the building.
I found another investor and he is gladly taking on the project without a sweat or care in the world. It wasn’t until I watched him casually go under contract that I realized I made a major mistake. The amount of potential wealth that can be created with that property can be life changing, and I let it slip away.
Again, no good deal will go unfunded and it’s up to you to find the necessary individuals who can help you close the deal. I failed on that aspect in this scenario.
Sure my investor was more experienced and prepared than I was but I can’t take that as an excuse. I should have been willing to make up in hours what I lacked in skill, at least for a project of this scale.
It’s all good, that “mistake” will only set me up to take down the next apartment building effortlessly. Do you think I’m going to allow another opportunity like that pass me by?! Psh. The opportunities that present themselves in real estate are rarely consistent with the vision in our head about how we’re presented that opportunity.
So why $125k? Equity.
The purchase price was around $275k with about $275-$300k in repairs and renovations. All in for around $575k and the ARV, after repair value, is around $700-$750k establishing $125k-$150k in equity to start. That’s what I lost out on. Instant equity.
Not to mention the positive cash flow and tenants servicing the debt, thus increasing the investor’s equity position. With real estate forever increasing in value (over the long run), that also adds increased equity value. I would not be surprised if this building was worth $1 million by the time our NEXT surging market occurs – we’ll have to have prices drop before we can do that.
Am I kicking myself in the butt everyday? No, but I do think about this deal from time to time as I become clearer on my apartment buying goals. I’ll humbly accept my wholesaling fee and will keep it moving with my eyes open.
Don’t let the opportunity slip away from you. Even if you think you have an opportunity, talk to someone experienced who can let you know a strategy to close the deal. Don’t give up if you’re faced with adversity.
“Difficult takes a day, impossible takes a week” – Jay Z