5 Mistakes You Should Never Repeat Twice
Everyone in business makes mistakes. When you are self-employed your mistakes tend to sting a little bit more. Instead of explaining yourself to a boss, there is nobody to blame but yourself. Under the right circumstances a mistake can be used a learning experience. However, if you continue to make the same mistake again eventually it will start to impact your business. All it takes is on misstep to change your reputation, your bottom line and how people view your business. Instead of acting after an error you are better off taking a step back and learning from your actions. You are only human to make a mistake once, but you are a fool if you make the same one twice. Here are five important real estate investing mistakes never to repeat twice.
- Not asking questions. Real estate investing is a difficult business. There are investors who have been in the business for years, who still get stumped on a scenario from time to time. It is ok to admit that you don’t know everything and need to reach out for help from time to time. One of the worst things you can do is get involved with a deal you don’t know everything about. A wholesaler may present you with an opportunity that is seemingly time sensitive and needs and immediate response. Regardless of the situation, if you don’t understand what you are walking into you need to take however long you need until you do. There is often little recourse if you find something out about the property after the fact. There are many people, websites and resources you can tap into to find out whatever you are looking for. Never accept someone at their word without doing your homework and asking questions where need be.
- Leaning on emotions. Real estate is often full of wild swings. One day you are at a closing table and the next a deal falls out at the 11th hour. As high as the closings and accepted offers can be, the fallouts are equally as brutal. It is important to always stay on an even keel. Never let recency bias influence your next action. Losing a deal can be tough, but you don’t want to compound it by reaching for a bad property. It is important to have a system, or checklist of actions, prior to moving forward with a deal. If not, it is easy to let your emotions take over and fall head over heels for a property. As obvious as it sounds, your goal is to make a profit and not simply buy properties you like. A home may have everything you personally look for in a home, but if you can’t generate appreciation you will be left with a poor asset you can’t get rid of. Emotions and business don’t go well in the world of real estate investing.
- Overpromising. Your reputation is one of the most important things you have in any business. As much as you want to do everything for everyone around you, it is important to know where to draw the line. By overpromising and under delivering you instantly lose credibility with the people around you. It is ok to say that you can’t do something, or you don’t know an answer. By doing so, people will respect and appreciate your honestly. The alternative is saying yes to everything and leaving them disappointed a few days down the road. Not only will they be more disappointed, they will be far less inclined reaching out to you in the future. Any chance you had of building, or enhancing, a relationship will be lost. If you can’t do something, it is ok to be honest and lay your cards on the table. Not doing something isn’t the end of the world but saying you can then not deliver can be damaging.
- Not getting help. Just because you can do something in your business doesn’t always mean that you should. There are many things you are far better off outsourcing. By driving to and from a rental property to cut the grass every few weeks, you pull yourself from work with a greater potential for return. The same is the case with trying to handle all the marketing, accounting, property management and lead generation. There are items you need to outsource, even if you don’t think you can find the capital to afford it. These items will create time or directly help generate new business. This business will often produce a greater return than whatever money you would have saved.
- Chasing deals with limited upside. There is nothing wrong with making a minor profit on a given deal. However, with any deal the return must justify the time and financial investment. Working on a property for six months only to scratch a minuscule profit is not worth the time and effort. Not only is this risky, but it leads to burn out and frustration. This doesn’t mean that every deal will be a home run, but you need to pick and choose your battles. Look for deals where you can generate appreciation or get out with a profit and move on. It is the deals that drain your time and money that are an anchor to your business. They will pull everything down and leave you wondering what you are doing.
Mistakes are part of life, and business. That being said learn from them and never make these five investing mistakes twice.