I thought I knew everything there was about investing in real estate. I mean, I attended a bunch of seminars, I read a ton of books about investing in real estate. Plus, I have an MBA and a couple of years of work experience, I know what I’m going to be rich.
Boy was I wrong.
Investing in real estate is a whole different ball game, and it will overwhelm you, it did for me. You are essentially starting a business, and if you’ve never run a business before, where you’re the boss, it can be very stressful.
Yes, you need to start somewhere, but my somewhere was for someone whom had a ton of experience with investing in real estate.
I had none, and when I finally stepped back after a couple of years to analyze my business, I realized there were a lot of things I would’ve done differently, because I did a lot of things wrong.
And, if I had to do it all over again, instead of just diving in head first like I did, this is what I would’ve done, to set myself up right from the beginning for success….
And less stress!
It's now been over 5 years, the end of 2013 to be exact, since I purchased my first investment property, a 6 bed, 2 bath duplex in Windsor, ON for $48K, to flip.
It was such an amazing rush, that about 2 weeks later after getting an accepted offer on the duplex, I made an offer on another duplex, for $87K, to fix and flip, or wait, maybe keep as a rental, or wait, maybe refinance it.
I didn’t know. All I knew was that when I ran the numbers, I was going to do very well. $30K on the first one, $40K on the 2nd if I flip it. Oh, look at this, a 22-unit mixed used commercial property just came for sale, let’s make an offer, the numbers show that after renovating it, it’s going to generate almost $2K a month in cash flow.
Yup, that happened. To the point that over the next 11 months I ended up buying 15 properties, which included an 8-unit mix use commercial, a fourplex, another duplex, and another, a single-family home, and another. Basically, anytime I saw a deal, I figured it was a deal, and I had to buy it.
I had no game plan though.
I was basically buying properties because it seemed everything was a deal, now realizing that I wouldn’t have bought most of them if I could go back, nor would I have paid what I paid for some of them, knowing what I know now.
But I didn’t know better at the time. I was buying these properties without any idea of what I was doing, nor any idea how much time would be involved when you own another property besides your own, nor the systems you need in place so everything runs smoothly, nor the team you need to help you run your business, nor the costs involved and the time involved. NOTHING.
I had basically set myself up for failure.
Luckily, I didn’t fail, I eventually turned my business around and built a solid foundation.
But, at the time, I was like a chicken with its head cut off. To the point where I was just trying to stay afloat, because I had tied up all my capital into so many properties so quickly.
And because I was tying up so much capital into all these properties, and the renovations needed at all these properties, there were times where I had to sell a property at a loss instead of keeping it in my portfolio because I needed the capital to complete renovations at another property, or to pay the mortgage at another, or pay back the private lender.
There were times where a property sat vacant for months, because I didn’t have the capital to do the renovations, nor the team to even do them, and there were times where a property wasn’t being rented because I didn’t have the time nor a property manager to find tenants and the manage unit once rented, causing me to use my capital to pay for the carrying costs.
My business and how I ran it, was a mess, reacting instead of being pro-active. Learning as I went, which I look back on now, easily cost me tens of thousands of dollars and lots of stress.
So, if I had to do it all over again, I would’ve bought a nice turn-key single-family home, or a duplex max, that needed no work, was in a nice area, had good long-term paying tenants, and generated a nice steady cash on cash return, which would give you the time you need, you really really need, to learn the ins and outs of investing in real estate.
If I would’ve done this, it would’ve allowed me to learn how invest to in real estate the right way, by developing systems, by creating rules of thumb to follow when analyzing properties to potentially purchase, by learning the ins and outs of running a business, such as how to record your income and expenses, how to manage a property, how to file a tax return, by building a team of professionals such as contractors, tradespeople, lawyers, accountants, that you can reach out to right away, and trust their advice, and by learning from others whom were successful and what they did.
Then after about a year, minimum 6 months, when you finally get a handle on owning an income property, a handle on how to deal with tenants, a handle on the bookkeeping, a handle on how to run a business.
And you’ve found a couple of good contractors, found good tradespeople you can call on that you trust, then, and only then should you start thinking to yourself, OK, I’m ready to buy another property.
I’m ready for my next challenge. I’m ready to maybe try to fix and flip a property. Or I’m ready to buy a multi-unit property.
Until then, a turn key property in my mind is how I would start today, to get my feet wet.
Because you’re not dealing with any renovations, you’re not dealing with the time crunch of a property your fixing and flipping, you don’t have to pour huge amounts of capital into the property to renovate it, you don’t have to deal the financial stress of tying up that money, you don’t have to deal with chasing tenants for there rent, you don’t’ have to deal with trying to find a contractor to do renovations at your property, or a trades person to do repairs in the middle of the night.
This is because when you buy a turn key property, you are buying a money making business, where the instant you own the property, you’re making an income, so you don’t have to deal with all the headaches that come with a property that needs work, or a property with multiple units, or a property you intend to fix and flip, or a property with not good tenants, or an old property that needs lots of maintenance.
No, with a turn key property, you will have little to no such headaches, which will allow you to focus instead on how to set up the systems that will allow you to scale your real estate investing business so that when the time comes, you can easily take on more challenges, because you’ve gained experience, you’ve built a solid foundation, and you know you can do more.
In fact, in my 6-week course, Real Estate Investing on Autopilot, I teach you step by step how to start investing in real estate the right way. By making sure the business is set up to be successful for the long-term, so that when you do grow your portfolio, it will run as smoothly as owning a turn-key property. This way you can grow your wealth without the headaches and the stress that I endured when I began. My course basically teaches you everything I know, so that you avoid the mistakes I made.
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Learn to Invest in Real Estate on Autopilot