5 Real Estate Mistakes I Made as a New Investor
One thing that bothers me about the capital C – Church – is that we tend to not “come as we are.” We pretend to “come as we are,” but don’t truly share our burdens with each other. I believe that Jesus wants us to come and share our heartaches, frustrations, and mistakes with one another. That way we can help to lift each other up in the process, as well as learn from everyone else.
Now, I am definitely not a person who always “comes as I am,” but I do recognize that I can be better at it.
In an attempt to be more authentic with my writing, I wanted to give everyone an idea of the real estate mistakes I have made so far in my investing career. This isn’t easy for me to share, but I hope to create an atmosphere of authenticity.
Falling for a Guru
If you have been around the real estate investing world for a while, or even if you are someone peeking in through the windows, chances are that you have come across a guru.
Gurus are the people and companies trying to sell their expertise for a high price. They usually claim that they have all the answers and if you pay for their courses and materials you can be just like them.
Before my husband and I purchased our first rental property, we attended one of those pitches. Not realizing what it was before, during, or even after… I was so excited because I thought I had found a group that would help me learn everything I needed to know about investing.
All I had to do was pay $10,000 and I would be set for life!! At this time, I’m pretty sure the Holy Spirit was truly trying to get me from going overboard because I started to question it all.
Why did I have to pay 10k to learn about real estate investing, when I read all the time on BiggerPockets.com that people are figuring this stuff out for free??
Because of my doubts at the time, I didn’t end up going all in at the $10,000 price. The guru was offering a sort of “sneak peek” to their whole collection for only a mere $2,000. So I decided to take that route. HA.
I have taken a number of their online courses and haven’t learned too much that I couldn’t have learned anywhere else… It frustrates me to no end that I fell for such a silly trap. It is definitely one of my biggest real estate mistakes!
There are sooo many ways to get a free education these days. I am a fan of taking paid courses online, however, since then I have never paid more than $200 on an online course.
Buying in a Flood Zone
This is probably my most painful real estate mistake thus far in my investing career. It honestly makes me want to run away and hide because I was even warned about buying in a flood zone.
No floods have happened thus far, and actually, if you look at the history of the town that our rental property is in, there have been practically 0 major floods there in decades….
How silly…..
Even though the town has proven to have a great irrigation system, the location of our property has a 1% higher likelihood of flooding in the case of a big storm. And because of this measly 1%, we now have to pay $1075 extra a year to insure it. AHH!
Now you may be wondering – well why did you buy this place if you knew you would have to pay more to insure it?
The answer to that is this. We found out that one of the neighbors a couple of doors down was able to appeal to FEMA to have the flood zone removed from their property.
So we tried doing the same thing. The process with FEMA is a story for another time, but I’m sure you have guessed the outcome. FEMA declined the removal of the flood zone and the judgment is final!
Related: Why You Need Cash Reserves When Investing in Rentals
Partnering With People I Second-Guessed in the First Place
Before jumping into real estate investing, I read the book Long Distance Real Estate Investing by David Greene The one thing that David Greene probably stresses the most is that the key to investing out of state are the people you partner with. It is crucial to partner with others who understand your goals and help you achieve them.
Related: The Difference Between Investor-Friendly and Investor-Experienced Agents
Not only that, but the people you choose to partner with should be ready and available to help answer any questions along the line. I feel that it is very important to surround yourself with others who are ready and willing to help you succeed.
I’m sure you guessed where I’m going with this.
From the beginning, I had some communication issues with the lender I was working with. I chose to ignore my frustrations and gut feelings and push through with this person. However, time and time again I was let down by a lack of communication. We were able to close on our rental property just fine, but more issues arose months after the closing.
When I would reach out with questions in regards to purchasing our next rental property or about refinancing our current property it would take roughly a week – sometimes longer – for a response! How frustrating…
I am the kind of person who practically always gives people the benefit of the doubt. Everyone is innocent until proven guilty in my mind. I love to give second chances, but sometimes it can come to bite me in the butt later.
Thankfully, nothing extreme happened, but this has proven to me that the people that I surround myself with are important. Do not make this real estate mistake yourself! Go with your gut feeling when it comes to the people you partner with.
Staying at a Job That Made Me Unhappy
In 2018, I finally left the job that made me extremely unhappy, even though I was working in the real estate industry. I was working as a leasing agent at a property management firm. This job is where my passion for real estate stems, but through it, I also found out that I really don’t like being a property manager! Go figure.
I realized this back in September of 2017, and I finally quit my job in September of 2018. For that whole year, I came home deflated and unmotivated to do anything. My job and the clients I was helping out would drain me of all the energy I had.
I stuck with it out of fear of leaving without some other job lined up. And this was definitely a silly real state mistake I made.
Just because the job was in real estate didn’t mean that it was helping me achieve my long term goals in real estate investing!
Related: Your Biggest Goal Setting Mistake
Not Starting Sooner!
This mistake may seem a little cliche, but it honestly is a mistake in my mind…
2 years before we bought our rental property, I had considered buying my first house. This was before my husband and I were married or engaged. So at this time if I were going to buy a house, it was going to be on my own.
I was qualified for a small FHA loan, and I could have purchased a condo or townhouse, but I never did. I talked myself out of it.
Knowing what I know today, I wish I could go back and continue my search for a place of my own. Mainly for the sake of getting started in real estate.
My intention back then was to House Hack. I would buy something with at least two bedrooms and find some roommates to live with me to help pay my mortgage. It would have saved me money in the long run with all the rent I have paid up to now.
Also, the Denver market has continued to boom since 2017 and I know if I had purchased a condo back then I would have had a lot of equity in it now! Bummer!
Lessons from my Real Estate Mistakes
The other day I was feeling totally deflated. We had just found out about the denial for the flood zone removal, and I was so let down.
I was texting Wes and he said “So what? We still have cash flow! STOP it. Right now. This is all a learning experience and you have done a great job.”
Honestly, even though these mistakes somewhat haunt me, he was right. I am super thankful for these “mistakes”! I am choosing not to look at them as mistakes, but rather lessons. I won’t let them defeat me, instead, I will let them teach me.
Guru Trap
It frustrates me that I fell for the guru trap, but now I am a huge advocate for free education! There are so many ways to learn about real estate investing without needing to pay someone for it. I hope you can get a free education by learning from my mistakes!
Now, if I ever hear of anyone else contemplating going to a guru, I can help them understand they can get the same education for free.
Flood Zone
I now will never, EVER, buy a property in a flood zone. Even if it has the potential to be removed. It just isn’t a great idea… The insurance alone is reason enough not to buy that property.
Thankfully, flood insurance doesn’t completely diminish the cash flow of our rental property. Not all is lost!
Partnering
I have also learned to be more selective with the people that I choose to surround myself within this investing journey. I know now that I want to partner with others who can help create win-win situations. And to me, that means helping each other learn new things.
There are so many people out there who are ready to help us out. I realize now that I can be more selective. All I need to do is find better matches!
Jobs
When I recognized that my career goal wasn’t to end up working at a 9-5 job, I realized that it didn’t matter where I was working. As long as I still had the energy at the end of every day to work on my real estate investment company, I could work anywhere. So I left my property management job to work somewhere that I enjoyed being!
My property management job led me to learn a lot about being a landlord and how to love tenants well. I came up with my own ultimate property manager question guide to help weed out the good from the bad.
Since then I have gone through a lot of job changes. And again, realized that it doesn’t matter what I’m doing just as long as I stay focused on my investing goals.
Getting Started
And even though I didn’t get started investing those couple of years earlier, it doesn’t stop me from pursuing my passion now. It just fuels my fire even more today. I know I am doing what God has called me to do now.
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I understood from the beginning that our first rental property wasn’t going to be a smashing success. We weren’t going to buy a bad deal, but we knew that the first house wasn’t going to make us rich. Our second rental property is better but also isn’t making us super rich. But this won’t stop us.
Each deal we do is a stepping stone to our next one. They will all be different and each one will bring its own lessons. And instead of letting each mistake stop us in our tracks, we will figure out the lesson to be learned and use that to strengthen our knowledge for the next deal!
Related: 5 Tips to Achieve Your Goals
There is one more important lesson that I have learned so far, and that is that experience is the best education. There is truly nothing like messing up that really teaches you a lesson!
So don’t let your real estate mistakes define you. Recognize that they will happen, but you can make the choice to learn from them.
Fear not, for I am with you; be not dismayed, for I am your God; I will strengthen you, I will help you, I will uphold you with my righteous right hand.
Isaiah 41:10
Real Estate Mistakes: Blog Article Spotlight!
Just as I was finishing up this article, I happened to come across another blogger who recently posted about their own real estate mistakes. 5 am Joel has been investing longer than I have and has come across some of his own unique “mistakes” just as I have. Check out his article so you can also learn from him!
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Love this! Real estate is such a good industry to be educated on, but definitely can have its pitfalls. Thanks for sharing these tips!
Thanks, Sydney! It can be pretty tricky to navigate at first, but it has some awesome rewards and is so much fun! It is definitely one of my biggest passions.
Great honest article Katie. One thing my husband and I always keep in mind when investing in real estate is that if it were easy everyone would be doing it. Keep going and learning from your mistakes – we all make them.
Maria, you are so right! And I’m glad to hear that I’m not the only one making mistakes!
Buying properties that are vulnerable to flooding and even earthquakes is the stuff my nightmares are made of. I always try to ask around and research, because the first house we bought was a disaster.