This blog was born after I completed my first real estate purchase back in July, but my real estate investing adventure started long before that. It started about 2.5 years ago with a lot of research. The adventure also involved two failed purchase attempts that happened a few months before the first successful one.
I think one of the most important things about real estate investing is not giving up, and not being afraid of the hard times. Of course, it’s OK to fear the hard times (that’s normal), it’s just that you need to prepare for them so that, when they happen, you’re ready and aren’t surprised or paralyzed by them.
Here are the stories about the first two deals I tried to close:
Deal #1 was a turnkey property in Chicago. It was a duplex in a working class neighborhood. The top unit was inhabited by a small family and the bottom unit by a single woman. For some reason, the information provided by the turnkey company about the tenants wasn’t very reassuring. I never received very clear information about who the tenants were or what kind of background checks had been done when they applied to live in the house. Furthermore, the week we were supposed to sign the contract and I needed to send the earnest money, I was notified that the woman living in the bottom unit had left. This created some concern and a lot of uncertainty about the property and more so about the turnkey provider, so I stepped away from the deal. Perhaps this was a mistake since the property seemed like a good investment, but it would have been my first deal and I was very cautious.
Deal #2 was a single-family home in the Midwest. Everything was going smoothly; I had the mortgage approved and the contract was in place. The only problem was that the appraiser appraised the house at roughly $70,000 while the asking price was $95,000. This made me very nervous about the turnkey company since the main benefit of working with one is the fact that they are experts in their market or city. They are supposed to be experts on their neighborhoods and property values. Moreover, this was a mortgage that I was getting through a bank they recommended–so the appraiser was someone they’d worked with before. This led me to believe that the company is not the expert I need my turnkey provider to be, and I stopped working with them. (Sure, glitches happen, and this may have been a mistake on their part, but there are plenty of markets and turnkey companies out there.)
The moral of the story is: You might not succeed the first time (in fact, you probably won’t), but things get better and easier as you gain experience. So, if you head into real estate investing understanding that there’s a learning curve, early failure won’t be as hurtful to your morale as it may have been if you’d been expecting things to be smooth from the get-go.
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