If you make a bad investment when growing your real estate income, it can be like burning money and tossing it to the wind. The truth is, though, I’ve done it. I made a TERRIBLE investment and I want to make sure you do not make the same mistakes I did!
I’m going to share the long drama of the house I probably should not have bought (well, my brother says so), but that was an excellent teacher of what NOT to do. Thankfully, you don’t have to do what I did. Let’s get to it!
Don’t Make These Mistakes While Growing Your Real Estate Income
Many, many, many years ago, when I was just a little newbie real estate investor, I was the eager little investing bee buying up anything and everything I could find. One day my brother and I decided to participate in an online auction and we found some super awesome deals.
The problem is that not all of them were super awesome deals. In fact, I didn’t really take the time to make sure that all of them were actually deals at all.
My brother drove around to check out the properties and told me not to buy this one particular property on the list.
Through his gagging and vomiting noises, he said repeatedly, “Ughh! Whitney, you cannot buy this house. It is GROSS and you just cannot do it.”
But, me in my amazingly naive self at the time waved him off and said, “Yeah, yeah, but if we did put a bid in on this house, what could we pay?”
My brother reluctantly told me absolutely no more than $15,000. So, I set the bidding maximum to $15,000 and went to bed. Low and behold, the next day I was the proud owner. I had the maximum bid for this newly auctioned property of mine.
And then the hell began.
You see, I was working to grow my real estate income. I was new to this whole real estate world and I really had no idea what to do. My mind was completely absent of any knowledge about lease options or creative financing, or anything else about how to really invest in properties yet. I just had one goal: make money.
Great idea, Whitney. :::insert eyeroll here:::
Well, let me tell you, it was just BAD from the start. This was one of the first houses that actually scared me. I saw this constant stream of questionable people walking in and out of the house next door. The house on the other side had this super high privacy fence and these creepy “kidnapper vans” in the yard.
It was insane.
This one day I went to the house to go check it out and whatnot, but when I got out of the car to head into the house I was smacked in the face with this horrible smell. All I can say is that it burned and hurt my throat like chemicals. I decided NOT to go inside on my own that day and called a contractor friend of mine to come over with me the next day.
Well, he did, and when he crawled under the house to check things out he just said, “Oh man, don’t close on this house. The plumbing and air conditioner are a disaster.” But, again, I just waved him off and said, “No, no, no, everything is fine. Something is going to happen. This will be great. It will be fine.”
He kind of just grunted and groaned that he house was terrriblleeeeee, but, again, I said it would be fine.
I just knew that this house would help me grow my real estate income. I mean, “won’t any house?”
So, I closed on the house a week or so later and started advertising it for $20,000. I thought, “Surely any house is worth $20,000 if it has got plumbing and electricity and a roof, etc. then it has got to be worth at least that. I mean, how bad could this deal be? Somebody in this town surely will want to buy this house in the heart of Knoxville!”
Well, a week or so later I still had not had any action on the property, so I decided to just spruce it up with a little landscaping.
I called a landscaper and had them come by to take care of some trimming and planting, etc. He told me the cost and I left him the check and I headed out on my way. Now, this is a contractor I work with all the time. He is great. Love him, and I trust him a ton.
So, I left him to go about doing what he needed to do and I got about 2 minutes up the road before I got a call from him. “Hey Whit, I am gonna have to hire another guy and increase my price on this. Because, we just had someone try to steal a chainsaw right out of the trailer while we were like 5 feet away.”
I heard that and said, “Oh don’t worry about it! I’ll come back and watch the trailer for you.” But, thankfully I figured out pretty quickly that was a stupid idea. I mean, what in the world was I going to do if someone came to steal something?! So, he went ahead and hired another guy and I went on my way.
They finished up, the house looked great, and I still had not been in it.
Not too long after my brother told me we really needed to get into the house and check things out. No one had even kind of shown interest in this house and we needed to figure out why. Well, we went over the house and I stepped into the kitchen…and my foot sunk as water started filling all around it.
UGHHHH. The house was a mess! Apparently the plumbing was a wreck and there were fleas everywhere. It was just awful.
I slowly backed out and stood there stunned. WHAT IN THE WORLD ARE WE GOING TO DO?!
My brother in all his wisdom reminded me, “I told you not to buy it.”
So, long story short, I wracked my brain for days and remembered something about creative financing options and people who buy houses. But, not one investor who did lease options and seller financing would even touch that house! One investor even laughed at me.
“Just because you bought a bad deal does not mean I will.” OUCH.
“I have formulas and specific criteria I use to choose my houses and make sure I will be able to get my ROI.” OUCH.
Lesson learned. Eventually, I put it up for auction again and contacted the other people who had bid on the property before. I just wanted $12,000 on the house to try to make up some of the loss, but I only got $11,000. So, I was out $4,000 plus closing costs but gained a LOT in hard lessons learned.
So, what are the mistakes I made while I grew my real estate income?
#1 NEVER buy a house without first checking it out yourself
#2 NEVER pay cash for a house without first doing an inspection
#3 Wholesalers and investors ALWAYS work with strategies and formulas to make sure they are doing a great deal
#4 Auctions are great but REQUIRE a solid understanding of how to check out a house as a potential investment opportunity
#5 Don’t get so caught up in the individual deals that you lose sight of the big picture situation you have in your investments.
Look, real estate investment is not “easy street.” It takes work and education to grow your real estate income. And you need to expect to take some hits and make some bad choices along the way!
But, even with all of the bad choices, you can still succeed as an investor.
If you are eager to start growing your own real estate income, make sure you check out my FREE masterclass to start your education so you don’t repeat my mistakes. Remember, this masterclass is totally free, but it’s full of helpful info to get you started. Click here to learn more!
I know that mistakes can be super scary and feel like the sky is falling, but really they are blessings in disguise. Learn to embrace them. They will teach you more than any successes ever can.
Don’t let a little bit of fear and worry hold you back from building your real estate income. If you make the choice to do the work and to keep going when the going gets tough, you will soon see your real estate dreams come true.
Now, go make that money, honey!
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