10 Lessons I'd Tell My Newbie Real Estate Self
TL;DR - Learn from my past mistakes with real estate investing. I suffered so you don’t have to.
Whenever we start something new, we tend to think we’re better than we are.
Or we’re too prideful to ask for help…
Because that’d show weakness, right?
Well, real estate investing is no different.
We want to prove that we can do it all by ourselves. With nobody to guide us.
Trust me when I say that’s a huge mistake.
It’ll force you to learn the hard way — through trial and error.
But there’s a smarter way to get good at real estate investing…
A way that’ll save you time and money.
Check it out — right now.
10 Lessons I'd Tell My Newbie Real Estate Self
Be Wise… Learn From the Wise
Anyone can learn by bashing their head against a wall.
And that’s what you’d be doing if you choose to invest in real estate with no help.
Which is fine, if that’s the way you want to do it!
For some people, the pride of doing something solo outweighs all other benefits.
But know that, without understanding the real estate game before investing, you’ll lose thousands…
Or hundreds of thousands…
On your first few deals.
That can be a tough pill to swallow.
So if you want to invest smarter — not harder — then learn as much as you can from experienced investors.
They’ve been where you’ve been before. And they know ways to avoid most, if not all, of the struggles new investors endure.
Sure, you’ll have to swallow your pride. You won’t be the big dog in the room.
But you will save precious resources.
Time — something you can never get back.
Money — the sole dictator of investing success.
Stress — kick the gray hair a few years down the road.
Now, if you’re open to learning, here are 10 lessons I wish I knew as a newbie real estate investor.
10 Lessons I'd Tell My Newbie Real Estate Self
This list could be hours long. But I respect your time and attention.
So here are 10 of the most important lessons I wish I knew starting out.
1. Don’t Get Fancy
When you first start investing, you might get caught in the trap that a lot of new investors do.
You’ll consider starting with syndication or the BRRRR method.
But these are advanced strategies!
Before you get to them, you should focus on the fundamentals of real estate investing.
Things like:
Finding good deals
Building your real estate team
Calculating returns
This is the time to build a strong foundation, much like a house, and then grow from there.
2. Learn To Calculate Returns
As I mentioned previously, money is what determines if your investment was good or bad.
Did you make money or did you lose it?
And how much did you gain or lose?
To make sure you’re gaining money from your property, you need to maximize cash flow.
This involves learning real estate metrics, your monthly rental expenses, and property management fees, among other things.
Basically, you want your rental income to be higher than your monthly expenses.
So make sure you know the math and get a good return on your money!
3. Invest for Profit
Listen, real estate tax benefits are awesome.
So awesome that you can pick and choose from the top tax deductions. Find which you like the most.
But the main goal is to make money from your properties.
No matter what property type you’re looking for, make sure it’ll earn your minimum profit standard.
Any property you invest in should help you reach your income goals, not just benefit you tax-wise.
4. Always Improve Your Network
A larger network means that your life as an investor is easier.
Look at it this way…
Your property will need repairs. It’s not an “if”, but a “when”.
The more contractors you have on call, the quicker you can get your property fixed, and the happier your tenants will be.
You’ll also need people around you that know where the deals are, when they’ll be available, and how to get them done.
People like:
Real estate agents
Home inspectors
Lenders
Appraisers
Title companies
Bird dogs
Your bird dogs will let you know of a distressed seller, your lenders will help you get the money for the deal, your real estate agents will help you close the deal, so on and so forth.
The more qualified people you know in real estate, the more resources you have to accomplish your goals.
5. A Good Deal Requires Work
Everybody and their mama’s looking for turnkey rental properties. The ones you’ll find on popular websites like the MLS or Roofstock.
And sure, they aren’t bad options! But they won’t get you amazing returns.
The best deals take persistence and work to find. Because they aren’t where everyone can find them.
You’ll have to do some digging.
Look for distressed sellers — people with the motivation to get rid of their property quickly.
Sometimes a bird dog will let you know about these sellers. Sometimes a wholesaler from your network will bring a deal your way.
Regardless, great deals are waiting to be found. You just have to put in the work to find them.
Trust me, the profit will be worth it!
6. Low-End Neighborhoods? No Thanks
It’s tempting to purchase property in low-end areas.
The cap rates are higher than normal and you need less of a down payment to own a rental.
But the potential profit simply isn’t worth the headache.
You’ll have to deal with higher crime rates, higher chance of rent default, and higher chance of eviction, among other things.
Sure, your monthly rent may be great compared to your loan payment,
But if your tenant isn’t paying rent or you have a vacancy?
Doesn’t look so pretty then.
Do yourself a favor and take off the rose-colored sunglasses.
7. Unfriendly Markets = Bad Investments
There are certain areas of the US that aren’t friendly to real estate investors.
They normally have anti-landlord laws such as:
“No-fault eviction” bans
Slow evictions
Rent control
Rent stabilization
The top cities for this are:
Portland, OR
New York, NY
Washington, DC,
Baltimore, MD
Detroit MI
While these laws are great for your tenants, they aren’t great for you.
So if you’d rather not deal with all of the extra stress, stay away from these areas.
8. Get Great Tenants
One of the worst things an investor can deal with is bad tenants.
Bad tenants can ruin your property, be late with rent payments, leave you with an unexpected vacancy, and much more.
That’s why it’s so important to make sure to screen prospective tenants. Really make sure they’re good people that’ll respect your rental.
You’ll get the basic facts — credit scores, criminal history, etc.
But you want to go deeper. Call references, old landlords, and get a sense of who the person is beyond numbers on a sheet.
Of course, if you have a property manager, you won’t have to do this yourself.
But it’s good to keep in mind.
9. Start With Your Home
You might think that you need a rental property to start your real estate journey.
But that isn’t the case at all!
In fact, you can start with your primary residence today!
There’s an investing method called house hacking.
Basically, it involves renting out extra space in your home to tenants.
It may sound odd at first, but it helps you pay down your mortgage loan much quicker!
Sometimes your tenant(s) even pay your monthly mortgage payment completely.
Imagine how much money that’d save you!
You could even start saving for a down payment on a rental property…
10. Partner With an Experienced Investor
I’m sure you’ve heard of — or had — career mentors.
They’re experienced professionals that know an industry well.
Since they have advanced knowledge, they can help accelerate your growth in that same field.
Well, why not take that concept and translate it to real estate?
Your partner will likely make you do most of the menial work and pay more on the deal.
But in return, you’ll receive priceless education and advice.
Lessons that you’ll use to make way more money, way sooner.
If you want to catapult your growth, consider getting a real estate mentor.
Be Fruitful and Make Money
Well, if you haven’t started your real estate journey yet…
You’re certainly on the right track now!
It can be easy to let pride consume us.
Make us feel like we don’t need help from anyone else.
But hey, we’re in the business of making money from rental properties.
If you can learn how to make that money faster, why not take some advice here and there?
I hope you’ve learned from my past mistakes and taken some bit of knowledge away.
The only thing left is for you to use it!
As always…
Happy hunting!
How We Can Help You
Does investing in real estate sound intriguing to you? Would you like to learn more? We’d love to be of value!
At Undoor, we pride ourselves on teaching new and experienced investors how to maximize their gains with minimal stress. Our goal is to help you fall in love with real estate and real estate investing. What we’re most passionate about is maximizing investment gains for people like you.
Do you want to get key insights and advice that’ll help you get ahead of the game? Don’t hesitate to contact us for any and all real estate wants or needs.
