The Biggest Real Estate Investment Mistake I Made In 2018

It is always better to learn from other people’s mistakes than to have to experience them for yourself. This week I want to share what has been my biggest mistake in 2018, and hopefully save you that pain and keep your real estate deals running at optimal profitability.

Shifting Gears

If you’ve followed my story and the progress of our businesses, you’ll know that since really mastering the mortgage note space six years ago, I transitioned back to adding in rehabbing rental properties and doing flips after 2015. I was initially doing this with my own personal portfolio and this was the first time I had begun doing it at volume again since before 2008. Consequently I felt it was only right to offer my investors the opportunity to participate in what was working for my personal portfolio and created a hybrid fund which blended these assets and strategies with mortgage note investments.

During the process I augmented our established note, bank and REO channels by working with a local Realtor to acquire more properties. We completed a lot of acquisitions and the agent really helped negotiate some fantastic deals.

Then this happened…

Seller Hell

If you’ve been watching YouTube or following this blog feed you know that we recently started doing more high end luxury home renovations and flips.

We listed one of these properties. Within 30 days we got a good offer and the property went under contract. Then the buyer failed to make their additional deposit on time and started messing around. We cancelled the deal and reslisted it.

Just two weeks later we had the property under contract again. The same issue happened and the deal fell apart. This hell for sellers as it’s one of the biggest risks. Definitely be careful who you go into contract with. Every day counts, and you don’t want to miss the best buyers because you are locked up with one who isn’t going to follow through. In one instance, the buyers were supposed to put up $250,000 as a deposit, and didn’t come through on time. My rule is if that the deposit isn’t funded in 72 hours, we’re out of the deal.

The Big Mistake I Made

I have to take the blame for this one. During the process of working with this Realtor to acquire all these other properties, I told them we’d work in more benefit on the backend as they had done so well negotiating great deals for a very low commission on the buy side.

This office really specialized in lower end properties. They focused on serving more volume investors looking for B and C class product. I wanted to help them with a million dollar opportunity that would help them set a record and upgrade their own business with this higher-end property.

I actually made three critical mistakes in this situation:

1. I thought the agent could pull it off, even though it wasn’t their speciality
2. I trusted the deal would sell on the MLS
3. I was confident that the product would sell itself, regardless of the marketing

In reality this brokerage office didn’t have the contacts and buyers that were right for this property. That said, certain agents only want to show properties when they are getting the full commission as dual agents, so this one probably didn’t get shown enough. The marketing really wasn’t up to par for this class of property. And in all honesty, it doesn’t matter how good the property is. Sales is 90% marketing.

Time is money in real estate. Extra days listing and relisting are an expense. I had to pull the listing from this good agent and put it with someone else who was a better fit for this niche. Their expertise ought to ensure those expenses are covered with a better sales price to better fitting buyers. I am confident that we will cash out on this investment soon.

I trust you can profit by learning from this, without having to go through it yourself. Please feel free to comment with your own big mistakes this year that you think can help others navigate better, skip the pain and enjoy more gain.

Take a sneak peek at the work we did to this property Luxury Flip

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

Image by Steve Buissinne from Pixabay