Real Estate Investing Mistake #2: Inspections And Repairs
The only real solution for real estate investing mistakes is consistent action! You've got to stick with it and realize that part of learning process
. You WILL make mistakes... and you will continue to make them for as long as you choose to invest.
The key is to learn from each and move on. Add it to a policy and procedure manual so to speak! And avoid that particular real estate investing mistake in the future!
When I first started in real estate, I would document every real estate deal in detail. I would be sure to document: (1) What went well, (2) What didn't go well!, and (3) How to improve on the next deal.
In this article series, I've highlighted 17 mistakes that I made early on and share with you what you can do to avoid making the same real estate investing mistakes I made...
Real Estate Investing Mistake #2: Assuming the repairs and maintenance
This is a biggie early on for real estate investors. They assume that properties have been maintained and/or that the owner is telling them the "whole story" about everything. I know that some will tell you it's a waste of time and money to have inspections done on all of your deals.
When I got started in real estate investing, I primarily rehabbed properties, and because I had ZERO construction knowledge going into it all, I had a formal inspection on every single property I purchase. And without fail, 100% of the time, I made the inspection costs back in renegotiations with the homeowner.
Think of your home inspection costs early on as a invaluable education! People will spend 10s of 1000s of dollars on home study courses, but will balk at $200 on a home inspector that will literally give you on the job training.
On my very first deal, I assumed that everything was in good working order because I knew the owners. They were related to my business partner! Well, needless to say, I was VERY wrong! Fortunately, things worked out in the end, but this "mistake" SHOULD have cost me nearly $5000. And it w
as something a home inspector would have easily caught! Sure the obvious stuff stood out on this real estate deal... things like the rotted wood siding and the "pond scum green" pool! But I didn't know the first thing about what to look for in terms of plumbing, roof, electric, structure, etc.
How to Avoid Real Estate Investing Mistake #2
First and foremost, the key to avoiding this real estate mistake is to LEARN the majors of rehab!
These include:
1. Roof
2. Structure (Including the foundation)
3. Electrical
4. Plumbing
5. HVAC (Heating, ventilation, and air conditioner)
These are the items that can cost you (or your retail buyer) BIG dollars on a deal... and these are things that will make or break a deal in a matter of minutes. In some cases, they can take you right out of the real estate investing game (I've got lots of stories of deals - some good and others... a good learning lesson). These are things that can literally make or break a deal and you certainly don't want to turn into a motivated seller yourself!
These items might seem scary when you're first getting started in real estate, but in reality, a little education goes a long way. And the best type of education is hands-on. I asked questions and got involved. I also worked closely with my home inspector as I took on more and more rehabs in the beginning of my career.
After I negotiated the contract, I always got a professional inspection. This has earned me thousands and thousands of dollars in my real estate investing career. After simply having a third-party expert do the inspection, I found it's virtually always possible to renegotiate the price of the contract and receive credit for repairs.
by: Heather Seitz
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