Real Estate mistakes

I'm not being a pessimist today, but just thought this would make for interesting reading, for those of you who are brave enough!
Most investors of property have made mistakes along the way (and I'm sure we have many to come!) and it often helps fellow investors to know such errors, so that they can avoid them and become all the wiser for the next purchase.
So, I'll start off with a couple of mistakes that I won't be making again:

1. Letting a contract of sale go unconditional when finance hadn't been yet approved in writing. (Verbal assurances mean diddly squat)

2. Not stipulating in a contract that all window treatments were to be the same as they were on initial inspection of the property (in other words read the fine print more carefully!)

Alas, there have been more (I am human after all) but I have started the ball rolling. So who's courageous enough to follow on now?

 

1) Not paying a few thousand more when I was already getting a good deal

2) Chasing the elusive big fish when smaller fish were easy to net and the rising tide would lift them anyway (how's that for mixing metaphors?)

 

How about this-
Not buying a House and Land package - as it is often overpriced. The depreciation benefits are often no better than buying (lets say) a 2 or 3 yr old house.
You can do better buying either:
a/ a 2 or 3 yr old house in the same area - and be able to bargain the price down.
b/ an older house that needs work - value add by renovating so you can claim the extra depreciation and extra rent.
In my time I have come to realise brand new isnt always the best

 

The greatest mistake of all:

NOT buying real estate!
Yes there are many, many "gunna's" out there who are still waiting (indefinitely it seems) for the right time.

And the "Right Time" is always (Within Rental Reality of course ) RIGHT NOW!

Regards,
Steve

 

1.Buying high and then selling low when we could have afforded to hold the property and not knowing that the big boom was around the corner

Lesson : time in the market, not timing

2. Another lesson from the same property (and I think this leson applies to all investing and indeed life) : go with your first insticts. we looked at the property a month or so before, decided it wasn't for us but went back a month later and because we hadn't found something and they had done a paint job, bought it

Self managing a property is great and you save money until you have a difficult tenant which makes it very unpleasant

Lesson : for me it's better to pay for a PM and be hands off (for others they like to be hands on)

 

Dear All,

1. One major lessons which I have learnt in the past is choosing to passively invest by buying newly completed land and house packages, instead of buying vacant lands and building a house on them each, myself i.e becoming a developer myself and adopting a more pro-active 'buy and build" investing strategy.

2. The other major lesson learnt is trusting the RE agents and others more than I am willing to trust myself.

3. For your kind update, please.

4. Thank you.

regards,
Kenneth KOH

 

Can you expand on this for us Kenneth? Are you saying that you prefer to now passively invest by purchasing stock that is already built?

 

Not buying the 95k terrace in Surry Hills in the late 80's as I was freelance and got cold feet about a 75k mortgage

It is worth 10 times that now

 

I'm puzzled as to how you come to the conclusion that timing is not important.

Surely your example is an expamle that highlights the importance of timing


See Change

 

Hehe Ani That reminds me of when my parents were attempting to sell their Carlingford PPOR sometime in the late seventies/early eighties for around $30K. My Dad really wanted this other property that had a tennis court but I don't think Mum was comfortable in borrowing the extra $10K to finance it

Oh, how times have changed......!!

 

Sea change

On the one hand I agree - if you time the market , you maximise your result. On the other hand, the time in the market theory comes into play. There is a saying that property is very forgiving ie even if you bought at the absolute peak , chances are they if you can hold the property for long enough, it will repay you. Not all of us can buy just at the right time, certainly as my first purchase , I know very little about the market or property cycles. know a bit more now

Gazza

 

So I guess timing of the market is important, but if you screw that up, then time in the market can help recover that loss if you can afford to hold the investment and there are no other better opportunities around.

 

Hi Everyone,

Our biggest mistake would have to be paying full asking price for twenty five acres at Mudgee in 1989 on the measley interest rate of 18%.

Hopefully have learned a bit since then.

Not all bad though, we sold that and used the money for a deposit on our first house which we could not have saved otherwise.........a kind of forced saving. We did pretty well out of that house.

Cheers

Jared

 

Guys,

I'm afraid my mistakes are most closely aligned with Steve's...

1. Not buying real estate as early as I could have and as much as I could afford by maxing my leverage to its absolute limits then holding it forever come hell and high water.

2. I bought a measley unit in Carramar as my first IP for $80K. Sold it 6 years later for $75K. Two years after that its worth $150K.

3. Upside to my "mistake" at point 2 is that I used the proceeds from the sale to buy my PPOR. It cost $650K and is now valued at $800K. I missed out on $75K growth in the IP, but made $150K growth in the PPOR over the same period. If only I'd bought a more expensive PPOR... or more IPs at the same time...

Cheers,
Michael.

 

****************************
Dear Jacque,

1. I now prefer to buy vacant land and build the house for rent/sale, as I can save upto 25% of my investing costs as compared to buying a completed land-and-house package.

2. I'm sorry that my initial post was not clear and well-expressed.

3. Thank you.

regards,
Kenneth KOH

 

My biggest mistakes have been selling properties. If only I knew then what I know now!! It's horrible to think of all that lovely capital growth that we gave away, choosing instead to line the pockets of our local real estate agents . Nowadays we keep everything and just rent it out.

Cheers, Medine

 

Hi everyone,

Well said Medine.........this is our second biggest mistake in real estate.

Cheers

Jared

 

Well said Gonzo. I believe there are some excellent examples of 'timing' around, but over a 20 year period the 50% growth in a single period pales in comparison to the whatever % growth over a couple of decades

My mistakes, never to be repeated :

1. SELLING decent property because I thought I had to, to finance other purchases
2. Leaving 'lazy' equity unused
3. Fear of debt

I used to cry over spilled milk, (eg. I sold a city view Queenslander on 2 blocks at Norman Park, for $147K in the 90's ) but now I just look on it as a great learning opportunity that will make sure I NEVER act impulsively again.

But at the end of the day you can't take it with you. I'd rather live in a shoebox with a family that loves me, than in a mansion with some witch who wants my money The bonus of all this work is I know my daughter will get a good start in life, or at least to the best of my ability.

Cheers
Carl

 

Carl,

As a brief aside.... I couldn't agree more!

At work today I was thinking I've got some interesting challenges at the moment and I quite enjoy my job at present BUT I don't want to enjoy it TOO much so that it becomes the most important issue in my life and all I want to do.

I'm a husband, father, son, friend, brother-in-law, employee, son-in-law and the list goes on.....

I hope my investments do ok in the future but I also like to remind myself every now and again that it's only part of the whole package.