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Our Biggest Mistakes of 2010

January 1, 2011

There is a lot of emphasis focused on your goals each year (which I also think is essential), but I also like to write down my mistakes made each year.  Mistakes are where I learn lessons that I don’t  easily forget as they typically hit me in the pocketbook.  Sometimes people ignore their mistakes or are so ashamed they try and forget about them.  I think writing them down does a couple of things:

  • Helps you overcome the fear of making mistakes
  • Helps you accept your mistakes
  • Helps you learn from your mistakes
  • Forces you to own up to the mistakes you made and insure you don’t forget them
  • It in effect gives you a correction list

Below are some of the mistakes we made last year.  Some cost us money and others are just areas we could have handled better.  Either way, we learned something and are getting smarter with every mistake.

Trying to get banks to finance an investment purchase.  There are lots of people having problems with this and I can absolutely confirm that there is a problem here.  You just can’t use the big banks for financing investment properties right now.  I now use unsecured lines of credit sometimes called signature loans.  These are easy to set up, very quick to fund, they have competitive rates and almost no fees.   The only thing you must have for this is good credit and a high paying job really helps too.

Did not convert utilities in tenants name to avoid a city inspection.  Ok, so I bought a house in a city that requires a rental inspection to be compliant with the city code.  I then had a tenant quickly after my repairs were done.  I was just going to “whistle through the graveyard” on this city inspection and just get my tenant in first.  However, when I then tried to convert the utilities, I realized the inspection is a pre-requisite.  Now I am playing this game where the utilities are in my name, I pay the bill each month and then have the tenant add this to the rent.  It’s actually working out so far as all the utilities are on the same city bill.  In the meantime, I kept meaning to get the inspector out there and get the inspection done.  However, I am hearing horror stories about these inspections being very comprehensive and requiring quite a few improvements that I would rather not make.  Long story short, I am waiting till the next vacancy to get the inspection.

Over improvements.   After purchasing a property, we still tend to over improve the property versus just getting it ‘rent ready’.  You should look at every improvement and ask – Am I going to get a return on this investment?   Am I going to be able to charge more rent or is the property more valuable as a result of this improvement?  If not, don’t do it.

Lack of research before hiring out a job.   I had a garage door spring break on one of my properties this year.   My tenants car was essentially locked in the garage.  I had to get someone out there fast.  I saw a sticker near the garage door for a repair person, so I just called them and had them come out.  I never did discuss price or even research how much it costs.  I was very busy with my day job and not able to meet the repair man personally at my property (another mistake).  In any event, total bill was $345 for a job that I later researched and should have been around $200-$250.  Lesson:  Research a repair before hiring someone and try to be there if it’s someone you have not used before.   

Making mistakes in this business is fine, ordinary and expected—once.  But when you fail to learn from that mistake, you run the risk of wasting time, energy, and money on the exact same mistake again.  I think writing them down will help you be more accountable, more accepting of your mistakes and insure you don’t forget about them.  I wish it would eliminate my mistakes for 2011, but I know I will have a similar post next year.

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From → Planning

2 Comments
  1. Over improving rentals – that is a tough one. I still go back and forth on this issue. The reason is simple, you can’t always tell what “sells” a tenant on renting out your place. I usually error on the side of best product, best price. I know changing a brass ceilling fan to a brushed nickle isn’t going to make a tenant pay $50 more a month, but I haven’t had a vacany last more than 2 weeks either, who knows why that is??

    How do you measure what is effective?

  2. Arthur,

    This is tough to measure. It probably ultimately comes down to what class the Property is. Class A properties might need to have the brushed nickel ceiling fan. I only have one Class A property and right now I dont have Class A tenants in there. They just dont expect those things, so I know I don’t need to do that. I think it’s a combination of understanding your Property class and your potential tenants expectations.

    I think we have gotten better over time, but sometimes we will spend dollars that I don’t think we are getting back. Val put some landscaping in and created a little garden area in the backyard of one of her properties. It was nice and only cost maybe $100. It still looks decent today and who knows the lady that moved in there seemed to like it and it might have been just the thing that made her decide to rent the place. Either way, it is a tough call and sometimes it just about setting a tone that we take pride in our home – its not just some rental.

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