I have recently been remembering back to a time where I lost at least 20k on a Rent to Own (RTO) real estate investment in Barrie that went sour. Surprisingly, I was not upset about it. I saw MANY errors I made on the property and I am grateful that I didn't bring an investor along for the bumpy ride. That real estate property set the standard on how I do RTO'S today.
I suppose a piece of me is glad for the incredible learning experience, even though it was painful. In the world of real estate investing, a mistake only occurs the second time you make the same error. Prior to that you didn't know what you didn't know. It is important to be compassionate with yourself in this business; there will be a lot of wins, but there will also be some tough loses. My philosophy is, rip the band-aid off as fast as possible and move on. Staying in a situation to try to wait for the market to turn, or the situation to change in your favour just eats up precious time & energy, causes missed opportunities and often costs more money. Take stock, learn from every loss.
If you can clearly identify where things went wrong and how to prevent them in the future, a strange thing happens...your confidence builds. It is when we are unclear as to where the errors lie, that fear takes over and we shy away from any future growth/risk. That is how I was feeling after the 2008 stock market crash. An inability to see where I had gone wrong and how to protect against it in the future left me not wanting to play and believing that there had to be a better way. I found it in real estate but like everything in life, it is not perfect.
The 4 Things I Learned
The question still needs to be answered, what errors did I make that cost me so much money? Here they are:
- I trusted someone else's due diligence. Assumed because they were a specialized RTO company that they were the experts and knew what would be successful.
- I didn't research the market I was in to learn that it is not appreciating at all.
- I didn't meet the tenants in advance to determine for myself if they would be successful getting their own RTO.
- I bought a house way to old, with way too many things to repair that the tenant buyers simply did not have the funds for.
What I did here was pull out the specific errors I made, and highlighted them to ensure I never made those errors again. Moving forward in my RTO’s I now ensure that I confirm someone else’s due diligence, I fully research all aspects of the market, I always meet future tenants, and I review a house for repair work and budget appropriately. The main thing to take from this is, always analyze your soured deals. I analyzed this deal and turned it into a learning experience that helped me become better and more successful at real estate investing.
Contact me anytime if you need mentorship or training on your real estate investing journey
- Susan White Livermore