The following is a post created by Phyllis Rockower in 2015 but is still relevant. Her son, attorney, and real estate investor, William Bronchick, is continuing her blog as per her wishes and continue to educate real estate investors.
Avoid my real estate mistakes
I have made several big mistakes along the way of my real estate career. I am sharing these with you so you don’t make them. As I always say, “There are 2 types of people in the world; those who want to learn by their own mistakes and those who want to learn from other people’s mistakes”. The second type will be much more successful.
The first mistake I made was not realizing how rich you can get with real estate. I always knew you could make lots of money but it never sunk in that little old me could be really rich. I was in the right place at the right time but was not aggressive enough. If I had only held onto more properties instead of fixing and flipping, oh boy would I be rolling in it. Each property that I kept from 1998 until 2005 increased in value at least 3 times what I paid for it.
I was worried about carrying so many properties that were not making me much of positive cash flow. When these dodos did not pay their rent, I had to cover the mtg anyhow. There were months that I was laying out $7000 and not getting anything back. It was scary.
However, that should not have kept me from holding more properties. My mistake was not finding a partner who was looking at the future and could afford the negative cash flow. There are many people with money in cd’s or 401 k’s who don’t care about negative cash flows.
It’s good to fix and flip also, but don’t do only that. Look towards the future yourself.
Want to hear the dummy way to get rich in real estate?
Find a partner like we discussed above who are looking towards retirement. Buy a bunch of properties in nice areas with 15-year loans and let the tenants pay off the loans. In 15 years, it will not matter what the economy does, what prices are, what interest rates are, what appreciation has happened, If you have a bunch of free and clear houses, you are ready for retirement. – case closed!.
Another mistake I made was sticking to only low priced junky properties. If I had purchased more expensive properties, my bank account would be even bigger. Once again, all I needed was a partner who could cover me when these expensive properties went negative.
The wonderful thing about California is its expensive properties. Don’t be bummed by that. I had all these houses in Florida. When things tripled, they went from 20k to 60k. Big Deal. In California, these same types of junky properties in junky neighborhoods went from 60k to 230k. A lot bigger profit.!!!