3 Hard-Learned Lessons For Every Newer I...

I’ve got some hindsight for you today. Well, a few thoughts and ideas that actually come straight out of my world of hindsight.

JP Moses here, and it’s been said that hindsight is 20/20, and that can be so true it almost hurts.

The great thing about me looking back at all my shortcomings, faults, mistakes, poor judgement – and on and on – is that I can now present them to you as helpful, forewarned info. (Embarrassing, though, as some may be… I’ll fall on my sword for the sake of you, my fellow investors.)

The idea here is that you can learn from the wrong turns that I made in my real estate investing journey, and hopefully, you’ll be smart enough to learn from them.

While this lesson will definitely be useful for newbies… all you seasoned veterans out there – do not stop reading – you can also most certainly use this lesson as a super helpful reminder for things you may have forgotten about…

Because we all need these from time to time.

Those of you who know me, know that I started in this business around the turn of the century. (It’s neat to be able to say that, but makes me sound really old!) Using my 20/20 hindsight, I can say with passion:

‘Oh how I wish I’d had someone to get this honest with me when I first started. If I’d had that needed insight, I would have been SO much further ahead and would have done things SO much faster…’

So, here we go…

I’m going to serve you up a heaping helping of hard-learned lessons so that you won’t have to experience them in your own business.

Lesson #1 – Dangers of Deal Desperation

Do you ever entertain thoughts like this:

“All I want is 1 deal. Just 1 deal. I want to know what it feels like to close 1 deal. I don’t even care if I don’t make a penny. I just want to experience closing my first deal.”

If that’s your attitude, I gotta tell you that you’re treading in some dangerous waters. I had that overzealous attitude as well. I was so green but oh so eager.

Here’s the thing – the excitement and hunger is a good thing. That’s what motivates you to get out there and take action. But use caution - don’t let it mess with your head and cloud your good judgment.

Important Reminder: You’re not in this business to do deals, you’re in this to help people solve their problems and make money along the way.

lesson If you’re doing a deal just to do a deal, you’ll live to regret it. It establishes the wrong attitude and bad habits, right at the outset. In all these years of hanging out with, partnering with and mentoring new investors, I can tell you without hesitation that it will end up costing you in the long run.

I’ve seen it happen too many times to count.

Lesson to Learn: Make the sacrifices needed to land that first deal, but make sure it’s a good deal. Why go for anything less?

Learn at the starting gate what makes a good deal. Set your priorities early on, two of which should be:

Maintain integrity
Make money

Be sure you know your market and understand the fundamentals of analyzing profitable deals. Go with the numbers that make good sense – even on your first deal.

Nothing wrong with taking a risk in this business… but you must realize that there’s a big difference between a calculated risk and foolishness. You’re going to feel much better about yourself if that first deal actually results in taking a check to the bank.

That’s the experience you should be looking for!

Lesson #2 – Be Cautious When Choosing Your Mentor

Have you ever heard me tell the story of my first local mentor?

The upshot is: He took me under his wing… to the cleaners. I’m not using this lesson as a place to vent blame but rather to send out warning signals and hopefully save you some grief.

At that time, I was so green I literally did not know what I did not know. (Know the feeling?) It was a painful lesson, but a lesson well learned. I got taken in by the best!

Here’s some of what happened…

Those patch-n-paint rehabs he was letting me “steal” from him at 80% of appraisal weren’t rehabbed all that well, clearly proven by how they started falling apart within a few months of me buying them.

Then there were the second mortgages he took back and assured me he’d simply forgive. That was loan fraud. Oops.

Then I was sold on the deal that $600/month for rent would give me $200/cash flow – nothing mentioned about the $400/month PITI. Another oops. That left nothing in reserve for repairs and/or maintenance. Come to find out his poorly rehabbed houses were scattered all over the place.

So what went wrong? I thought I was doing the right thing in latching on to a mentor.

What went wrong was my eagerness to grab the first investor I’d ever met. And I had no idea the sign hanging on my back spelled VICTIM in bright red letters and the sign across my forehead spelled SUCKER.

Yea, it was that bad.

He saw me coming from a mile away. His offer to “take me under his wing” was music to my ears. This meant I believed everything he said and did, some of which was questionable – some of which was illegal.

It took a while, but finally the light bulb came on for me! Believe me when I say this lesson cost me dearly, both in time and money. It took years for me to recover.

Lesson to Learn: As a newbie, beware of being bedazzled by stardom. Just because an investor is successful doesn’t mean that person will be a good-fit mentor for you. It doesn’t even mean they will have your best interest at heart. Same goes with seasoned investors who, perhaps, are interested in doing JV deals.

So, ask lots of questions. If they’re unwilling to take the time to answer them, chances are they’re not a good choice.

Ask for references only to learn if this is a person of high integrity. My best advice: Trust cautiously and verify well.

More to Come

Well, that’s 2 of 3 painful lessons I learned from the School of Hindsight Hard Knocks. In my next lesson, I’ll share with you #3 – how much investing education is too much and scams and red flags to be aware of regarding courses, classes and seminars.

More really useful information in that follow-up lesson – stuff I wish I’d known way back when. I think you’ll be glad you’re learning it sooner than later.

See ya next time…