This is an article I wrote a few years ago. Again I am hearing the rumblings of some of my students who believe they can buy 100 houses or more every year and it scares me to death. I believe what this article says is so important for every investor to know. That is why I decided to have this article republished.
Recently I was talking to several of my students who each said they wanted to buy 100 houses this year. These students had listened to one of the guru’s who had bought and sold over one hundred houses in one year and are now teaching people how to duplicate what they had done. I listened closely to these bright eyed inexperienced students tell me they wanted to do the same as the guru and it frightened me to death. Later over dinner, I mentioned what I had just heard to my wife. She encouraged me to tell my tale of woe about the years of agony we experienced because I got too big for my britches and against my wife’s better judgment I had tried to do the same thing myself.
The reason the students frightened me was several years before, I thought I knew enough about buying and selling houses that I could easily buy 100 houses in a year. I thought it was a noble goal and I clearly believed I could create my fortune in months, not years. That is why I want to tell my story so every overzealous beginning investor will think before they set about to try to do the same.
My problem wasn’t finding and buying houses. I could make deals. I bought ten houses in one week. I was surely on my way to easily achieving my goal that year. Everything was going just fine until my contractor who had 3 crews working for my group of investors rehabbing the houses I bought unexpectedly disappeared and left town with a considerable amount of my money. At that point, I couldn’t find a contractor to finish my work because every contractor I contacted had more work than they could handle and simply didn’t have time to take on my projects.
It didn’t take long for me to realize I had a real problem. I had never thought about not being able to get the properties I bought quickly rehabbed and sold or rented before I made the decision to buy so many houses. I also never thought about the fact that to be able to do that many houses in a year, my overhead costs were going to be far greater than I had planned. I not only didn’t have contractors to finish my properties I had bought, I didn’t have in place many of the other people who provide services every investor needs. I simply wasn’t prepared to take on such a huge undertaking. Many times I didn’t know what day it was.
I didn’t have people in place in my business I needed such as, an insurance agent, a Certified Public Accountant who invests in real estate themselves who could give me the very best tax saving strategies. I didn’t have a property appraiser I could ask for opinions of value of the houses I was interested in buying. I didn’t have a title company I was willing to put my complete trust into. I didn’t have a savvy real estate agent to find houses for me to buy and sell the properties I didn’t want to keep. I didn’t have anyone to help some of my potential buyers clean up their credit so they could get a loan to buy one of my houses. I didn’t have Financial Friends who I could do deals with if I was short of money to get a deal done.
Next month I will continue what I believe any investor who wants to go big and buy many houses in any year needs to know.
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Until Next Month,
Good Luck and Happy Investing