Last time on True Jamil Stories, I discussed 5 of the most epic mistakes I made when I first got into real estate investing.
If you missed the first part, make sure you click below to catch up:
Ok good, you’re caught up.
If you can’t be bothered to look back, here’s the quick summary of mistakes:
Didn’t comp before signing a contract
Didn’t have an investor friendly title company
Got emotionally attached
Only worked with a small amount of buyers
Reduced the inspection period
Now, I did say I made 10 epic mistakes…
And I’m going to reveal the other five, career-ending mistakes now.
#6 – Limited Access Contract
A wise archeologist once said, “Snakes. Why is it always snakes?”
And yes, that is important.
Like my previous mistake of taking a shorter inspection period, I went for a deal where the seller would not allow us access to the home until we had closed.
I get it – the seller was extremely protective and paranoid about people being in the house because they owned a lot of valuable items and they were concerned that those items might turn up missing.
I let it slide.
So where do the snakes come in?
Well, they came in from the ceiling…
And the closets…
And the walls…
Yes, you read that correctly. I am not using the term to describe the seller; there were literal snakes in the house – they were in the walls, they were in the tub, they were in the pool…
I was literally Samuel L. Jackson on a plane full of snakes, except this was no plane.
(And… I'm brown…not black. So there’s that too.)
So while I respect a seller’s cautious nature about having strangers in their home, I will never sign a contract again until I’ve seen the house.
#7 – Multiple Buyers at a Showing & Being a No Show
In my 4th mistake, I told you a story about only working with one buyer while doing a deal and having them cancel on it after kinda stringing me along for a few weeks.
So this time, I made sure to have multiple buyers for a deal…
But that’s not the mistake.
The mistake was not being there when everyone showed up to view the property.
I was on vacation at the time and I thought it would eliminate a lot of time and hassle if I just brought all of the interested buyers – 6 at the time – to view the home.
Well, not only was the seller shocked at seeing so many people, but the amount of chaos that ensued was enough to convince that particular seller to stop working with me.
I lost the deal.
Do yourself and everyone involved a favor – when you set a date for a showing, show up!
This way you can answer any questions from the buyers and ensure that everything goes smoothly; this also helps to build trust on the part of the seller and any buyer you have.
#8 – Celebrating WAY Too Soon
This is actually a mistake I didn’t make, however it is one that I heard from someone I know and a common mistake I see from other investors and wholesalers.
This person closed a deal and made a lot of money, like $30k, which…if you’ve never had that kind of money before…
Well, there’s a higher probability you’re going to do stupid things with it.
Trust me, I know.
So this person comes into a cool $30k, but instead of saving it or investing it and continuing to build up their business - they went money crazy. The kind of money crazy that happens when people win the lottery…
They bought a new car, they went on a bunch of vacations…
Meanwhile, the process they had been building to get this deal done in the first place screeched to a halt. They weren’t following up on the leads they had, they weren’t cultivating those relationships…
And that $30k kept getting smaller and smaller and smaller.
Eventually, that money went poof (as did their real estate wholesaling business).
They ended up going back to their 9-5 job, which only deepened their depression.
Believe me, I totally understand what happened. My first deal I made about $45k after taxes and payments, and for younger me, that was the equivalent of winning the lottery.
And I did the exact same thing – I just spent money.
Now, I was still building up connections, but I wasn’t saving any of this money I was making because, let’s face it –
When we’re young, financial stuff is “future you’s” problem.
Well, future me and that individual both learned real quick what happens when you don’t plan.
Do yourself a favor when you make money on a deal – save it. Build up that savings account or split it between savings and an investment.
And don’t stop your business growth – keep following up with sellers and buyers, keep building relationships…
Make your business a business, not a side hustle.
#9 – If Something Seems Too Good to Be True…It Probably Is
When things look so great on paper, sometimes you just want to believe it’s truly something awesome… even in the face of some obvious red flags.
Oftentimes, it’s not.
A running theme in these categories of mistakes so far, is the fact that I (or my team) - on more than one occasion- did not have access to a property until after we closed escrow.
If there was ever a bigger red flag than being told you can’t view or have access to a property until after it’s closed…
I’m not aware of it.
We got a deal from another wholesaler who had a 3 bedroom, 2 bath property he was contracting. The numbers looked good and they were looking to make a fairly substantial assignment fee.
Again, the hiccup here was that we couldn’t get access until close of escrow.
And guess what?
When we finally did, this was not a 3 bedroom, 2 bath property…
This was a 2 bedroom, 1 bath property, meaning that the math on this property was off by hundreds of thousands of dollars.
Don’t be this guy by rushing through to get a deal done.
Not only does it give you a bad reputation among other wholesalers, other investors, and buyers, but it perpetuates a negative perception of wholesaling and wholesalers and that’s a no bueno.
#10 – Not Setting Up an LLC
Guys, probably the biggest, most EPIC mistake I have ever - ever ever ever! – done in my career is not setting up an LLC.
Now, I’m speaking mostly as an investor and as a wholesaler, but this is true for anyone who is starting a business…
Set. Up. Your. LLC.
SET IT UP!
And I’ll tell you why…
In the event that you get sued or you’re part of a lawsuit and you don’t have an LLC, all of your personal assets – your car, your house, your finances – are at risk.
This is so important, I’m going to repeat that -
In the event that you get sued or you’re part of a lawsuit and you don’t have an LLC, all of your personal assets – your car, your house, your finances – are at risk.
When my sister and I did a deal early on, I ended up in a lawsuit because the buyer decided to sue the rehabber I worked with.
And because I had used my personal name, my personal assets were at risk.
So what did I do?
I settled.
I wrote a check in order to protect myself…
Despite the fact that my contract protected me by clearly stating the terms and conditions and everything.
It didn’t matter.
At the time, I SAVED maybe $80-100 dollars by NOT setting up an LLC.
In the end, I lost thousands because of it.
The benefits for having an LLC are many – click below to read this article on what an LLC is and why you should have one:
Guys, I made these mistakes so you don’t have to, I’m hoping you take these as a learning experience you didn’t have to go through.
You can watch the full video of these when you click the link below:
As always, if you want even more guidance and support, come and join the largest wholesale real estate investing community aka AstroFlipping.