Today I want to tell you about the biggest real estate mistake of my life.
Back in 2007— the very height of the market, but soon to be the very bottom—I had recently bought a multiplex on the east side of San Antonio for $150,000. I thought I was buying a place that would be easy to manage; I’d just hire a property management company and everything would run smoothly.
It wasn’t like that at all.
It turned out that nobody wanted to manage the home. I had a really hard time finding a high-quality property manager because rents were around $500 and there wasn’t a lot of money in it for the property management companies.
The property quickly became a lot of work. I had multiple drug addicts apply, as well as people who would lie and try to scam me to get in—it was awful. There were lots of repair requests, since the place was old, and the police were called many times. It was a revolving door of tenants, but I sucked it up and worked really hard to manage the property.
I did have a 15-year note, so I was able to get the cash flow from the property. But in that time, the market went down; I had purchased it without really looking into the numbers. As it turned out, I had really overpaid for it, and then I was forced to sell it because there was so much work involved, not to mention the fact that my real estate reputation was at risk.
I ended up selling the property for around $100,000—what an awful investment! However, my note went down to $100,000, so all in all, I didn’t really lose that much money when I sold the property.
In the end, my mistake was caused by my own cockiness, overconfidence, and my ignorance about the market. I hope this story can help save you from a lot of sleepless nights where you have to deal with really bad tenants!
If you have any questions about this story about investing in real estate in general, don’t hesitate to reach out to me. I’d love to hear from you.