2023 has been a whirlwind of ups and downs. Many lessons have been learned along the way that I will carry with me into 2024 and beyond, especially as it comes to my focus in real estate investing. Reflecting on this year during this blog post will allow me to extrapolate lessons based on some of my experiences this year so I could learn from them and share what I’ve learned with you, the reader. This has been my most action packed year to date full of first time experiences. There’s a lot to unpack from 2023.
Lesson 1: Don’t bite off more than you can chew
In 2023, I tried my hand in all different sorts of real estate investment opportunities. In the first half of 2023, I bought as many properties as I could. I raised a few hundred thousand dollars of money to fund these investments from private money lenders who I established relationships with as well as family members. I bought deals in Texas and Florida in as many cities as I could. Tampa, Winter Haven, Houston, San Antonio, Killeen, Copperas Cove, along with a few others were the cities I chose to buy in. The excitement of buying these properties was overwhelming. I was finally doing what I set out to do from the start and buying my own properties! I couldn’t believe all of the success I was having. My plan with the majority of these was to do what is called a wrap where I take over a low interest rate mortgage and wrap it into a new higher mortgage for a buyer who can’t qualify for a bank loan. In concept, this worked perfectly and allowed for extremely high cash flow to be realized. The mistakes didn’t wait for the excitement to settle down before it began to crush my spirits. Holding costs on these properties began to add up and finding these wrap buyers didn’t get any easier. I spent the first half of 2023 buying properties like crazy and the second half cleaning up my mess from the first half of the year! I had to figure out how to pay back a handful of private money lenders, find buyers for my houses, and do it all within a 3-6 month timeframe! I was working on over 10 of these deals at once! Right now as I write this, I still have 4 of them I have yet to sell. 2 of them I plan to turn into regular rentals and break even on. One of them I will turn into a rent by the room . The third one, I will continue to hunt for a wrap buyer. This buying frenzy created more work and issues for me than it did benefits in 2023. In 2024, I will take this lesson with me and only take on what I have the capacity for without the excessive risk I have dealt with in 2023
Lesson 2: Have a solid plan before you execute
The worst purchase I made in 2023 was a property I forced myself into buying. It was originally supposed to be a wholesale deal, but the buyer backed out last second days before the closing. My team and I decided to take on the property ourselves and implement his plan even though we didn’t have any experience executing a plan such as his in the past. This turned out to be the mistake of the year and it cost us tens of thousands of dollars. To purchase the property in such a short timeframe, we took on extremely high interest debt. We paid that debt back late because we were unable to execute our plan and racked up on additional 5k+ in late fees. To pay off this lender, we had to borrow money from another lender, something that cost us an additional 10K. During this process, we dealt with trespassers, damages, trash outs, and so much more. My partner had to fly out there because it got so bad! We are still sitting on this property paying holding costs. Our hope is that we find a wrap buyer who can break us even every month on the payments and make us whole over time. Buying this property without a real plan because we felt the pressure to perform was a mistake we’ll never make again. If you fall for this trap, it could cost you 10s of thousands of dollars like it did me…
Lesson 3: Trust but verify
Unfortunately, not everyone is ethical and has your best interests in mind. There are parties out there, many of which I dealt with in 2023, that put themselves ahead of others they worked with even if it meant putting other parties in really difficult situations. Whether this was from overpromising and under delivering on expectations or just flat out deceit, both reared their ugly head in 2023. It’s not a great approach in my opinion to go into every dialogue and conversation you have business or not questioning someone else’s motives or intentions. However, if someone raises a red flag, make sure to take note of that and distance yourself quickly. I won’t get into specifics but this was a problem for me in 2023. Additionally, many people out there will view you as expendable and only reach out to you when they need something. Watch out for these people as well. They won’t be there when you need them the most. This is a sad reality, but you should still approach relationships and opportunities with optimism unless given reason to believe otherwise.
Conclusion
These are just some of the lessons I’ve learned in 2023 that I’ll take with me in 2024 and beyond. By far, these three are the most important ones I think people need to be aware of. Not adhering to any of these lessons can put you in a bad spot and my hope is for you to be able to avoid that after reading this. Make sure to be vigilant of the potential pitfalls of what you’re undertaking, but don’t be afraid to seize opportunity when it presents itself! Use these lessons to take skillful and precise action as we enter into 2024 and beyond!