I closed my first rehab / flip house Aug 22, 2006. In honor of my fast approaching 8 year anniversary as a real estate investor, I thought I'd explore some, just a few, of the many mistakes I've made over the years.
I bought a mobile home in a senior park with $800 space rent during the collapsing economy. I was told not to do the deal by my good friend Chris Carlson, a much more experienced investor who just got out of a horrible mobile home deal. I did it anyway thinking "I'll show him." All I showed him was how me and my partner each paid $10,000 to get rid of the mobile home.
Then me and that same partner bought another house out in Palm Springs. Didn't understand the market out there. Six months later we netted a whopping $2,500 each... on paper. That doesn't account that Palm Springs is 1.5 hours one-way from my house and I spent a lot of days out at that job. If I recall correctly, we didn't work together too much longer after that deal.
I used my IRA to buy a second mortgage on a mobile home. After a year, the borrower stopped paying on the first loan. The first foreclosed, but failed to notify me. I called them up and notified them they now owe me as I'm in first position. I should have shut my mouth because they hadn't yet recorded their deed so they just did the foreclosure all over again and wiped me off. Luckily I salvaged the note out of my IRA with another deal, but that is $5K plus interest I'll never see again.
I refinanced one of my high equity rentals to a 10 year I/O just before the economy collapsed and used the money to pay way too much for two rehab/flip houses from wholesalers. The economy stalled and started collapsing before I could sell them for a profit. Should have just gotten rid of them and been done with the loss. I still own both of them today and they once again have some equity in them, but that refi'ed rental house is still upside down! LOL
I put $18,000 into an out of state apartment deal. Never saw a dime returned. The guy who put the deal together disappeared along with $2.7M in other investor's money, I'm told the woman involved is claiming mental illness and I've also been told the building went to foreclosure. You can't make that one up!
I once bought a house subject to another investor's hard money loan. I then sold the house to yet another investor, but I gave him the deed before he gave me my money or paid off the first investor's hard money loan. (I don't recall exactly how I was ever that dumb, but it happened.) I found out he wasn't paying on the loan so I had to make the payments and every week I begged him to deed me the house back even emailing him grant deeds. Although, I did eventually come out whole on that deal and with a very good profit when he finally got his refinance through, there were MANY months of waiting that didn't feel too good in my tummy while writing checks to cover one investor's loan on another investor's house.
I've got so many more... It's only money! Let the education continue....