My blog readers might notice that I committed many real estate investing sins. I have learned lessons. Today, I travel the path of a reformed terrible real estate investor. I’m not half bad. I’ve had many successes after many failures. Here is another early failure.
I bought a distressed two-bedroom San Antonio investment property for $40,000 in 2008. It needed a new roof, siding, and major plumbing work, including a new plumbing line to the main line at the street. I chose a contracting company for the $25,000 rehab that a friend recommended.
A mistake, and one I made multiple times in my early distressed property investing career. Haste. I wanted to become a successful real estate investor, but I cut corners to reach my dream. I was impatient.
A sad fact about the real estate business is that many scammers are attracted to it like flies to…well, you know. The FTC reports 83,000 complaints about home renovations and improvements every year.
My contractor’s rehab work was subpar. After he completed the work, the ‘new’ roof leaked, the ‘new’ siding started to peel off after five weeks, and the ‘new’ plumbing system stopped up under the pier and beam foundation. A smelly mess ensued.
I knew one of the laborers the contractor hired on my house. He called me a month after they completed the work. Sad news, he told me. I paid over $10,000 for new materials for the roof and siding. But my friend told me the contractor had the workers grab old materials off piles of scrap in the alley. They used old shingles and older siding to rehab my San Antonio distressed property.
I don’t know what the contractor did with my $25,000, but it didn’t go toward new materials for my San Antonio investment property.
I had to pay another contractor $20,000 to redo the renovations. Eventually, the house became successful and provided steady rent to me for almost 10 years. However, it took five years to turn cash positive.
Lesson – Choose your San Antonio investment property contractors carefully. I recommend driving by the property every week during renovations. Watch your contractors and the quality of work they perform. Vet your contractors carefully. Check online reviews and call their references.
Last tip: Don’t be hasty in real estate investing. Success will come, but only with patience and discipline.