4 Things I wish I knew (Part 1)

I recently sold a house.  Ordinarily, I like to spend a little time reflecting upon what I could have done better with this property and how to fix it.  There are always tweaks that can be made to make the next project a little easier or a little more profitable.

This was not an ordinary house though.  This sale made me stop and think even more.  The house was one that I had owned for the last 5 years.  It was the fifth investment property I had purchased to flip and the first that I did not sell immediately.  There was no real point in analyzing the deal.  Everything was wrong.

You see, I bought this house before I invested in my education, used systems on a daily basis, and learned a host of other things that changed my business and my life.  I cannot fathom operating in this manner today.  In fact, I’m certain I would no longer be a real estate investor had I continued to operate by the seat of my pants.  It’s too hard, too risky and eventually your luck runs out.  I’ve seen it happen to many others.

With that in mind, here’s 4 Things I wish I knew then..

1)      Rehabbing homes can be a business or a job

Would you rather make $10 per hour or $1000 per hour?  It seems like a simple question and yet many rehabbers, myself included at one point, choose $10.  We get sticker shock when reviewing contractor quotes and decide that we can do the work for much less.  After all, if I save $1000 painting a house myself, that’s more profit, right?  Demo is easy and fun.  I should definitely do that.  Installing cabinets, vanities, lighting, etc. isn’t very hard either.

There is no rocket science involved.  An able-bodied person with time on their hands and access to Google/YouTube can do almost anything involved in rehabbing a house.  But, should you?

If you are the contractor, you are working a job and not operating a business.  Whether you want to become a full-time real estate investor or simply supplement your income, working a second job is the way to accomplish the goal.  You need to adopt a business owner mentality and find qualified people to do the work for you.  The time you spend on your business should be doing things that generate hundreds of dollars per hour not tens.

Plus, opportunity cost is real.  Spending 60-75 hours doing three $10,000 deals in a year is far better than spending 300 hours doing one $25,000 deal.  At the end of the day, your have more money AND more time.  That’s why you want to be an investor.

More than anything, I wish I knew this when I started.    (To be continued…)

Erik Hitzelberger has been Real Estate Investor since 2007. While learning the ropes in the market down-cycle, he now teaches others how to use his systems and leverage other people’s expertise to achieve their own goals.

Erik Hitzelberger – who has written 194 posts on Part Time REI.

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