Real estate investing, like life, is full of surprises. This is especially true for the first time real estate investor. Surprises arise in part from the fact that every investor and every property are different. These differences keep things ever changing and churning. So what first time real estate investor surprises might be in the works? Here are four that stand out to me.
People Do Not Keep Their Word
This may not at first seem like much of a surprise, but because of the nature of real estate investing your eyes may still get widened. Real estate investing, perhaps more than other lines of work, often relies on someone’s word. We have to have a good faith in this business that when someone says they have a deal, they really have it. When we develop a scope of work to be performed by contractors, we have to trust that it is what they will do. When given times for the completion of rehab jobs, appraisals and inspections, we have to assume that people will do things when they say they will.
Yes, getting things written down and solidified into a contract helps. But when it comes down to it, a lot of this business is based on someone’s word. Unfortunately, sometimes that does not go very far. And for me at least, I was surprised by the number of people who do not keep their word when I got started.
The Price Is Not The Price
Buying real estate is not like buying airline tickets. Sure, you can shop around and compare prices but have you ever tried haggling with an airline to get them to lower the price? It is not going to happen. The price is the price. Not so with real estate. Everything is negotiable. In fact, most will expect you to negotiate. You can negotiate almost anything, including the price, the time frame for the closing, who pays for certain aspects of the deal and on and on. Negotiation on almost any price in real estate is not only common, it is expected and this is a surprise for most first time real estate investors.
Repairs Are Always More Expensive
Repairs are a part of most real estate investor’s world. Rehabbing is often how we investor’s add and create value. We all try to do our best at estimating repairs but trust me, repairs are always more expensive than you thought they would be. Even very experienced contractors can have trouble here. There is always a surprise hiding in the wall or down in the basement. An “oops” portion of any repair budget is absolutely necessary.
It’s Harder Than You Think
Despite what you may have heard on some podcast or seen in a video, real estate investing is harder than you think. Real estate investing takes work. This is especially true as you are first getting started and climbing the learning curve. Real estate is just like any other endeavor that is worth doing. There are items to be learned and challenges to be overcome and they will not always be easy to do. But the potential rewards are so worth the effort.
Real estate investing is full of surprises. Even to this day after more than 15 years in the business I am still surprised at what I find. Experience has taught me many lessons but these surprises are what make real estate investing such a fun and interesting thing to get into. You just never really know what will turn up with your next deal.
What surprised you about real estate investing? Please share with a comment.
My first deal in 2003 was supposed to be a two bedroom one bath home. Once we acquired the property and started the rehab, one bedroom had two closets. Then we realized that it was really a 3/1. What a pleasant surprise. Simply add a wall and we increased our property value. The same house had been winterized. And the not too pleasant surprise was when we turned the water on and the water kept running and all of a sudden the kitchen ceiling fell in. That was not so pleasant. But a learning experience. It taught me “Always expect the unexpected.”
Jim,
At least you had a balance of surprises!
I also had to learn the hard way to always have someone on hand to listen while the water was turned on for the first time. YOu just never know what pipes have burst, been broken or stolen while the property was vacant.
Thanks for reading and writing,
Kevin