My “Golden Rule” of real estate investing is this – The numbers never lie.
If you do not like what the numbers are telling you, move on to the next investment. Do not try to make the numbers fit or make the deal work by “fudging” the numbers. I have witnessed more than one real estate investor think they can keep repair costs down, tell themselves rents can be increased higher than the market will allow, or believe their vacancies will be less than similar properties. All in the excitement of getting the deal done.
Those are the properties that I end up buying. Why? Because those investors that fudge the numbers end up losing money. When they lose money, the property often goes into a death spiral. Losses accumulate every month. Repairs and maintenance are not done. Tenants leave. Losses pile up even more with the decreased revenue until the bank forecloses or the owner gladly sells at a loss.
Real estate investing is all about the numbers, and the numbers never lie. Ignore them at your own peril.
