Earlier this week, someone asked about real estate investments that I regretted. I've been really fortunate over the years, and all of my real estate investments have done very well for me. However, that good fortune comes with a lot of hard work. I believe the more research you do and the more information you have, the better. This includes information about the area, the property type, the financials, and the local demographics. You have to do your homework before you invest.
But... there was an investment that I made that just didn't suit my personality. I made the mistake of not doing enough research. I should have talked to more people who owned that type of real estate.
In my worst real estate investment, I bought a storage facility. I didn't own it for long, because I absolutely could not handle it the emotional side of it. I really didn't like the idea of people storing their things, but if they couldn't pay the rent, I had to repossess their stuff. These were personal, sentimental mementos! I just didn't have the stomach to do that. It wasn't a fun investment for me.
When you're getting into commercial real estate, like long/short-term rentals, you can't just look at the numbers. Before you invest, you have to talk to other people who have owned that type of property. What personality style does it take to manage that kind of investment? What are some of the common problems? What are some of the hidden challenges? The numbers won't tell you these things.
Just because something has the right numbers on paper to make you money does not mean it is an investment you will like. I like residential real estate, small commercial real estate, and short-term vacation rentals. These suit my personally much better.
Back when I initially invested in the storage facility, it was during a time when we didn't have the internet like we do today. There were no Facebook groups or YouTube reviews or Subreddits. Today, you can join a real estate investing group for any niche you are thinking of investing in, and you can ask current and previous owners about the realities of owning that type of property. They will tell you! We're so fortunate today because we have the ability to connect to people who love to share their experience.
If I could go back and invest in real estate all over again, the only thing I would change would be to do it earlier. Unfortunately, I didn't have a lot of money when I was starting out, so I had to earn it the old-fashioned way just to get enough to buy one property. And then I had to save up more money to buy a second property. It was a slow start, and if I knew then what I know now… Oh, the investments I could have made!
One of the biggest barriers to investing is getting enough money together just to start. The nice thing about investing in real estate is that income-producing properties can actually help you to get that property qualified, so that you may not have to bring as much money to the table. The only way to know is to do the research.
So many people don't crunch the numbers and investigate all the options because they are afraid. It can be really intimidating to open yourself up to investing when you don't think you have enough money. Lenders can ask some uncomfortable financial questions, but there's a lot of good, creative information out there. You just have to do the research to find it. If you want to be a successful investor bad enough, you will find a way.
My biggest investment mistakes can be chalked up to lack of research. If I had talked to other storage facility owners, I would have better understood what it took to manage this type of commercial investment. I was lucky and tenacious enough to start investing in my late 20's, but I wish I had started when I was 22 or 23. Think it can't be done? Think again - it absolutely can!
If you want to level-up your investing knowledge, we are doing a 3-day intensive Prosperity Strategy workshop in November in Palm Springs. Whether you are starting your investing journey or are ready to shift your strategy into high gear, this event will expand your knowledge and understanding. I hope to see you there.
By Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group, Denise Lones, brings nearly three decades of experience in the real estate industry. With agent/broker coaching, expertise in branding, lead generation, strategic marketing, business analysis, new home project planning, product development, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.