March 21, 2025 • 27 mins
Podcast Intro
Propstream
PropStream is real estate data and analytics platform where investors can get an abundance of info .
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to the Professionist Real Estate
Investing Podcast.
Speaker 2 (00:03):
I'm with my guy who oh, you know, it's Marcus Harvey
.
Property Relief in the Housefor another episode the
Professionalist.
You know what it is.
Speaker 1 (00:12):
Yes episode Avoiding Costly Mistakes as a New Real
Estate Investor.
Speaker 2 (00:17):
Let's do it.
Speaker 1 (00:18):
Yes, first part.
Like to get into this.
I don't like beating around thebush, I just like just going
straight at it get at it.
Hey, number one, not doingenough market research.
You just can't be going outthere just saying, hey, that
property looks good, and justyou know what, how much is it?
Speaker 2 (00:36):
I'm gonna buy that property right.
Shoot me a number, I got thisexactly right.
Speaker 1 (00:40):
I'm not gonna even do my research and my due
diligence right now I'm justgonna.
I just want this propertybecause it's it looks good.
Speaker 2 (00:46):
Right, right.
Speaker 1 (00:47):
That's definitely not the way to go, so investing in
the wrong location withoutchecking local trends.
And it says Over that therental demand for property
appreciation.
Speaker 2 (01:03):
Yeah, yeah.
Speaker 1 (01:04):
Yeah, that's just, that's just all bad.
If a person goes through that,you just can't go out guns
blazing and be like, hey, I likethe way it looks, I just want
to pay for it, right.
Speaker 2 (01:13):
Yeah, yeah, you got to do the numbers, you got to
run numbers.
It has to make sense.
Speaker 1 (01:19):
It does.
So that brings another partoverpaying for a property,
getting emotional instead of youknow it's just crunching the
numbers and numbers, yeah, yeah,don't, don't get your emotions
involved with it.
You want to make sure thatyou're going to be paying for
the right amount of something,right, right?
Speaker 2 (01:35):
Right.
And the next one you havefailing to negotiate or
understand fair market value.
Yeah, if you're going into adeal and you're not negotiating,
you already lost.
You always have to be able tonegotiate, see if there's a
better deal for you, um, andthen you have to understand the
fair market value.
Um, you know people are goingto want to list and put their
(01:57):
houses for sale at fair marketvalue, even if it hasn't been
updated.
The house hasn't been updatedin years.
They still think they can getfair market value, which is
crazy to me.
Speaker 1 (02:10):
And I would say too, you know, if you are definitely
uncertain about it, get acredible, reliable lawyer.
I mean a lawyer, a lawyer tohelp you out and get in a
realtor.
Absolutely, you want.
You want to make sure thatyou're just going about this.
I've seen so many people justlike hey, I like, I'm like, have
(02:30):
you done your research or duediligence?
No, I, just want to go by.
I'm like hold on, let's do thecomps around here for the past
six months, six, nine months ormaybe even a year, Right.
Speaker 2 (02:39):
Right.
Speaker 1 (02:40):
Right, so make sure you're not.
Your money works for you.
Speaker 2 (02:42):
Yeah, yeah, because you don't want to just go in
there and be like, oh, that's,that's how much they want.
I think I got that, let me justpay for that.
No, it's a whole process behindit.
You've got to be able to buyright and be able to be at the
right price point where it'sgoing to benefit you in the long
run, depending on no matterwhat strategy you're trying to
(03:03):
do in the long run.
Speaker 1 (03:04):
Depending on no, no, matter what strategy you're
trying to do.
And then the next one saysunderstanding, repair and hidden
costs.
Speaker 2 (03:10):
Yeah.
Speaker 1 (03:10):
I think a lot of people get.
They don't understand that partor it's not.
It's not even understand it.
It's like out of sight, out ofmind.
Speaker 2 (03:20):
Yeah, it's not even.
It's not even transparent tothem.
So they're just like oh, youknow.
Speaker 1 (03:24):
I, you know type of thing yeah, I forgot about those
total, those hidden costs andthen like the hidden part with
me when, when somebody sayshidden, first thing I think
about is plumbing yeah, yeah,that's that's one part.
I see.
I'm just like what you and like, how's the plumbing here?
Speaker 2 (03:41):
do you have septic, do you I?
Speaker 1 (03:42):
know you live way out in the country.
Do you have septic?
How's the plumbing here?
Do you have septic?
I know you live way out in thecountry.
Do you have septic?
How's your water pressure?
Right, right, I know.
Right now I have a house out inthe country.
The house is basically it'sbeen built About 75 percent, but
the thing about it is is he hasspring water but the water
(04:02):
pressure is not at thespecification for the city so
they have to, they have to.
Um, I have to do my duediligence and tell whoever wants
the place.
Yeah, hey, that you're gonnahave to build a well and that's
gonna cost anywhere between 15to 20k.
Yeah that's gonna be priceyright there yeah, because you
(04:22):
want to make sure the waterpressure to the house is just
right.
You don't want it tricklinginto your house.
Speaker 2 (04:27):
Yeah, yeah, it all has to make sense, all the way
down to the water pressure, tothe electricity, to everything.
It has to make sense.
Speaker 1 (04:39):
It says not factoring in vacancy rates, property tax
and the lovely insurance,especially in this state.
You want to make sure, you wantto know it's good to know and
find out like up hand, like howmuch something is going to be.
Yeah, and especially with theinsurance, like because I know
it was at home home warrantyinsurance, fire insurance, like
(05:02):
I tell everybody, especiallyhere california, everything's a
fire zone yeah we're, we're,every, every, everything's at
fire risk here when it comes tothe state from southern
california.
Speaker 2 (05:12):
What's going down in in in that area?
Um, um, the the fires they justhad um down there all the way
up here.
That happens every summer.
Yeah, there's a fire all thetime.
Speaker 1 (05:23):
Yeah, yep.
And then choosing the wrongfinancial financial strategy.
That's another one.
That's huge.
Yeah, it says high interestloans that can cut into your
cashflow, and not having haveenough resources for unexpected.
We talked about this beforeUnexpected expenses.
(05:45):
Yeah, we talked on otherepisodes.
Speaker 2 (05:45):
Have enough resources for unexpected we talked about
this before unexpected expenses.
Speaker 1 (05:47):
Yeah, we talked on other episodes we talked about
like capex and stuff like thatand just other expenses that
people just don't uh account forwhen it's time yeah, and
especially, I was thinking toowhen, especially comes to
investing, you want to make sure.
So the main things I woulddefinitely look out for is the
roof.
Speaker 2 (06:05):
All is the roof.
Speaker 1 (06:06):
Yeah, how's the?
How's the plumbing?
Another one that a lot ofpeople don't think about is is,
I say what, their landscape?
And they have a huge tree inthe yard.
How far are the roots in theground?
Is those roots uplifting thedriveway Is?
Speaker 2 (06:22):
those roots uplifting the driveway?
Yes, yeah, yep.
Is it breaking any concrete up?
Is it wrapping around any majorplumbing or pipes that I might,
you know, need concern, beconcerned about?
You know?
Yeah.
Speaker 1 (06:35):
Like the upgrades.
The hot water heater yes, hotwater heater is a big one too,
even when it comes down even toappliances one too, um, even
when it comes down even toappliances.
But that that the appliance oneis not really a big thing,
because if you buy somethingit's going to be up to your
preference, like what you wantanyway.
So yeah, that's an easy fix,yeah, but it's the, it's a, you
know the sight unseen with theplumbing, uh, the trees, uh,
(06:59):
because those trees, even thetrees, the, the, the line of
what property is yours comparedto your neighbors.
You want to make sure you knowexactly where, because there's a
lot of properties where peoplethey thought they knew something
was at and that's not actuallythe property.
You want to make sure that youget it at the right.
You want to make sure you goright accordingly to what's your
property and their propertyExactly.
Speaker 2 (07:21):
Exactly.
You definitely want toestablish that right off the get
go.
But going back to the choosingthe wrong financing strategy
though you have high interestloans that can cut into your
cash flow as an investor, youdon't want to go that route.
You want to make sure you havethe right financing strategy,
depending on the property or thesituation of the property, and
(07:45):
then not having reserves is abig one.
It can really really just killyour deal for the rest of the
year If you don't have reservesto do fix, to do repairs and to
fix on your property.
Speaker 1 (07:59):
You know it's very important.
Yeah, you don't want to look.
You know it's very important.
Yeah, you don't want to look.
You don't want to look bad whenyou look in an area that has
excruciating heat during thesummer and the AC breaks down
and there's a family of fiveliving in, living in that
investment property that youhave and you don't got enough
funds.
Speaker 2 (08:19):
And they just brought a brand new newborn baby home
or something.
So yeah, you don't want, youdon't want to be that one, yeah,
so you want to make sure youaccommodate your tenants, to
make sure, like, your propertyis working efficiently or your
heater and AC works, your, your,your plumbing works, um, no
crazy, um, electrical issues andstuff like that, and, um, you
(08:40):
know, um, make sure you save forreserves, save for repairs and
to get other financing otherthan a high interest loan.
It's going to be way better foryou and way better for your
cash flow at the end of the day,especially here in California
where cash flow is hard rightnow now.
Speaker 1 (09:08):
So yeah, and I was thinking also too, and also the
more mortgage lender, whoeveryou're dealing with, let them
know.
Let them know that you want toget the best possible loan
program for you in your your umsituation oh yeah, because
there's so many different.
There is so many differentoptions when it comes to the
mortgage loans that you can dealwith that you probably had no
clue about right, right exactlythe next one.
(09:31):
This is a good one too.
Yeah, trying to do everything byyourself yes, it's failing to
build a team agents, contractors, lenders, mentors not learning
from experienced investors.
Speaker 2 (09:45):
Yeah.
Speaker 1 (09:46):
Yeah, don't do this all by yourself, cause, yeah,
you, you, you think you're goingto be saving money.
Actually, you're going to bespending more money than you
thought.
Yeah, yeah.
Speaker 2 (09:54):
And I've heard that so many times from other, like
people on podcasts and otherpeople, other experienced
investors you have to build ateam.
You can't do every job byyourself.
You don't even have enough time, you know during the day to try
to do everything yourself.
So let the mortgage lender dowhat they do, let the agent real
estate agent do what they do,let the contractor do what they
(10:16):
do and you know like.
Like you said, learn fromexperienced investors yeah, it's
like a, it's like not.
Speaker 1 (10:23):
you're not necessarily a big puzzle, but
it's a small puzzle that eachpiece play their part and then,
the picture comes all togetheras one.
Speaker 2 (10:30):
Yeah, exactly.
Speaker 1 (10:33):
And then, um, here's what you need to do.
This is the part thatstrategize how to avoid these
costly mistakes.
The first one is you need tohave a mentor, or I should say,
master, market research, so youutilize tools like Zillow or
Ritameter or the or the MLS.
It is not not the MLS that umrealtors use, but it's the other
(10:59):
one.
Speaker 2 (11:00):
Yeah, the public.
The public one um realtors use,but it's the other one yeah,
the public, the public one.
Speaker 1 (11:02):
Yeah, you use those, as you can use those as your
research tools.
Zillow I will say this zillowis a great tool, but do not use
the zillow meter as thereference is using of how much
the house is.
Speaker 2 (11:19):
Right.
Speaker 1 (11:20):
Right, that's just a guesstimate of what they think
it is, but it's not the bestcredible.
Speaker 2 (11:27):
Yeah, I think Zillow calls it a zestimate.
Speaker 1 (11:30):
Yeah, the zestimate Using the Z.
Speaker 2 (11:33):
Yeah, I like Zillow too, but I feel like sometimes
the range is off with theproperties and some of the
numbers might be off.
But you know, I'll look atother listings and then they'll
be exactly what MLS is.
Speaker 1 (11:48):
So it's just a hit and miss sometimes with Zillow,
but you know Zillow's still goodit is, I tell, as long as you
got options, you know just don'tjust don't use one, use a
conglomerate of right,conglomerates of them, and and
then then you use your judgment,use good judgment and if you,
if you need any help, talk totalk to a realtor, broker,
(12:12):
realtor, yeah, investor, someonethat kind of just, you know,
just get their opinion, hey,their opinion.
Speaker 2 (12:18):
Hey, what are you using, like, what are you using
to comp properties or to evenestimate what properties are?
Speaker 1 (12:24):
Yes, you know and then it says running the numbers
like a pro yeah, you want torun these numbers.
You want to make sure that youare not spending unnecessary
money.
You're trying to make profit,not lose money off of this money
.
You're trying to make profit,not lose right money off of this
.
Yeah, exactly.
And says how to you know how tostress test your investment.
(12:46):
Um, worst case scenarioplanning yeah, and that comes
also.
That comes with it too, with,you know, putting that
collateral on the side for arainy day if something breaks
down also, yes, unexpectedexpenses, yeah, yeah it says
budget for unexpected, which wejust talked about, setting aside
reserves for repairs andvacancies, especially the
vacancy part.
So it's not like, especiallywith the home, if, uh, if you
(13:10):
have somebody move out and youdon't get a person to rent the
house and you know in in a, andyou know that in that month's
time, right, who's stuck withthat rent?
You, as an investor, you'restuck with that rent.
you got a mortgage payment yeahyeah, but then if you deal with
you know, with you know, likewe've talked so much about
(13:30):
multi-family syndication,everything you have leeway
because you got, you have doors,you have doors that can help
you out right, but when it?
Comes to single-family homes,you don't have that privilege.
You still, you know that'swhere that collateral comes into
play, because you don't, youdon't, you don't know if you're
going to get the good, therenter that you need to be in
that house.
(13:50):
You just, and the thing is,don't take any type of renter.
Speaker 2 (13:52):
Also, because they got money, exactly, exactly,
even the even.
Even with the two to four doors, um, multifamily, one can one
person leaving is just going tohurt you because you gotta oh,
you gotta turn the prop, yougotta turn the unit over, you
gotta get a new tenant, um, makesure everything's good again.
It's just starting all overagain.
So like, yeah, two, two to fouris it's just like having one,
(14:16):
one single door it is, you know,you lose one or two tenants out
of the two to four and you'reback to.
You're back to square one,almost so and what it makes
sense too.
Speaker 1 (14:25):
Because, yeah, because, when you get that, no
matter from one to four, that'sstill that, that residential
loan still residential it's noteven a commercial commercial
yeah still dealing withresidential rules exactly.
And then it says, uh, pickingthe right financing strategy,
conventional versus hard moneyor creative financing.
(14:46):
You know we got our guy Pace.
I love Pace to death.
Speaker 2 (14:49):
Yeah, he got that creative Shut up, Pace.
Speaker 1 (14:50):
Morby, he has that creative financing down to a T.
Speaker 2 (14:54):
Oh yeah.
Speaker 1 (14:55):
And then you got the regular conventional loan and
then the hard money, the hardmoney loan.
It can be a plus to you.
I think of the hard money likekind of like a loan shark.
Speaker 2 (15:06):
It is kind of like that, because it's like you know
, hard money, they're going tocharge some points, they're
going to charge that highinterest, but you need the money
.
Speaker 1 (15:14):
We got the money for you, but this is what that
interest rate is going to beRight.
Or your credit is like this oh,don't worry about it, we got
you, we'll get this deal done,no matter what.
And this is surround yourselfwith experts.
It says finding a mentor,joining an investor group,
building a strong team, realtor,property manager and contractor
(15:37):
.
Those are all helpful for youto succeed.
And, like I said, it's it's nota big puzzle, it's a small
puzzle.
Everybody plays their part tomake that picture, make you know
that picture come about.
Speaker 2 (15:47):
Right right.
Speaker 1 (15:48):
Exactly, and this is uh about the costly, a costly
mistake, how to avoid it.
It says um, how to share.
I'm trying to think how to havean example, as if all I know is
I've come across some peoplewhere they they just bought uh
(16:09):
stuff just because of, um, offof emotions, yeah, yeah, and I
was, I had to, you know, had topump the brakes on them on that,
like no, no, no, you can't.
Let's, let's, uh, let's, dosome research, let's see, right,
let's see what you're workingwith and like.
And I I talked to say who'syour, you know your lender, you
know your lender, you know cause, your mortgage, your mortgage,
uh, broker, that they, they playa huge part of what you can be
(16:33):
accepted for, yeah, or it's asituation where I have a friend
named such and such and they didit.
Speaker 2 (16:39):
So I want to do it there.
You know they it's it's.
You know they won't be likethat Exactly.
Speaker 1 (16:43):
They're, you know they, it's, it's, you know they
don't want to be like thatExactly, and every story is
that's every.
Every story can't have thatsame story.
Speaker 2 (16:48):
Right, exactly, exactly.
You can't want to just all theway copy what your friend or
what your this, this othercouple has done, or whatever the
case you want to be able to.
Every deal is different, every,every, every.
Uh, what do you call it?
Every deal is different.
Every, every, what do you callit?
Every, every house is different, every situation is different
(17:12):
all the way from the loan to thenumbers, to how much it costs
for the property certain repairs.
So your situation can't beexactly like your friends.
Yes, exactly yeah, don't go bydon't go by that, that that
situation is different.
I saw them do that.
Why can I have that?
Well, I mean, it's a differentsituation, so exactly, yeah,
(17:35):
yeah.
Speaker 1 (17:36):
so these are how to avoid making uh costly mistakes
and errors when buying a uhbuying a piece of property as a
new investor, because, yeah,it's a team effort.
A lot of people get in it fordifferent reasons in investing,
(17:57):
but the longevity of it isalways long when it comes to
real estate investing yeah, forthe most part.
Yes, this is not a short game.
This is a long game when itcomes to it.
Speaker 2 (18:03):
Yeah.
Speaker 1 (18:05):
So just to let you know the world out there know it
says you know, start witheducation, educate yourself.
Books, podcasts like this,networking yes uh, there's many
networks that you can go to whenit comes to real estate
investing.
Uh, analyze multiple dealsbefore buying your first
property.
If you don't know how to goabout doing it, talk to an
(18:27):
experienced investor, or talk toa realtor, or even to a
mortgage broker.
You want to make sure thosenumbers are good for you.
Speaker 2 (18:34):
Yeah, Look at plenty of deals before you just commit
to something you know.
Just look at plenty of options,because there's so many options
.
Speaker 1 (18:43):
Yes, and then get multiple quotes and repairs and
financing.
That is huge.
Don't go by the first one.
Yeah, I would say go by threeor four.
Speaker 2 (18:52):
Yeah, I say minimum three quotes for, for, for
repairs and then for financing.
The same, if you if at least aminimum of three.
If you want to do five, just topick one out of the five,
that'd be cool too.
But at least get three, aminimum of three quotes.
That way you can choose whichone you want to go with, and it
don't have to necessarily be thecheapest one, it's just, you
(19:13):
know, the one you feel confidentabout.
Speaker 1 (19:15):
So yes, and he says have an exit strategy before
investing, because it's a longgame.
But then eventually, you know,eventually you're gonna, you're
gonna let that property go.
You might, you might, uh, youmight invest it somewhere else
or you might go into asyndication deal.
He's like you know what I'mtired of?
I'm tired of the single familyhome.
(19:36):
I'm going to multi-family,right see, I want, I want, I
want more doors under one roof,right yeah?
Speaker 2 (19:42):
exactly you.
Just because the, the, the nameof the game in real estate is,
eventually you're going to,you're going to want to scale to
a certain level.
You know, whatever your visionis, if it's starting out with
one to four and then you've beenthere for a few years and you
want to scale up to multifamily,you know that's, that's just
how it goes, you know.
(20:03):
And then some people go furtherand want to go commercial.
You know yeah uh, multi-familycommercial, or even uh uh um
industrial commercial, or, or orskyscrapers, you know stuff
like that big buildings exactly.
Speaker 1 (20:17):
I view it like you.
Just you're just graduating uphigher on the ladder?
Speaker 2 (20:20):
yep, you just graduate and that's all you're
doing.
Each level, you're graduatingand and, and you know trying to
figure it out, you know, butsome people stay with the
strategy that works best forthem as well.
You know.
Some people aren't going to gofor whatever's the most money,
they're just going to like.
You know what?
I'm making a little bit ofmoney.
This is kind of like it's notstressing me out, so I'm good
(20:43):
with it, you know know.
Speaker 1 (20:44):
Yeah, so, but everybody's different.
You know it is, it is, and thenanything else you want to say.
Speaker 2 (20:50):
So, the only thing I have to really say about this
topic, um to avoid costlymistakes as a real estate
investor, um to to recap, and umsome key takeaways I want to
say is make sure you're runningyour numbers.
Make sure the cash flow isgoing to be there, um, depending
on your strategy, um make sure,um you take care of your
(21:13):
tenants.
Speaker 1 (21:14):
Oh, yes, to make sure they're happy.
Speaker 2 (21:16):
Um, and to avoid costly mistakes, um, make sure
you're doing the right financingfor the for for the property um
in question.
Make sure you're followingprocedure and following the
process of it all.
Don't jump around, you know.
Follow the process of takingyour time doing due diligence,
(21:37):
doing your homework, to figureout if the property is right for
you.
Look at, analyze and look atplenty of properties.
Speaker 1 (21:45):
Yes, that's my take, that's.
You heard it from Marcus Harvey, mr Property Relief himself,
sir you know we're going to doanother one for you guys.
Speaker 2 (21:55):
Um, here coming, um, here coming soon.
Um, we've talked about anothertopic, um, um, and other topics
we're going to touch on, but, um, yeah, that's pretty much what
I have to say about this topicis just make sure you do your
homework, as always.
Make sure numbers are right.
Yes, make sure you got a cashflow, because it's a business
(22:18):
and you don't want to lose money.
Speaker 1 (22:19):
Amen, amen.
And then my part is I just wantto thank everybody that listens
to the Professors Real EstateInvesting Podcast on Spotify, on
Apple, on all the otherplatforms.
All the shorts, what I'm goingto start doing.
I started to do it at first,but now I'm going to start back
doing it.
I'm actually going to have allthese on YouTube so you can have
(22:43):
the visual for the whole timeof the podcast also.
Yes, because that needs thepodcast also.
Yes, because that needs to bedone.
I'll also have I already have aslew of interviews coming up
and I have some previous onesthat I've done that I need to
bring out and so you can havethe visual effect of it.
Also, because the interviewsare very informative,
(23:06):
information that you would needinto you, into your, uh, real
estate investing portfolio, yourplatform that's needed.
Yeah and yeah.
I just want to thank everybodyand I appreciate.
Speaker 2 (23:18):
You say appreciate.
You guys just keep tuning in tous.
Just a couple quick littleshout outs to some mentors pace
morby, we got grand cardone.
Um, we got the the what Iforgot dude's name, the wealthy
podcast dude, you know.
Oh, yes, with the beard and thebody, I forgot his name.
But shout out to you, bro um.
And just shout out to everybodywho's uh, doing real estate.
(23:39):
Oh, shout out to my, my god,new development, eric
crutchfield, dallas, texas.
He's killing it out there, he'sjust doing his thing.
So shout out to him.
And just everybody in realestate that's trying to grind
and get this thing going, justshout out to you Keep going,
keep building, keep trying to.
You know, stay in the game andget this real estate money.
Speaker 1 (24:02):
Amen, amen.
And, like I said, apple,spotify, all platforms, youtube
go to the Professional RealEstate Investing Podcast channel
.
And yes, I just want todedicate this to my late cousin,
this episode to my late cousin,Didi, who I love so much she
passed away from cancer I hatecancer and I'm actually going to
(24:26):
structure um um this year thatwhen I, when I sell property
that I'm going to go throughproceeds to help out with with
cancer, because that's awesomebecause I can't stand.
I lost two women in the pastthree years to cancer my, my
granny and my cousin.
My cousin taught me everythingI know about dressing from head
to toe.
Make sure everything matchesthat's right make sure, make
(24:48):
sure I talk to everybodypresentable and oh yeah in the
way that everybody canunderstand and accept and uh,
yeah, that's it basically forsure, for sure.
Speaker 2 (24:58):
yeah, like, like condolences to your family, man,
and I just want to everybody tojust stay strong, keep working
out there, don't give up.
Um, you know you can in thislife, man, anything's possible.
Speaker 1 (25:11):
So yes, and in that world, everybody have a blessed
day, blessed week blessed monthand blessed rest of the year we
out.
Welcome to the Professionist Real Estate
Investing Podcast.
Speaker 2 (00:03):
I'm with my guy who oh, you know, it's Marcus Harvey
.
Property Relief in the Housefor another episode the
Professionalist.
You know what it is.
Speaker 1 (00:12):
Yes episode Avoiding Costly Mistakes as a New Real
Estate Investor.
Speaker 2 (00:17):
Let's do it.
Speaker 1 (00:18):
Yes, first part.
Like to get into this.
I don't like beating around thebush, I just like just going
straight at it get at it.
Hey, number one, not doingenough market research.
You just can't be going outthere just saying, hey, that
property looks good, and justyou know what, how much is it?
Speaker 2 (00:36):
I'm gonna buy that property right.
Shoot me a number, I got thisexactly right.
Speaker 1 (00:40):
I'm not gonna even do my research and my due
diligence right now I'm justgonna.
I just want this propertybecause it's it looks good.
Speaker 2 (00:46):
Right, right.
Speaker 1 (00:47):
That's definitely not the way to go, so investing in
the wrong location withoutchecking local trends.
And it says Over that therental demand for property
appreciation.
Speaker 2 (01:03):
Yeah, yeah.
Speaker 1 (01:04):
Yeah, that's just, that's just all bad.
If a person goes through that,you just can't go out guns
blazing and be like, hey, I likethe way it looks, I just want
to pay for it, right.
Speaker 2 (01:13):
Yeah, yeah, you got to do the numbers, you got to
run numbers.
It has to make sense.
Speaker 1 (01:19):
It does.
So that brings another partoverpaying for a property,
getting emotional instead of youknow it's just crunching the
numbers and numbers, yeah, yeah,don't, don't get your emotions
involved with it.
You want to make sure thatyou're going to be paying for
the right amount of something,right, right?
Speaker 2 (01:35):
Right.
And the next one you havefailing to negotiate or
understand fair market value.
Yeah, if you're going into adeal and you're not negotiating,
you already lost.
You always have to be able tonegotiate, see if there's a
better deal for you, um, andthen you have to understand the
fair market value.
Um, you know people are goingto want to list and put their
(01:57):
houses for sale at fair marketvalue, even if it hasn't been
updated.
The house hasn't been updatedin years.
They still think they can getfair market value, which is
crazy to me.
Speaker 1 (02:10):
And I would say too, you know, if you are definitely
uncertain about it, get acredible, reliable lawyer.
I mean a lawyer, a lawyer tohelp you out and get in a
realtor.
Absolutely, you want.
You want to make sure thatyou're just going about this.
I've seen so many people justlike hey, I like, I'm like, have
(02:30):
you done your research or duediligence?
No, I, just want to go by.
I'm like hold on, let's do thecomps around here for the past
six months, six, nine months ormaybe even a year, Right.
Speaker 2 (02:39):
Right.
Speaker 1 (02:40):
Right, so make sure you're not.
Your money works for you.
Speaker 2 (02:42):
Yeah, yeah, because you don't want to just go in
there and be like, oh, that's,that's how much they want.
I think I got that, let me justpay for that.
No, it's a whole process behindit.
You've got to be able to buyright and be able to be at the
right price point where it'sgoing to benefit you in the long
run, depending on no matterwhat strategy you're trying to
(03:03):
do in the long run.
Speaker 1 (03:04):
Depending on no, no, matter what strategy you're
trying to do.
And then the next one saysunderstanding, repair and hidden
costs.
Speaker 2 (03:10):
Yeah.
Speaker 1 (03:10):
I think a lot of people get.
They don't understand that partor it's not.
It's not even understand it.
It's like out of sight, out ofmind.
Speaker 2 (03:20):
Yeah, it's not even.
It's not even transparent tothem.
So they're just like oh, youknow.
Speaker 1 (03:24):
I, you know type of thing yeah, I forgot about those
total, those hidden costs andthen like the hidden part with
me when, when somebody sayshidden, first thing I think
about is plumbing yeah, yeah,that's that's one part.
I see.
I'm just like what you and like, how's the plumbing here?
Speaker 2 (03:41):
do you have septic, do you I?
Speaker 1 (03:42):
know you live way out in the country.
Do you have septic?
How's the plumbing here?
Do you have septic?
I know you live way out in thecountry.
Do you have septic?
How's your water pressure?
Right, right, I know.
Right now I have a house out inthe country.
The house is basically it'sbeen built About 75 percent, but
the thing about it is is he hasspring water but the water
(04:02):
pressure is not at thespecification for the city so
they have to, they have to.
Um, I have to do my duediligence and tell whoever wants
the place.
Yeah, hey, that you're gonnahave to build a well and that's
gonna cost anywhere between 15to 20k.
Yeah that's gonna be priceyright there yeah, because you
(04:22):
want to make sure the waterpressure to the house is just
right.
You don't want it tricklinginto your house.
Speaker 2 (04:27):
Yeah, yeah, it all has to make sense, all the way
down to the water pressure, tothe electricity, to everything.
It has to make sense.
Speaker 1 (04:39):
It says not factoring in vacancy rates, property tax
and the lovely insurance,especially in this state.
You want to make sure, you wantto know it's good to know and
find out like up hand, like howmuch something is going to be.
Yeah, and especially with theinsurance, like because I know
it was at home home warrantyinsurance, fire insurance, like
(05:02):
I tell everybody, especiallyhere california, everything's a
fire zone yeah we're, we're,every, every, everything's at
fire risk here when it comes tothe state from southern
california.
Speaker 2 (05:12):
What's going down in in in that area?
Um, um, the the fires they justhad um down there all the way
up here.
That happens every summer.
Yeah, there's a fire all thetime.
Speaker 1 (05:23):
Yeah, yep.
And then choosing the wrongfinancial financial strategy.
That's another one.
That's huge.
Yeah, it says high interestloans that can cut into your
cashflow, and not having haveenough resources for unexpected.
We talked about this beforeUnexpected expenses.
(05:45):
Yeah, we talked on otherepisodes.
Speaker 2 (05:45):
Have enough resources for unexpected we talked about
this before unexpected expenses.
Speaker 1 (05:47):
Yeah, we talked on other episodes we talked about
like capex and stuff like thatand just other expenses that
people just don't uh account forwhen it's time yeah, and
especially, I was thinking toowhen, especially comes to
investing, you want to make sure.
So the main things I woulddefinitely look out for is the
roof.
Speaker 2 (06:05):
All is the roof.
Speaker 1 (06:06):
Yeah, how's the?
How's the plumbing?
Another one that a lot ofpeople don't think about is is,
I say what, their landscape?
And they have a huge tree inthe yard.
How far are the roots in theground?
Is those roots uplifting thedriveway Is?
Speaker 2 (06:22):
those roots uplifting the driveway?
Yes, yeah, yep.
Is it breaking any concrete up?
Is it wrapping around any majorplumbing or pipes that I might,
you know, need concern, beconcerned about?
You know?
Yeah.
Speaker 1 (06:35):
Like the upgrades.
The hot water heater yes, hotwater heater is a big one too,
even when it comes down even toappliances one too, um, even
when it comes down even toappliances.
But that that the appliance oneis not really a big thing,
because if you buy somethingit's going to be up to your
preference, like what you wantanyway.
So yeah, that's an easy fix,yeah, but it's the, it's a, you
know the sight unseen with theplumbing, uh, the trees, uh,
(06:59):
because those trees, even thetrees, the, the, the line of
what property is yours comparedto your neighbors.
You want to make sure you knowexactly where, because there's a
lot of properties where peoplethey thought they knew something
was at and that's not actuallythe property.
You want to make sure that youget it at the right.
You want to make sure you goright accordingly to what's your
property and their propertyExactly.
Speaker 2 (07:21):
Exactly.
You definitely want toestablish that right off the get
go.
But going back to the choosingthe wrong financing strategy
though you have high interestloans that can cut into your
cash flow as an investor, youdon't want to go that route.
You want to make sure you havethe right financing strategy,
depending on the property or thesituation of the property, and
(07:45):
then not having reserves is abig one.
It can really really just killyour deal for the rest of the
year If you don't have reservesto do fix, to do repairs and to
fix on your property.
Speaker 1 (07:59):
You know it's very important.
Yeah, you don't want to look.
You know it's very important.
Yeah, you don't want to look.
You don't want to look bad whenyou look in an area that has
excruciating heat during thesummer and the AC breaks down
and there's a family of fiveliving in, living in that
investment property that youhave and you don't got enough
funds.
Speaker 2 (08:19):
And they just brought a brand new newborn baby home
or something.
So yeah, you don't want, youdon't want to be that one, yeah,
so you want to make sure youaccommodate your tenants, to
make sure, like, your propertyis working efficiently or your
heater and AC works, your, your,your plumbing works, um, no
crazy, um, electrical issues andstuff like that, and, um, you
(08:40):
know, um, make sure you save forreserves, save for repairs and
to get other financing otherthan a high interest loan.
It's going to be way better foryou and way better for your
cash flow at the end of the day,especially here in California
where cash flow is hard rightnow now.
Speaker 1 (09:08):
So yeah, and I was thinking also too, and also the
more mortgage lender, whoeveryou're dealing with, let them
know.
Let them know that you want toget the best possible loan
program for you in your your umsituation oh yeah, because
there's so many different.
There is so many differentoptions when it comes to the
mortgage loans that you can dealwith that you probably had no
clue about right, right exactlythe next one.
(09:31):
This is a good one too.
Yeah, trying to do everything byyourself yes, it's failing to
build a team agents, contractors, lenders, mentors not learning
from experienced investors.
Speaker 2 (09:45):
Yeah.
Speaker 1 (09:46):
Yeah, don't do this all by yourself, cause, yeah,
you, you, you think you're goingto be saving money.
Actually, you're going to bespending more money than you
thought.
Yeah, yeah.
Speaker 2 (09:54):
And I've heard that so many times from other, like
people on podcasts and otherpeople, other experienced
investors you have to build ateam.
You can't do every job byyourself.
You don't even have enough time, you know during the day to try
to do everything yourself.
So let the mortgage lender dowhat they do, let the agent real
estate agent do what they do,let the contractor do what they
(10:16):
do and you know like.
Like you said, learn fromexperienced investors yeah, it's
like a, it's like not.
Speaker 1 (10:23):
you're not necessarily a big puzzle, but
it's a small puzzle that eachpiece play their part and then,
the picture comes all togetheras one.
Speaker 2 (10:30):
Yeah, exactly.
Speaker 1 (10:33):
And then, um, here's what you need to do.
This is the part thatstrategize how to avoid these
costly mistakes.
The first one is you need tohave a mentor, or I should say,
master, market research, so youutilize tools like Zillow or
Ritameter or the or the MLS.
It is not not the MLS that umrealtors use, but it's the other
(10:59):
one.
Speaker 2 (11:00):
Yeah, the public.
The public one um realtors use,but it's the other one yeah,
the public, the public one.
Speaker 1 (11:02):
Yeah, you use those, as you can use those as your
research tools.
Zillow I will say this zillowis a great tool, but do not use
the zillow meter as thereference is using of how much
the house is.
Speaker 2 (11:19):
Right.
Speaker 1 (11:20):
Right, that's just a guesstimate of what they think
it is, but it's not the bestcredible.
Speaker 2 (11:27):
Yeah, I think Zillow calls it a zestimate.
Speaker 1 (11:30):
Yeah, the zestimate Using the Z.
Speaker 2 (11:33):
Yeah, I like Zillow too, but I feel like sometimes
the range is off with theproperties and some of the
numbers might be off.
But you know, I'll look atother listings and then they'll
be exactly what MLS is.
Speaker 1 (11:48):
So it's just a hit and miss sometimes with Zillow,
but you know Zillow's still goodit is, I tell, as long as you
got options, you know just don'tjust don't use one, use a
conglomerate of right,conglomerates of them, and and
then then you use your judgment,use good judgment and if you,
if you need any help, talk totalk to a realtor, broker,
(12:12):
realtor, yeah, investor, someonethat kind of just, you know,
just get their opinion, hey,their opinion.
Speaker 2 (12:18):
Hey, what are you using, like, what are you using
to comp properties or to evenestimate what properties are?
Speaker 1 (12:24):
Yes, you know and then it says running the numbers
like a pro yeah, you want torun these numbers.
You want to make sure that youare not spending unnecessary
money.
You're trying to make profit,not lose money off of this money
.
You're trying to make profit,not lose right money off of this
.
Yeah, exactly.
And says how to you know how tostress test your investment.
(12:46):
Um, worst case scenarioplanning yeah, and that comes
also.
That comes with it too, with,you know, putting that
collateral on the side for arainy day if something breaks
down also, yes, unexpectedexpenses, yeah, yeah it says
budget for unexpected, which wejust talked about, setting aside
reserves for repairs andvacancies, especially the
vacancy part.
So it's not like, especiallywith the home, if, uh, if you
(13:10):
have somebody move out and youdon't get a person to rent the
house and you know in in a, andyou know that in that month's
time, right, who's stuck withthat rent?
You, as an investor, you'restuck with that rent.
you got a mortgage payment yeahyeah, but then if you deal with
you know, with you know, likewe've talked so much about
(13:30):
multi-family syndication,everything you have leeway
because you got, you have doors,you have doors that can help
you out right, but when it?
Comes to single-family homes,you don't have that privilege.
You still, you know that'swhere that collateral comes into
play, because you don't, youdon't, you don't know if you're
going to get the good, therenter that you need to be in
that house.
(13:50):
You just, and the thing is,don't take any type of renter.
Speaker 2 (13:52):
Also, because they got money, exactly, exactly,
even the even.
Even with the two to four doors, um, multifamily, one can one
person leaving is just going tohurt you because you gotta oh,
you gotta turn the prop, yougotta turn the unit over, you
gotta get a new tenant, um, makesure everything's good again.
It's just starting all overagain.
So like, yeah, two, two to fouris it's just like having one,
(14:16):
one single door it is, you know,you lose one or two tenants out
of the two to four and you'reback to.
You're back to square one,almost so and what it makes
sense too.
Speaker 1 (14:25):
Because, yeah, because, when you get that, no
matter from one to four, that'sstill that, that residential
loan still residential it's noteven a commercial commercial
yeah still dealing withresidential rules exactly.
And then it says, uh, pickingthe right financing strategy,
conventional versus hard moneyor creative financing.
(14:46):
You know we got our guy Pace.
I love Pace to death.
Speaker 2 (14:49):
Yeah, he got that creative Shut up, Pace.
Speaker 1 (14:50):
Morby, he has that creative financing down to a T.
Speaker 2 (14:54):
Oh yeah.
Speaker 1 (14:55):
And then you got the regular conventional loan and
then the hard money, the hardmoney loan.
It can be a plus to you.
I think of the hard money likekind of like a loan shark.
Speaker 2 (15:06):
It is kind of like that, because it's like you know
, hard money, they're going tocharge some points, they're
going to charge that highinterest, but you need the money
.
Speaker 1 (15:14):
We got the money for you, but this is what that
interest rate is going to beRight.
Or your credit is like this oh,don't worry about it, we got
you, we'll get this deal done,no matter what.
And this is surround yourselfwith experts.
It says finding a mentor,joining an investor group,
building a strong team, realtor,property manager and contractor
(15:37):
.
Those are all helpful for youto succeed.
And, like I said, it's it's nota big puzzle, it's a small
puzzle.
Everybody plays their part tomake that picture, make you know
that picture come about.
Speaker 2 (15:47):
Right right.
Speaker 1 (15:48):
Exactly, and this is uh about the costly, a costly
mistake, how to avoid it.
It says um, how to share.
I'm trying to think how to havean example, as if all I know is
I've come across some peoplewhere they they just bought uh
(16:09):
stuff just because of, um, offof emotions, yeah, yeah, and I
was, I had to, you know, had topump the brakes on them on that,
like no, no, no, you can't.
Let's, let's, uh, let's, dosome research, let's see, right,
let's see what you're workingwith and like.
And I I talked to say who'syour, you know your lender, you
know your lender, you know cause, your mortgage, your mortgage,
uh, broker, that they, they playa huge part of what you can be
(16:33):
accepted for, yeah, or it's asituation where I have a friend
named such and such and they didit.
Speaker 2 (16:39):
So I want to do it there.
You know they it's it's.
You know they won't be likethat Exactly.
Speaker 1 (16:43):
They're, you know they, it's, it's, you know they
don't want to be like thatExactly, and every story is
that's every.
Every story can't have thatsame story.
Speaker 2 (16:48):
Right, exactly, exactly.
You can't want to just all theway copy what your friend or
what your this, this othercouple has done, or whatever the
case you want to be able to.
Every deal is different, every,every, every.
Uh, what do you call it?
Every deal is different.
Every, every, what do you callit?
Every, every house is different, every situation is different
(17:12):
all the way from the loan to thenumbers, to how much it costs
for the property certain repairs.
So your situation can't beexactly like your friends.
Yes, exactly yeah, don't go bydon't go by that, that that
situation is different.
I saw them do that.
Why can I have that?
Well, I mean, it's a differentsituation, so exactly, yeah,
(17:35):
yeah.
Speaker 1 (17:36):
so these are how to avoid making uh costly mistakes
and errors when buying a uhbuying a piece of property as a
new investor, because, yeah,it's a team effort.
A lot of people get in it fordifferent reasons in investing,
(17:57):
but the longevity of it isalways long when it comes to
real estate investing yeah, forthe most part.
Yes, this is not a short game.
This is a long game when itcomes to it.
Speaker 2 (18:03):
Yeah.
Speaker 1 (18:05):
So just to let you know the world out there know it
says you know, start witheducation, educate yourself.
Books, podcasts like this,networking yes uh, there's many
networks that you can go to whenit comes to real estate
investing.
Uh, analyze multiple dealsbefore buying your first
property.
If you don't know how to goabout doing it, talk to an
(18:27):
experienced investor, or talk toa realtor, or even to a
mortgage broker.
You want to make sure thosenumbers are good for you.
Speaker 2 (18:34):
Yeah, Look at plenty of deals before you just commit
to something you know.
Just look at plenty of options,because there's so many options
.
Speaker 1 (18:43):
Yes, and then get multiple quotes and repairs and
financing.
That is huge.
Don't go by the first one.
Yeah, I would say go by threeor four.
Speaker 2 (18:52):
Yeah, I say minimum three quotes for, for, for
repairs and then for financing.
The same, if you if at least aminimum of three.
If you want to do five, just topick one out of the five,
that'd be cool too.
But at least get three, aminimum of three quotes.
That way you can choose whichone you want to go with, and it
don't have to necessarily be thecheapest one, it's just, you
(19:13):
know, the one you feel confidentabout.
Speaker 1 (19:15):
So yes, and he says have an exit strategy before
investing, because it's a longgame.
But then eventually, you know,eventually you're gonna, you're
gonna let that property go.
You might, you might, uh, youmight invest it somewhere else
or you might go into asyndication deal.
He's like you know what I'mtired of?
I'm tired of the single familyhome.
(19:36):
I'm going to multi-family,right see, I want, I want, I
want more doors under one roof,right yeah?
Speaker 2 (19:42):
exactly you.
Just because the, the, the nameof the game in real estate is,
eventually you're going to,you're going to want to scale to
a certain level.
You know, whatever your visionis, if it's starting out with
one to four and then you've beenthere for a few years and you
want to scale up to multifamily,you know that's, that's just
how it goes, you know.
(20:03):
And then some people go furtherand want to go commercial.
You know yeah uh, multi-familycommercial, or even uh uh um
industrial commercial, or, or orskyscrapers, you know stuff
like that big buildings exactly.
Speaker 1 (20:17):
I view it like you.
Just you're just graduating uphigher on the ladder?
Speaker 2 (20:20):
yep, you just graduate and that's all you're
doing.
Each level, you're graduatingand and, and you know trying to
figure it out, you know, butsome people stay with the
strategy that works best forthem as well.
You know.
Some people aren't going to gofor whatever's the most money,
they're just going to like.
You know what?
I'm making a little bit ofmoney.
This is kind of like it's notstressing me out, so I'm good
(20:43):
with it, you know know.
Speaker 1 (20:44):
Yeah, so, but everybody's different.
You know it is, it is, and thenanything else you want to say.
Speaker 2 (20:50):
So, the only thing I have to really say about this
topic, um to avoid costlymistakes as a real estate
investor, um to to recap, and umsome key takeaways I want to
say is make sure you're runningyour numbers.
Make sure the cash flow isgoing to be there, um, depending
on your strategy, um make sure,um you take care of your
(21:13):
tenants.
Speaker 1 (21:14):
Oh, yes, to make sure they're happy.
Speaker 2 (21:16):
Um, and to avoid costly mistakes, um, make sure
you're doing the right financingfor the for for the property um
in question.
Make sure you're followingprocedure and following the
process of it all.
Don't jump around, you know.
Follow the process of takingyour time doing due diligence,
(21:37):
doing your homework, to figureout if the property is right for
you.
Look at, analyze and look atplenty of properties.
Speaker 1 (21:45):
Yes, that's my take, that's.
You heard it from Marcus Harvey, mr Property Relief himself,
sir you know we're going to doanother one for you guys.
Speaker 2 (21:55):
Um, here coming, um, here coming soon.
Um, we've talked about anothertopic, um, um, and other topics
we're going to touch on, but, um, yeah, that's pretty much what
I have to say about this topicis just make sure you do your
homework, as always.
Make sure numbers are right.
Yes, make sure you got a cashflow, because it's a business
(22:18):
and you don't want to lose money.
Speaker 1 (22:19):
Amen, amen.
And then my part is I just wantto thank everybody that listens
to the Professors Real EstateInvesting Podcast on Spotify, on
Apple, on all the otherplatforms.
All the shorts, what I'm goingto start doing.
I started to do it at first,but now I'm going to start back
doing it.
I'm actually going to have allthese on YouTube so you can have
(22:43):
the visual for the whole timeof the podcast also.
Yes, because that needs thepodcast also.
Yes, because that needs to bedone.
I'll also have I already have aslew of interviews coming up
and I have some previous onesthat I've done that I need to
bring out and so you can havethe visual effect of it.
Also, because the interviewsare very informative,
(23:06):
information that you would needinto you, into your, uh, real
estate investing portfolio, yourplatform that's needed.
Yeah and yeah.
I just want to thank everybodyand I appreciate.
Speaker 2 (23:18):
You say appreciate.
You guys just keep tuning in tous.
Just a couple quick littleshout outs to some mentors pace
morby, we got grand cardone.
Um, we got the the what Iforgot dude's name, the wealthy
podcast dude, you know.
Oh, yes, with the beard and thebody, I forgot his name.
But shout out to you, bro um.
And just shout out to everybodywho's uh, doing real estate.
(23:39):
Oh, shout out to my, my god,new development, eric
crutchfield, dallas, texas.
He's killing it out there, he'sjust doing his thing.
So shout out to him.
And just everybody in realestate that's trying to grind
and get this thing going, justshout out to you Keep going,
keep building, keep trying to.
You know, stay in the game andget this real estate money.
Speaker 1 (24:02):
Amen, amen.
And, like I said, apple,spotify, all platforms, youtube
go to the Professional RealEstate Investing Podcast channel
.
And yes, I just want todedicate this to my late cousin,
this episode to my late cousin,Didi, who I love so much she
passed away from cancer I hatecancer and I'm actually going to
(24:26):
structure um um this year thatwhen I, when I sell property
that I'm going to go throughproceeds to help out with with
cancer, because that's awesomebecause I can't stand.
I lost two women in the pastthree years to cancer my, my
granny and my cousin.
My cousin taught me everythingI know about dressing from head
to toe.
Make sure everything matchesthat's right make sure, make
(24:48):
sure I talk to everybodypresentable and oh yeah in the
way that everybody canunderstand and accept and uh,
yeah, that's it basically forsure, for sure.
Speaker 2 (24:58):
yeah, like, like condolences to your family, man,
and I just want to everybody tojust stay strong, keep working
out there, don't give up.
Um, you know you can in thislife, man, anything's possible.
Speaker 1 (25:11):
So yes, and in that world, everybody have a blessed
day, blessed week blessed monthand blessed rest of the year we
out.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.