WHEN THE WHEELS COME OFF YOUR REAL ESTATE INVESTMENT VENTURE

What do you do when you’re facing a failure in real estate?

Sometimes real estate investment plans fail. In spite of the best hopes and plans, it doesn’t always work out as expected. What do you do then?

If there is one thing that we should learn from the most successful real estate and business leaders out there, it is to embrace failures. They are often the catalyst for the greatest successes. So, if your real estate investment doesn’t go right, what should you do next?

It Happens to the Best of Us

Millions of Americans “failed” in real estate in the last couple of decades. That includes wealthy celebrities and average citizens. Shark Tank investor Barbara Corcoran, who started in real estate with just $1,000 and grew it to a $5 billion empire, says the best thing entrepreneurs can do is embrace failure. In fact, she says it is the most important thing they can do.

You can be smart, rich, and bullish. But that won’t guarantee you sustainable success the first time around. If it weren’t for great minds and risk takers who were willing to try again, we wouldn’t have electricity, the telephone, the internet, mortgage loans, and let’s not forget, good vacuum cleaners.

So how can real estate investors minimize the chance of failure? Get back in the saddle after some bumps in the road? How can you make sure things go better in the future? And who is going to work with you even if you’ve taken a few extreme detours from real estate success in the past?

Why Do Real Estate Investors Fail?

The biggest failure of all is still not trying real estate investment. If you don’t try it, you’ve already failed—guaranteed. From those who have invested in real estate, there are some lessons learned. Some of the most common reasons for failure are:

•Poor budgeting of renovations

•Buying properties with negative cash flow

•Surprise repairs after failing to do due diligence

•Real estate and mortgage fraud

•Borrowing too much

•Rushing in without getting educated first

•Overconfidence

•Ignoring commonsense investment principles

Businesses come and go in any sector and any economy. From a broader perspective, the top reasons for business failures include:

•Emotional pricing

•Operating and living beyond means

•Failure to pay taxes

•Lack of planning

•No knowledge of financing

•Lack of experience in record keeping

•Expanding too fast

•Inadequate and ineffective borrowing practices

•Wasted advertising budget

•Going into business for the wrong reasons

Tips for Preventing Failure in Real Estate Investment

Whether starting out with one investment property or launching a real estate investment business, it is pretty clear the best way to prevent failure is to avoid the pitfalls we’ve just covered. Do this by:

•Planning thoroughly

•Completing all needed due diligence

•Learning about financing

•Borrowing better, and enough

•Keeping better records

•Staying on top of taxes

•Watching your budgets

•Living within your means

•Having insurance

•Having legal help on call

•Sticking to common sense

Tips for Getting Back on the Road to Real Estate Riches

What if your child fell off a bicycle the first time they tried to ride one? You’d insist they try again, right? You’d think it was crazy if an adult friend of yours told you they have never tried riding a bicycle again after an incident like that, right? So don’t even consider not getting back on your journey to building wealth in real estate. It’s just a matter of how you do it.

You might want a helmet, some elbow pads, a few tips, and maybe even someone riding alongside you so that you don’t crash and burn again. Find a mentor; hire a coach and network with successful investors to learn the lessons of the pros.

•Be objective about past failures (it’s not you, it’s what you do).

•Analyze what went wrong and what you can do better.

•Invest in learning more about your craft and the real estate market.

•Put safety precautions in place, and avoid the pitfalls.

•Get busy moving forward.

Opportunity Is Knocking

If you’ve had a deal or a whole portfolio go wrong in the past, don’t let it hold you back. This is opportunity knocking, right now. It’s waiting for you.

There are lots of great real estate investment opportunities out there. And even with a few battle scars, there are a number of real estate lenders to work with you. Be prepared to talk about what happened and to use the experience to demonstrate that, despite what happened, you know what to do, and what not to do. That’s an asset. That’s an advantage.