{"id":3204,"date":"2013-09-30T17:58:49","date_gmt":"2013-09-30T17:58:49","guid":{"rendered":"https:\/\/tommorkes.com\/?p=3204"},"modified":"2018-12-06T08:30:20","modified_gmt":"2018-12-06T15:30:20","slug":"finish-the-journey","status":"publish","type":"post","link":"https:\/\/tommorkes.com\/finish-the-journey\/","title":{"rendered":"Finish the Journey"},"content":{"rendered":"

\"-\"Trying\u2026<\/h2>\n

I started investing in real estate at 22.<\/p>\n

As a young officer in the Army, I leveraged my guaranteed paycheck and a VA loan to purchase a 4-plex.<\/p>\n

My intention was to live in one unit and manage the others.\u00a0 By renting out the other 3 units, I\u2019d be able to essentially live for free, pay down my mortgage and even have a little bit left over for myself.\u00a0 It seemed like an easy win.<\/p>\n

Of course, things don\u2019t always pan out how you plan.<\/p>\n

Less than one month after closing the deal, I got deployed to Iraq.\u00a0 Instead of being able to manage the property myself, I had to hire a property manager.\u00a0 My intent was always to hire one, but not so quickly after closing.\u00a0 I wanted to get a feel for the property and manage it myself to better understand the ins and outs of management so I could hire the right kind of manager.<\/p>\n

Sadly, I didn\u2019t have this opportunity.<\/i><\/p>\n

So I deployed to a combat zone thousands of miles away and left a massive investment in the hands of a property management company I didn\u2019t know.\u00a0 For the next 12 months I attempted to manage my manager from abroad.\u00a0 The property was running fine in the beginning but month after month my cashflow decreased and I had no idea why.\u00a0 I couldn\u2019t get straight answers from the manager \u2013 it had something to do with random expenses popping up every month, but since they weren\u2019t itemized like I requested, I had no idea how to remedy the situation.<\/p>\n

And Failing\u2026<\/h2>\n

When I redeployed 12 months later, I found my 4-plex in really bad shape; the lawn was a mess, the interiors were dirty and falling apart, and a couple squatters occupied two of my units.\u00a0 To make matters worse, it became pretty obvious my property management company had been skimming off the top.<\/p>\n

This is the quintessential real estate investor horror story \u2013 the kind that keeps most people from investing in the first place.<\/i><\/p>\n

I thought I\u2019d done my research, I thought I knew what I was doing, but the whole thing backfired \u2013 I was screwed.<\/p>\n

I spent that first day back in the States hating myself \u2013 how could I be so na\u00efve?\u00a0 How could I have made such a stupid mistake?\u00a0 I\u2019m such a loser - I should just get rid of this property as quickly as possible. \u00a0I\u2019m not cut out for this.<\/i><\/p>\n

\"-\"
This is how I felt.<\/figcaption><\/figure>\n

After several hours of calling myself every name in the book, shouting expletives at myself in my head, and generally feeling sorry for myself, I came to a conclusion:<\/p>\n

Nobody is going to take care of this bad situation for me.\u00a0 Only I can fix this.\u00a0 No more self-loathing or self-pity.<\/p>\n

It\u2019s time to get resourceful.<\/i><\/p>\n

Learning Lessons the Hard Way<\/span> Best Way<\/h2>\n

It would be an understatement to say turning that property around into a positive cashflowing investment was hard.<\/p>\n

It took a lot of blood, sweat and tears.\u00a0 I spent the next year gutting and renovating each unit, getting rid of bad tenants, and filling the unit with good people who would actually pay rent.<\/p>\n

But after all the heartache, I look back on that first property and say it was one of the best learning lessons of my life.<\/b><\/p>\n

I learned a lot about real estate investing, sure, but the most important lessons were applicable beyond real estate.<\/p>\n

1. Do your due diligence \u2013 twice.<\/h3>\n

Due diligence is the process of investigating a property to determine its true value.\u00a0 Many times, the seller of a property (or the seller of anything) won\u2019t point out all the flaws of their product. That\u2019s the responsibility of the buyer to identify.<\/b>\u00a0 I did my homework and did it by the book, but I didn\u2019t go deep enough.\u00a0 I didn\u2019t play out negative scenarios.\u00a0 By looking only at the current situation and extrapolating from that, I didn\u2019t give myself cushion for future operations if things went south.<\/p>\n

And, of course, things always go south.<\/i><\/p>\n

When it comes to making any sort of deal \u2013 whether you\u2019re buying a new product, paying for a service, or writing a contract with a new partner \u2013 the burden of proof is on you<\/i><\/b> to figure out why the deal isn\u2019t good.<\/p>\n

The marketer will always have a brilliant new course that will (claim to) fix your business woes, the car salesman will always have a great reason you should upgrade, and the financial advisor will always have the perfect mutual fund for your situation.\u00a0 Why?\u00a0 Because that\u2019s their job<\/i>.\u00a0 But before you hit the buy button and dive right in, remember: the situation is ALWAYS caveat emptor<\/i>.<\/p>\n

2. Failure hurts, but it doesn\u2019t cripple us (unless we let it).<\/h3>\n

After surviving 12 months of gunfire, RPGs and mortar fire, I come back to the States and feel, for the first time, that I\u2019m done<\/i>.\u00a0 I\u2019m defeated<\/i>.\u00a0 I screwed up and there\u2019s nothing I can do<\/i>.<\/p>\n

Funny how financial setbacks can sometimes feel more devastating than physical, life threatening danger.<\/i><\/p>\n

Of course, the reality isn\u2019t this grave.\u00a0 Anyone can recover from a financial setback.\u00a0 Anyone can rebound from a bad choice.\u00a0 It just takes guts and it takes asking the right questions\u2026<\/p>\n

3. Quit your pride - get resourceful instead.<\/h3>\n

Like I said, I wanted to quit, to walk away, to throw in the towel.\u00a0 But, in real life, there are no towels; we reap what we sow, good or bad.<\/p>\n

After giving myself a good few hours of denial\/anger\/self-pity time, I finally stopped asking myself self-defeating questions:<\/p>\n