A real estate investor describes how decisions made between 2015 and 2019 led to a 20% buyer default rate and six-figure rehab costs. He explains how tighter vetting and new processes turned things around in 2020-2021, and shares a framework for weighing upside against downside before you decide.
Chapters
The decisions you make today will affect the next 3 to 5 years of your life, and maybe even beyond. I want you to think about that for a second. Think about every decision that you make today could potentially have a good or bad effect for your future. Back in 2019, Things were tough for our family, our real estate investment business. We made a lot of bad decisions on purchasing properties, bad decisions with sellers, bad decisions when selling properties to buyers. We were taking too small of deposits from buyers because we have a family. And we had mouths to feed. Just a couple years earlier, I came in full-time, left my bartending job, came in full-time. My wife came in at the exact same time. Nick had been in for about a year. Chris had been involved from when he started the business. And we had a lot of people which needed to be fed from this company. So we made decisions based upon that, and unfortunately a lot of those decisions were not the best ones. And those decisions were made back in 20— say 2016, 2017, 2015, when all of us came together on a whim, when we all decided to leave our full-time jobs and come in to this company. So those decisions affected 2019. Fast forwarding that, we had— let me— I gotta take a just a pause. We had as high as a 20% default rate during that year of our buyers. We had almost 6 figures worth of rehabs that were going to be coming because our, our buyers were not acting the way they should have. As you can imagine, that puts a lot of pressure on a company to be able to not— to not only be able to continue to do deals, but to clean up the prior decisions that we made. I remember showing up into our weekly meetings with a pit in my stomach Anytime we have to talk about that. Look, decisions don't always cause negative, negative events here. I just want you to realize that there are some decisions that you make today that could affect you in a negative way. But let's talk about the flip side. There are so many great decisions as a company we made that are now changing the lives of others around us. The positive side is once we had those learning lessons from the decisions that we made in 2016, our entire business changed. We pivoted. We, we added in new processes. We looked at buyers in a different way. We vetted them more heavily. We added in additional resources. We started making better decisions, and now we're Receiving the the fruits of our labor in 2020, 2021 because of those better decisions we made in 2019. So this happens on both sides. This is not a scare tactic. This is just to tell you the levity of the situation when you go in and you start making decisions. Now my hope is that you don't have to make those same bad decisions that we made, or for you to be able to capitalize. On those great decisions that we made. Look, you can learn from that wisdom. I encourage you to go through our Amazon bestselling book, Real Estate on Your Terms, because it just was rewritten in effect and, and really incorporated everything that we've learned in the past couple years. So that way you have the knowledge, the wisdom now. My words of advice though, and something that I learned, were that anytime that I go to make a decision— so now I hope that anytime that you go to make a decision, you have clarity on the upside and the downside, and that you make that decision knowing that you can live with the downside.
