Only raised enough for the down payment… not the rehab. #realestate #multifamily

By far the most expensive mistake I made when I started in real estate was on my first deal. It was a seller-financed 38-unit building. I raised exactly $300,000 as a down payment to close it, which is exactly what I needed. I raised from 3 people I'd never met before, and I put an agreement in place that I could buy them out for double their money within 5 years. Here's the problem: I raised exactly what I needed to close. I didn't raise a renovation budget. Now, we fixed this by refinancing at the end of year 1, buying out the investors. Eventually, this deal appraised for $4.2 million. I did make a lot of money, but I had to buy all the investors out at $600,000. I effectively I effectively borrowed at over 100% interest. Every one of them would have been just fine with a 25% return in one year. It should have cost me $75,000. Instead, it cost me $300,000 to buy them all out in addition to giving them the $300,000 back. That is an expensive mistake I could have solved by just having a coach who'd done a similar deal before.