I sold this house in May, and it completely transformed my business—and honestly, my life!
As a real estate investor, I purchased this property in September 2022 for $350,000 with plans to sell it for $475,000 within four months. The margins were tighter than I preferred, but with minimal renovations and strong comps, it seemed like a solid deal.
A key opportunity was adding an extra bathroom, which would significantly boost the home’s value—spending $7,000 to gain $30,000 in appreciation. However, after closing, I discovered that the area for the new bathroom hadn’t been permitted correctly by the previous owner. To move forward, we’d have to re-permit the work, adding another $15,000 in costs—funds we didn’t have at the time.
To cut expenses, I moved into the property once my lease ended, enduring the chaos of ongoing construction. Meanwhile, the market shifted under us, and three of our properties either sold for less than expected or sat on the market, costing us money.
The Market Shift & The Tough Decision
Once renovations were complete, we faced a decision: sell or refinance. We ordered an appraisal, expecting strong numbers, but the shifting market and rising interest rates hit hard—our appraisal came in at $425,000, a $50,000 drop from projections. Plus, we never added that extra bathroom.
I explored refinancing or purchasing the property from my company to maximize profits, but the bank shut it down. Back to square one.
Rather than take a massive loss, we waited. Eventually, we sold for $455,000, a better outcome than $425,000, but still a $20,000 loss in projected profit—not counting the additional holding costs.
Hard Lessons from a Real Estate Investor
Out of 25 flips, this was only my third loss, but it led to tough conversations with partners and increased company debt. Real estate investing isn’t always a win, but it’s about playing the long game.
Here’s what I learned:
- Real estate is like the stock market—just with bigger numbers. Don’t sell at a loss if you can hold out.
- Real estate investing isn’t for the cheap. Always raise more capital and lower expectations—unexpected costs will come up.
- I hate flipping. While flips generate short-term cash, rentals provide long-term wealth and stability.
Had I bought this house as a rental property, I’d still own it, and my partners would already be generating passive income while securing their investment. This realization led me to pivot—since then, I’ve converted six flips into rentals and restructured how we acquire and partner on properties.
A Mindset Shift for Real Estate Investors
This deal had me discouraged in 2024, but it was a fraction of my overall success and an even smaller fraction of future deals.
If you’ve had a bad experience as a real estate investor, don’t get discouraged! The lessons learned are worth more than a college degree. Focus on building a system for long-term wealth—one house at a time.
The only people who speak negatively about real estate investing are those who stopped after one or two deals. You never hear a seasoned investor with five or ten properties complaining. Push through challenges, stay committed, and you’ll experience massive success.
