The longer you work in the real estate business, the more likely you are to go through some stellar deals and experience some major wins. On the flip side, so to speak, you may also come across some bad deals that you’re fortunate enough to avoid. However, you may also find yourself encountering a seemingly good deal gone bad, and just like that, your real estate dreams may feel as though they have been dashed.
Not so fast, though. Yes, going through a bad deal can be both emotionally and financially painful. However, learning from mistakes made during the deal can also be an eye opener and a teaching moment that will help you for many years to come.
Here’s a rundown on a few errors commonly made with apartment investments, as well as what you can do to recover after a bad real estate business deal.
You may find your real estate deal going sour for a number of reasons. Perhaps you impulsively bought an apartment community and made plans for it on the fly, rather than creating a business plan and sticking to it. Another way you may end up in a tough spot with a deal is if you fail to hire investment team members who truly have a handle on your local real estate market.
Likewise, not obtaining the education you need to thrive in real estate can cause your deal to go south fast. For example, perhaps you fall into the trap of overpaying for a property. Miscalculating estimates, under budgeting, not calculating cash flow properly, or not coming up with multiple strategies for making money from a property can also doom your deal.
Let’s take a peek at what you can do to bounce back after making any of these mistakes and experiencing real estate industry setbacks as a result.
This is one of the most important things you can do as you try to recover from a bad investment. Yes, you may think that you could perhaps turn your sour deal around. However, it is far wiser to plan your exit strategy and follow through with this strategy instead.
One option in this situation is to simply sell your now-undesirable apartment asset at a loss. Why? Because offloading a bad investment puts you on the path to starting over with a better deal. Simply put, cutting your losses may pave the way for more gains in the future.
After you have unloaded your apartment community, it is time to complete a comprehensive analysis of what resulted in your real estate crisis. This is where you ask yourself the five W’s of who may have caused it, what may have caused it, where the problem erupted, when the issue happened, and why your deal went south. During your analysis, you should jot down figures and facts—anything that can help you to fully reflect on your situation.
Next, write down your business’s strengths, weaknesses, opportunities, and threats; this is an important step in overcoming business obstacles. You’ll also want to take stock of your liabilities and assets following your bad deal, as this will further help you to diagnose your current situation. Armed with these details, you can now create a stronger plan for your next real estate business deal. You could even ask colleagues or friends for feedback on your new plan as well as on the bad deal.
It’s natural for apartment syndicators to constantly wonder what they could have done to avoid bad deals. However, constantly singing the “shoulda, woulda, coulda” blues won’t do much to help you. Rather than being so hard on yourself for your oversights and mistakes, concentrate on goals and success habits that can help you to avoid making the same mistakes twice.
To achieve this, consider creating a list filled with goals you would like to achieve during your future real estate business deals. But make sure that your goals are timely, realistic, measurable, specific, and attainable. For instance, rather than saying that you want your next deal to be a successful one, say that you would like your next deal to net you a certain dollar amount. Also, be sure that your new plan provides you with a solid fallback option, too.
Now that you have a good idea of what you’d like your next deal to look like, it’s time to take action and make it happen. In other words, start looking for your next apartment deal. The more investment properties you buy, the more experienced you’ll be in spotting potentially lucrative deals and bad deals. Also, you’ll be in a better position to recover after one failed deal if you own many assets that are generating revenue for you.
Once you realize that a deal has gone belly up, you may immediately feel discouraged. And understandably so. But the good news is that every cloud has a silver lining. You can recover after a bad deal (yes, really) and turn mistakes into cash.
I have had my fair share of mistakes as a real estate mentor. I’d be glad to help you to find your way back to the path to success after you’ve experienced a less-than-stellar real estate business deal. And, as your mentor, I’ll show you what you can do to stay on track and avoid bad deals in the future.
Get in touch with me today to learn more about how you can live your best life in real estate investing no matter what the industry throws your way.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.