Top Five Ways To FAIL as a Commercial Real Estate Investor

Great little article. I'll cut to the chase, but obviously the writer (Rob Powells, a real estate coach and fellow blogger) is being a little sarcastic here. Simple lessons.

From Bigger Pockets:

So….here they are….Top Five Ways To Fail As A Commercial Real Estate Investor In The Coming Economic Storm (why only five? Well…because there are about a hundred ways to fail…who will read that?)

1. Be over-leveraged

Make sure that you are mortgage to the hilt on all your assets. This is a surefire way to make you scramble and panic as you come to the realization that you are upside down and if you sell…you will sell at a significant loss…. Even better….if you have any equity in your assets….leverage that too and buy more highly leveraged real estate.

2. Rely on your own inexperience

Ignore your mentor’s advice…or better yet, do not get a mentor. Mentors have a lot of advice based on experience. If you want to make sure you fail. Don’t get a mentor….and if you already paid for one…make sure you ignore his/her advice. Don’t fall into the trap of being a student. Your intelligence based on your inexperience is the best way to fail with flying colors.

3. Be Cheap

Make sure and do not spend the cash for a great real estate attorney or an asset protection attorney. This is a must if you plan to fail well. If your spouse or “partner” is giving you hell about getting an attorney….buy a book “Legal Advice for Dummies” or better yet…sign up for pre-paid legal. This way…you will still fail…but not fail fast. Also…make sure you do your own taxes and bookkeeping. CPAs and bookkeepers are for successful people….

4. Be a Lone Ranger

If you hate to “network”…then failure is at your doorstep. Make sure you are a loner and if you hate people….this is even better. By no means should you build “wealth lifelines” with those that can help you succeed. “Success breeds success” so say away from building relationships. Of all the ways to fail…this, by far, is the most successful way to shoot yourself in the foot.

5. Don’t sell

This is a great time to be greedy and hold out for your asking price. Just because values are plummeting does not mean you should give in to lowering your price even though your are getting your return on your investment if you sell. Most successful real estate investors are moving (or have moved) to a liquid (cash) position (getting ready to take advantage of plummeting values). By no means should you sell anything you have. Any equity you have will soon disappear and this my friends will help you owe more on your assets than what your assets are worth. Most experts ( Robert Prechter, John Williams, Nouriel Roubinii, and Harry S. Dent) are ranting about how property values are going to go down the toilet. Imagine selling your property today and buying it back at 40 - 60 cents on the dollar? If they are right….then make sure you stay greedy. The way to do this is to get emotionally tied to your properties…then your assets will be much more difficult to sell.

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