Things NOT to do in Real Estate
This is an ever-expanding list of things NOT to do in real estate. I've found over my career that knowing what NOT to do is incredibly powerful.
Do NOT rely on appraisals, comps from realtors, and ARV's from wholesalers alone for determining property value.
Do NOT trust the ARV without putting it to the test.
Do NOT buy a property using a quit claim deed only.
Do NOT buy a property unless there is an attorney involved on at least 1 side of the transaction, preferably a non-biased 3rd party.
Do NOT assume people are doing their jobs correctly. This includes attorneys, realtors, appraisers, assessors, bankers, contractors, title companies. Always double check people's work, it will pay off huge in the end.
Do NOT pay any upfront fees to a private lender. This is the easiest way to get scammed.
Do NOT buy listed properties for full asking price. This is what a sucker investor does.
Do NOT rely on the renovation alone to create value. You MUST make your money on the difference between what you're purchasing it for and what it's worth THAT DAY. Don't pay for potential future value before that value exists.
Do NOT put earnest money down on any deal without having guaranteed financing lined up.
Do NOT promise anyone a closing in under 30 days if title work has not yet been ordered. Many time delaying factors will be out of your control in this process, all you will do is upset sellers if you overpromise and under-deliver.
Do NOT pay for a real estate course. All of the info you need is available for free, you just need to organize it, which is what I'm attempting to do here.
Do NOT assume your favorite guru is doing as well as they let on. Most guru's make more money selling courses than they do from actual real estate.
Do NOT buy tools for your contractors, ever.
Do NOT try to be great at every niche in real estate. If you work at everything you'll be a master of nothing.
Do NOT trust that a wholesaler trying to buy your property actually has a buyer or financing lined up. If you order title work for this supposed "closing", you'll end up getting stuck with all the legal & title work bills for a closing that never happened. Wholesalers' main objective is to get as many contracts as possible "tie-ing up" as many properties as possible. Don't assume they have an end buyer or cash lined up no matter what they say or promise. Don't order title work without them putting up at least enough earnest money to cover it.
Do NOT advertise yourself as a wholesaler, ever, even if you really are one. People in this industry don't respect wholesalers like they do flippers & investors. Strike the word wholesaler from your vocabulary when introducing yourself and what you do.
Do NOT get so attached to one deal that you stop searching for others. Putting all your eggs in 1 basket is the surest way to fail.
Do NOT try to outsmart the IRS. I have made it through 2 full IRS audits successfully. They are smarter than you, I promise. Any gurus who brag about avoiding taxes are probably less successful than you think. Audits are expensive and the more you get into the grey area, the more you risk getting flagged for one. I got through mine because I had money to spend for my staff to work full-time round the clock putting 10+ binders together and a high priced accountant. This took months. You may not have this luxury. I paid 6 figures in taxes this year, plus it's the right thing to do. "Ask not what your country can do for you — ask what you can do for your country." - JFK
Do NOT promise things if you're not sure you can deliver. This is the easiest way to wreck relationships and reputation in real estate. You may not know this yet, but real estate is a very small scene, and while it seems like everyone is in it, there are a small handful of players that control it.
I'll be adding more to this list, this is just a preliminary set :)