As I sit here snowed in from all the “rain” in Pollock Pines, I’m beginning to realize another essential element of real estate success. And therefore another ingredient which goes into a recipe for a real estate disaster:

Recipe for Disaster #4: Not Getting Educated

I’m not talking about a college education here, of course. I’m talking about getting all the information about investing in real estate before you do anything. Okay, maybe ALL the information might be a stretch. But you should be pretty well versed in the area, prices, days on market, the types of homes in the neighborhood and so on. If you’re a first time home buyer, you’re obviously in the right place. This blog has so much information on finding the right place, getting the right Realtor®, what happens during home shopping and how to write an offer, what to offer and so on that you’ll be hard pressed to find a better resource. Nonetheless, remember that finding a home is more work than you might think.

The recipe for disaster comes in when you ignore doing your homework and jump headlong into something for which you have no exit strategy. The world’s best businesspeople will tell you to think of an exit strategy before you get into anything. It seems like you are thinking in reverse, but that’s a good idea. Beginning with the end in mind is a good way to begin. Of course, if you’re buying a home to live in, this question becomes (mostly) irrelevant.

With Serin, he did I suppose learn a few tricks from the real estate coaches, but didn’t take an indepth enough approach to eventually do well. Which was what was required. He hopped around from one idea to the next (and one property to the next) – something that was sure to end in doomsday as it finally did.

Recipe for Disaster #5: Being too Public

Now I know most of the publicity in the Serin case came after he had already made a mess of his so called real estate investments, but I think there’s something to be learned from that too. The problem was that he kept wanting to milk his mistakes to the very end. He started a blog about what a mess he had made, so that others could learn from it. He started a book, appeared on the Dr. Phil show and various other places for interviews, thus costing him whatever sympathy he had managed to generate from people just reading his story in the newspapers.

The problem with being so public about your real estate investments is that you tend to begin to make decisions based on reactions. You begin to stop thinking logically and rationally and begin reacting. Believe it or not, there are people out there that will be either threatened or just plain envious of your success and create impediments. When I said earlier that you should talk to a varied enough audience about your real estate ideas, that has to be in moderation. Get too public and it can become a pretty big recipe for a huge real estate disaster.

Recipe for Disaster #6: Not Sticking with It!

Real estate is a very strong investment – whether you’re one of those buying it as a home you will live in or you’re going to buy the house and rent it out. However, it does require patience. Many of the real estate investors (and homeowners) I know believe that the first ten years of owning real estate is just the beginning. While you may have heard stories of overnight millionaires in real estate, the truth remains that those are few and far between and have had oodles and oodles of luck. The real real estate moguls always win by buying at the right time and waiting it out.

Serin didn’t wait for anything. He didn’t even pause to think. Even after he had a mistake and learned he had made many mistakes, if he had just held on a little longer and found a way to make it work, he would have been much happier. Unfortunately, when the market turns, not too many have the fortitude or the insight to be able to hold on to their properties until they start to turn a profit. Of course it goes without saying that some cash reserves help in this regard. This is where the getting educated part comes in. Now, some people would call this preparing for the worst case scenario and that might just be true. Get educated and then have the resources to wait it out. If you don’t, that’s a recipe for disaster as sure as can be!

Now, please remember that I am not bringing up Serin to bash him. I think there’s been enough of that. I think he made some unforgiving errors of judgment and then some more to follow them up with. The reason I’m writing this post is so that even in this market we don’t miss out on the lessons we should be learning from the mistakes in the past. Even if they are made by someone else, no one is immune to them. Avoid these pitfalls and avoid creating the perfect recipe for your own real estate disaster, lest you end up like Serin! Good luck!

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