Common Real Estate Investing Mistakes

Oftentimes we talk to real estate investors or people thinking about starting to invest that think real estate investing is a sure thing but many people make the same few mistakes.

Experience has taught us that if you are able to avoid these common errors you’ll be well on your way to accumulating the  real estate riches that you are dreaming about.

Be Careful and make sure you don’t fall into one of these traps

  1. Avoid poor research. Most of us do a lot of research when we make relativiely small purchases. How much time did you spend thinking about the last phone you bought?  Would you have thought about that even more if it cost a couple hundred thousand dollars? Our guess is you’d have done even more research! So why is it that we often just spend a few hours researching a  piece of property?
  2. Inadequate or inappropriate financing. Its so easy as a real estate investors like to try to get into a deal cheaply, or to negotiate hard for your preferred terms. Real Estate is complicated and the deals we make tend to have a lot of moving parts. This also true of the financing portion of the deal. You might negotiate a balloon payments, a longer or shorter amortization period, interest-only, owner financing, or something else entirely the point is its really important to spend the time to get the terms that make the deal work.
  • Its easy to get carried away or to fall in love with a property but you need to remember that getting your price with out the right financing can still kill a deal.  You might even be willing to pay more for better terms. Be sure that you can unload the property or get other financing before a balloon payment or a rate reset kills your deal dead.


  1. Trying to do too much. Real estate is a team sport. Consider hiring a property manger, a good contractor or a great book keeper, you are unlikely to succeed on your own. You probably need at the very least , a real estate agent, attorney, title company, inspector, handyman, and insurance agent that you can call at the drop of a hat, you just dont know when you will need their services.
  • Get expert advice. Make connections, be networking all the time, you don’t know what you don’t know.


  1. Avoid overpaying. This should be fairly obvious but knowing the right price is a product of doing your due diligence (see number 1. above). Over paying is a sure fire way to kill a deal. If you pay too much you will likely be stuck with a property that is dragging you down.
  • Beginning investors are much more likely to work the numbers a little bit in an attempt to make a deal work. Do not do this!  Do your due diligence  and trust the numbers.  Don’t over pay!


  1. Failing to check the numbers. This is similar to overpaying. Often investors will look at a repair budget and think, ” I can get it done for $14,000, my contractor or so and so investor is crazy to think it will cost 20K” But what if it really takes 25k? If you first over pay and then you under estimate the budget you will be completely screwed. If you dont know for sure what something will cost you have to do more research, Get a quote, do what ever you have to, to make sure you know the numbers
  • Also make sure to account for all expenses. Missed expenses like landscaping, insurance, utilities, property taxes,  etc can destroy your cash flow. Be realistic with your budget!

In our opinion pretty much everyone has made some or all of these mistakes. The trick is to make them less often than everyone else.


At every point in the market cycle there are moneymaking opportunities, just don’t let these mistakes sink you!

For more information about the market cycle check out episode 13 where we explained how to figure out where you are in the market cycle

Or check out our most recent episode with Harry Dent Jr.

How to Invest in Big Real Estate Deals Without Being Rich

We promise “We’re not the Mafia!”

In this episode we talk about the often misunderstood topic of real estate syndication. We talk about how to invest in other peoples deals and how ordinary investors can own larger apartment complexes and other large commercial projects. We talk about the different ways to invest in other peoples deals, through lending, partnerships and limited or passive partnerships. We dig deeper in to limited partnerships and we talk about how they work and what you need to look for if you are considering investing in a syndication or limited partnership. We also cover the advantages and disadvantages of doing so including.


i. Chance to get in to bigger deals

ii. Diversification

iii. Much more passive than most real estate investing—mail box money

iv. Often highly tax favorable—passive losses

v. Solid returns


i. Less control

ii. Lack of Liquidity

iii. Deals rise and fall on the sponsors’ skills


New Construction Walk Through

In this video Brian and I walk through a partially completed single family home he is building up in Soddy Daisy TN.  If you have every thought about getting in to building new construction homes or are looking for a property in Soddy this video is a definite must watch for you.


What Every Real Estate Investor Needs to Know About Cash Flow Video Book Review

In this video I break down Frank Gallinelli’s book,  “What Every Real Estate Investor Needs to Know about Cash Flow and 36 other Key measures”  I really loved this book and thought it was super helpful so I taped a short summary of the book.  Hope you enjoy the video and as always please like subscribe and share our videos.


If you want to buy the book please go over to amazon using THIS LINK so we get credit for the sale.  (affiliate link-we might make a little money on this but it shouldnt cost you anything more than buying it any other way on amazon)



Episode 6: Is it really possible to invest passively in Real Estate?

How passive are your real estate investments? Are they really passive? Is it even possible to invest passively in real estate? These are just a few of the questions we answer. In this video we introduce the passivity scale a measure of how passive a particular investment actually is. Recognizing that it is the goal of most investors to get “Mailbox” money we talk in length about the feasibility of such a plan.

In episode 6 of the old fashioned real estate show we discuss those very issues.  Super happy with how this episode turned out.


Episode 5: Four ways to make money in Real Estate

Episode five is now live.  In this episode we talk about the different sources of returns from real estate investing.  First we cover Cash flows from operations which is broken into two categories,  Base line cash flows and increases in cash flows over time, then we cover the tax Advantages including Depreciation, cost segregation , deferred capital gains and the possibility of a 1031 exchange.  Then we cover Appreciation and finally Amortization,

As always we are super happy to have you here and hope you enjoy the show.



Episode 4: What type of real estate should you buy?

Many aspiring real estate investors struggle with what to buy.  Episode 4 of the old fashioned real estate show is a primer on the differences between the various types of assets and investor could consider.

Let’s us know what you think and as always if you are enjoying our show please subscribe or gives us a thumbs up.


In this episode (while drinking old fashioned cocktails) we discuss the Advantages and Disadvantages of Different Real Estate Asset Classes including Single Family Residential, Multi-family Residential (duplex, triplex, quad), Apartments (5+ units), Commercial (Office, Retail, Industrial)

Some of the highlights we cover include.

Single Family Residential

Pros : Low cost of entry, Generally lowest risk due to cost (market dependent), Appreciation is not tied to rental income, Typically lower tenant turnover compared to other residential classes Expenses tend to be lower than other asset classes, Most common asset type and Rents tend to be higher than similar unit in multi family configuration.

Cons:More volatile on price since primary value is based on comp sales. Property is either completely occupied or completely vacant (No STR’s) Cash flow not as much as other classes, No economies of scale due to single tenant, single location relationship. Financing is recourse

Multi-family Residential

Pros: More stability. Two (or more) tenants vs single, Greater income potential Values don’t fluctuate as much as single family Income approach is weighed more heavily in valuation Appreciation can be forced through rent increases, Easier to finance (typically) than single family

Cons: Higher turnover than single family Expenses run higher (tax assessments, pest, landscape, turnover costs) Financing is recourse. Higher barrier to entry


Pros: Generally most stable of asset classes Tenant base is diversified. Rents on apartments tend to recover faster after a downturn. Value is generally tied to NOI (income after expenses) More predictable due to rents being primary driver of value Appreciation upside can be tremendous equity addition Greater principal reduction on loan=faster equity build Typically greatest demand due to rent price Non-recourse financing, depending on loan size

Cons: Higher barrier to entry, Higher expenses than other residential asset classes, Consistent turnover of units-expenses are constant.


Pros: Longer term leases , Lease flexibility (tenants can pay tax, insurance, maintenance), Stability – Tenants can be large companies presenting less risk. Value is tied to NOI Financing – Non-recourse depending on loan size and lenders tend to look at the project as much or more than the borrower. Lower expenses compared to residential asset classes as a percentage of revenue More passive typically than residential

Cons: Vacancies last longer, Re-leasing expenses are far greater than residential Tenants are more susceptible to the business market cycle whereas housing demand is constant. More competition Shifting trends in desired locations (high rise office less in demand in some markets)












Old Fashioned Real Estate Show Episode 2: The Brian Leverage Episode

In this episode, Jeff interviews Brian about his background and we learn about how he got in to real estate investing, what he did before he was an investor and perhaps most importantly we learn about how he takes his Bourbon.

Check it out and let us know what you think.




Real estate investing for passive income.  Learn more.  Education Old Fashioned Cocktail.  Brian Levredge, Jeffrey Holst.  Real Estate Syndication, investors, syndicators,