One of the nice things about growing up is that you can blame a lot of your mistakes on being “young and dumb”. If you go to an expensive private school and pick a major that doesn’t have very good job prospects, there aren’t many people who will blame you. You can’t really expect 18 year old kids to make the best life choices when they’re thinking more about the opposite sex and partying than their career prospects and financial future. Make the same bad choice 10 years later and people’s opinion of you will be vastly different.
Even the brightest people on this planet are going to make a mistake here and there, but in real estate, when you make that mistake it will have a huge impact on your life. Losing half your net worth in a real estate deal at the age of 65 is a lot worse than doing the same at the age of 25.
So how do you avoid making a real estate mistake at the wrong time?
Buy Your First Property Early
Now that we live in the golden era of information and data, there are lots of calculators and simulations out there that you can try out before you ever even apply for a mortgage. These tools are extremely helpful when it comes to telling you what your monthly payment will be like but they do little to account for all the extras.
I can tell you from first hand experience that there are many issues that will undoubtedly come up with your first property. There’s always going to be a scenario you haven’t prepared for or something you didn’t think of. You won’t ever find out about any of this until you go out and buy your first property; no amount of research will make up for first-hand experience.
What Could Go Wrong?
Most of us tend to move around a lot during college and maybe even for a few years after that. During that time, you might shack up with your friends in apartments here and there, maybe even move in with a girlfriend, but eventually you’ll probably start thinking about buying a place on your own.
The average length of home ownership these days is 7 years. I don’t think I’ve ever stayed in an apartment for more than 2 years and I know most of my friends are the same way. If there’s something you don’t like about your apartment, you can always move after a year or two and it’s no big deal. But owning a home is obviously nothing like renting an apartment since if there’s anything that bothers you you’re kind of stuck with it.
My First Property
Even though I was generally happy with my first condo purchase a few years ago, there were lots of mistakes that I made. I am really glad that I made those mistakes though with my modest condo before buying a much larger and costly house.
By SoCal standards, my condo was pretty cheap but the house my fiancee and I would some day like to own something that will be about four times the price of that original condo. I plan on leveraging all of the knowledge I gained from my first property in order to make an informed decision about the next and hopefully final one.
Tell us more about your first real estate investment property. We’d love to hear about some of the real estate mistakes you made and what you learned from them. Please share this article and let us know about your early mistakes in the comments section below.