Investment Property Messes And How To Avoid Them

In "The ABCs of Real Estate Investing," Ken McElroy writes at length about the importance of putting together a team of experts that can help you with all the information-intensive steps of the buying, selling and upkeep of real estate. It makes sense if you consider that the first people he advises you to get on your team are an attorney and an accountant.

Everybody knows that you should represent yourself or do your own financial paperwork. For one thing, you simply do not have enough time to become a legal expert and a financial expert. Even if you did, you don't have the time to handle all those matters on your own. That stuff has to be done while someone goes out and hunts for new properties. Meanwhile, the current properties have to be managed.

It's like trying to run a restaurant with no employees. Yet, there are people who attempt just that when it comes to real estate investment. And those people have to either cut their losses and run, or go to great expense to untangle the inevitable mess.

Since McElroy owns a property management company and is one of Robert Kiyosaki's advisers (as detailed in his Rich Dad book series), he has probably untangled quite a few messes for other people in his day. In "ABCs," he spoke of one such situation.

For one thing, the man who approached him about helping him fix his real estate nightmare had bought an apartment building in a city in which he did not live and did not have convenient access. Because of the inconvenience of travel, he was not able to tend the property as it should have been tended. But that was not his greatest problem.

Because he had skimped on team-building, he'd had no one to tell him not to buy this particular property. He didn't know it was in a bad neighborhood overrun with gun-toting criminals. He didn't know that a great many of his tenants were those same gun-toting criminals. He had never even visited this building.

When you embark on a real estate investment adventure, you will make mistakes. It's a given. Any time you learn to do something new there are going to be mistakes. But there are things you can do to minimize those mistakes, like not trying to reinvent the wheel. Sure, it costs more money up front to hire a team of experts to help you, but if you don't you will be wasting a lot more money trying to unravel your mistakes than you would have spent if you had done things the right way.

And not all mistakes can be completely repaired. For instance, McElroy's company could evict the bad tenants and hire security guards to protect the property, but they couldn't do anything about the surrounding neighborhood. That was something the landlord simply had to live with. Something that cost him money.

The lesson to be learned is, if you have already made a few mistakes it is possible to untangle the situation you may have gotten yourself into. But it is also possible to avoid having to untangle things in the future with a little bit of planning.