In the video, Jack shares valuable tips on the importance of paying attention to the details when investing in real estate. He emphasizes the need for personal involvement in conducting due diligence and warns against relying solely on information provided by others. He provided examples of common mistakes to avoid and advises to thoroughly inspect properties, understand market trends, and have a comprehensive understanding of the deal:
Hello, this is Jack Miller. I can’t begin to tell you the number of deals that I’ve been involved with that looked like they were home run deals and they turned out to be busts, when you get involved with the details. So, my message to you today is: the devil is always in the details. When you’re buying something, the seller always wants to present it in the best possible light, and even if the seller isn’t presenting it in the best possible light, it’s the details that matter. So, I would tell you, one of the big tips I have for commercial real estate investors is: get in the details. I speak to people all the time, and they tell me, ‘Oh, the realtor told me this,’ or ‘the seller told me this,’ or ‘a general contractor told me this,’ or ‘somebody told them that.’ Frankly, those deals have a higher propendency to blow up than if you do the due diligence yourself. It comes down to everything in terms of due diligence, and it’s really critical that you have a full and complete understanding of it up front.
So, if it’s a fix and flip or a rehab, you need to understand what is involved, what is going on, what’s behind the walls. Just the other day, we took, we were talking to a borrower, and the seller or the realtor’s contractor told him, you know, gave him a price of 10 thousand dollars. We suspected something was wrong. We went back and it turns out there’s mold, and that 10 thousand dollars turned into 40 thousand dollars. So, that’s one classic mistake, classic example of the devil being in the details. If you’re buying it, check out everything.
If it’s a commercial property and it’s zoning-related, don’t just go by what somebody says. Go to the township and check it out. In the era today of buying properties online without seeing them, where you pay someone 150 dollars or some amount of money to see them, honestly, it works out sometimes, but a lot of times it’s a big disaster, a big disaster. And when you have a big disaster in real estate, it’s a big disaster. Take the time, invest the time up front. A couple areas that I’ve seen people go south on is rehabs.
Understand the rehab, don’t just go, ‘Oh, the seller said a new roof was put on two years ago, and they give you a roof warranty.’ You know, I could print up anything on the computer. Take the time to inspect that. Take the time to have a full understanding of the work that’s needed. Same thing with comps. You know, oftentimes buyers will be presented comps. Well, that’s great, but maybe that somebody left off a wrong comp. So, you have to take the time to understand the comps, understand the market, and do your own research and look for something that wasn’t presented to you. Understand market rents, understand the title, understand zoning. If there’s leases involved, read the leases. Plenty of times, I’m involved with situations where a borrower just doesn’t read the lease. They’ll maybe read the dollar amount, ‘Oh, the borrower’s paying 2000 a month or 5000 a month.’ But you have to have a full understanding of what else is involved with the lease. The economic rate is just one small part of it. So, my advice to you is, it’s absolutely critical. The cost is great, the risk is too high. Do your homework, get involved with every detail of the deal, get involved with minutia of the deal, micromanage it. Don’t depend on anyone else and understand everything about the deal yourself. Don’t depend on anyone else.
I don’t know who it was, but somebody said, ‘Measure twice, cut once.’ I would say, in commercial real estate, in real estate investing, measure three or four times and cut once. So, be careful. It’s a great field. You can make a lot of money in the field but get involved with the details. I see almost every day of the week where someone has a deal go bad. I’m exaggerating, I don’t see it every day that week, probably once a week, where someone has a deal goes bad, where they don’t know the details, and it could have been avoided. It could have been avoided. Remember, there’s a million great deals out there. So, my message today, short and sweet. I’ve gone over my allotment of time. Get into the details, dig deep, read every document, learn everything. You can’t know too much about it. Do it yourself, don’t depend on anyone else to do it.
Anyway, this is Jack Miller. Have a great day! If you like the video, hit like, comment on it. Feel free to comment, like the YouTube channel. Hit the bell or button, you’ll be notified when others, and remember, I’m with Gelt Financial. We’re financing America. “When your bank says no, we say yes”. Have a fantastic day out there and make a lot of money in real estate. Despite all my telling you all the things, all the things you have to look out for, you can make a fortune in real estate. You just got to be careful. Don’t be a sucker. Don’t fall for all this nonsense you watch on TV and radio. You got to pay the price and dig deep into the details. Take care and have a great day.
Category: Borrowers
