Learning from my mistakes by Russ Egan

by Greg on February 5, 2016

House for sale

I purchased my first property when I was 24 years old. I did huge amounts of DIY renovations and was able to increase the value of that property by 17%.

This enabled me to purchase my second property at 25 years old. This property made absolutely zero in terms of market growth but did teach me a lot about macroeconomics.

I scrimped and saved and purchased my third property at 26 years old, leading the way to a successful real estate portfolio.

Along this path I made a lot of mistakes – all of which taught me very important lessons. Lessons that are widely available in most real estate magazines and blogs, but I needed to experience them myself to fully understand. Hopefully I will be able to share these mistakes with you so that you can avoid them all completely.

I have made two major mistakes – ignoring the macroeconomics of supply and demand, and the decision to do renovations myself rather than use tradesmen.

I did not do sufficient analysis into the local market when looking to purchase my second property. I chose a location close enough so that any renovations or maintenance could be done by myself, which reduced my options dramatically. In terms of market value I only looked at yearly growth values and checked for local shops, schools, and transportation.

What I did not check was the large scale developments that were being constructed nearby. I thought these were far enough away that they would not influence the area I was looking at, but this turned out to be incorrect. The sheer number of new houses being introduced to the market diluted my slight positional advantage. The impact of macroeconomics through supply and demand cannot be ignored, and I should have conducted a lot more investigation and analysis to have guaranteed any success and profitability.

I am a practical person and decided that I wanted to do everything myself on my first renovation – both as a learning opportunity and to reduce my expenses. I spent all of my free evenings and weekends on demolition, cleaning, gardening, paving, and cosmetic renovations until I had to paint the property.

After two days of sanding, preparation, cutting in, rolling, and multiple coats I had only finished one single bedroom. Frustrating and annoyed I went to the pro’s and hired a painter. He completed the remainder of the house in a fraction of the time.

The most valuable lesson out of this experience was the difference in quality between an enthusiastic DIY’er and a professional tradesman. Yes, it can be much cheaper to complete the job yourself but at the end of the renovation if there is a distinct lack of quality then the outcome in terms of market value and profit may be at risk.

Real estate is a great investment tool and it is remarkable fun as well, but it can be very complicated with a lot to learn. Thankfully there is a lot of information available so that you can avoid making the same mistakes that others have already made.

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Russ Egan

Russ Egan is an enthusiastic property investor. Born in country Queensland and an engineer by profession he has been successful in building wealth through real estate investment, cosmetic renovations, and small scale developments. You can find out more about Russ on his blog.

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