11 Things I Wish I Knew When I Was 22 And Getting Started In Real Estate
16 years ago I bought my first investment property – a 4-flat in El Paso, TX. I was 22 and I didn’t know it at the time but I had no clue what I was doing. Freshly armed with a Real Estate Investing for Dummies book, I was ready to take on the world. The good thing was my ignorance didn’t stop me from taking action; The bad thing was I made a ton of mistakes along the way that I could have avoided. Here are 11 things I wish I knew when I was 22 and just getting started in real estate.
Go bigger, sooner. I thought early on that there was no way to buy a bigger building unless I worked my way up to it. I was convinced that the path was single family/duplex/tri or quad plex: buy more of those things again, buy a few more. THEN and only then could I buy something bigger once I built that experience. That assumption was incorrect — you don’t have to do that. In fact, it is harder to buy a 1-4 unit property in my opinion than it is to buy a 5+ unit, hands down. Now that doesn’t mean people should go out and buy a 100-unit property on their first go around. That to me is a little foolish and certainly a recipe for disaster (unless you have some smart, experienced folks as part of your team).
Time has a funny way of healing mistakes: What I realized in real estate is that even if you make a ton of mistakes, time has a funny way of forgetting all about them. What exactly do I mean here? Well, let me walk through a story. I bought an 11-unit property with some of my friends years ago and we made a TON of mistakes. We botched how much money we needed to get started (literally had no reserve capital); we had to fire our property manager in the first 3 months; the entire roof needed to be replaced in the first 3 months; we had a hoarder in one of the units and we had to evict at least 5 of the 11 tenants. We then went on a mission to straighten this place out, which always takes way longer than you imagine. Over time we got the right manager in place, we got the right tenants in, we improved the units which helped raise rents, inflation did its thing and helped raise rents further, the neighborhood improved, our expenses stabilized, we paid down the debt and our NOI got healthy, and we were lucky to ride one of the greatest bull markets in the history of capitalism. The past mistakes were literally wiped away when we sold the place 7 years down the road, over quadrupling my initial investment. Buy real estate and wait!
Action is the best education: I say this all the time, but you can’t learn everything from a book. At some point you have to go out and take action. My real estate life has been full up starts, stops, and “relearn and go again”s. But the trick is to always keep going and don’t make the same mistake twice.
Yes, luck has a lot to do with real estate success: Tell me I am wrong here and I will argue this until I am blue in the face. Sure, I did a lot of great things over the last 15+ years; I put myself in a position to make a lot of smart moves and I took action. While admirable, a lot of the success I had in real estate had a lot to do with luck. I was lucky I graduated college the year I did; lucky that I road a giant bull market all of these years; lucky that I had capital to buy when everyone was selling; lucky that I operated in an interest rate environment that was as great as it was; the list goes on and on. Luck played a big role in everything I have helped build, but I certainly couldn’t have gotten lucky if I wasn’t in the game. As the saying goes, “you can’t lose what you don’t put in the middle, but you can’t win much either.”
Leverage primary residence loans to buy multifamily real estate. Seems like a no-brainer but I messed this up early on. I recently helped a veteran buy a 4-unit multifamily property for ZERO DOLLARS OUT OF POCKET. He literally paid ZERO DOLLARS to buy a $985k 4-unit property in Chicago. FHA and Conventional loan products now allow you to buy at 5% and below down. Take advantage of these early, learn about house hacking, and start building wealth before it becomes more difficult to live in a 2-4 unit building.
Get a mentor and nurture that relationship: Another no-brainer but you can effectively collapse time by learning from someone who has been in the end zone before. I never really did a great job at this and I regret it every day when I run into a road block that I don’t know how to solve. Mentors can help unlock little hacks that save you time and money simply because they know the right person to call or have already done the same thing. Find someone a little more experienced than you and find a way to provide some value to them so that in exchange they will provide some value to you.
Don’t burn any bridges: The real estate industry is a small community — everyone knows everyone in some way. Be professional, don’t speak badly about other folks, do what you say you are going to do, and never sever a tie or lose a relationship over a problem that can be solved.
Be a good buyer: I frequently give this advice to my clients and sometimes get a lot of weird looks. What does this mean? Basically it’s as easy as it sounds. If you want to buy a lot of real estate, you must be a buyer that other’s want to work with. This means having your ducks in a row, having your financing lined up and ready, having your money seasoned and squared away, and having your team assembled. It could mean not acting like a jerk in a transaction, or squabbling over pennies. No one wants to work with a jerk, especially an inexperienced jerk. You want to ACT like you’ve done this before, even if you haven’t. Notice I didn’t say LOOK like you’ve done this before — I don’t mean have a fancy suit or a bone-colored, ‘Silian Rail’-fonted business card; I mean do the things that good, professional buyers do.
If you spend any time learning, learn about taxes: I hate to say this (like really, really hate to say this), but TAXES ARE A HUGE PART OF REAL ESTATE. The US Tax Code was created in a such a way that it clearly favors real estate professionals and business owners. You need to take advantage of this and you need to learn the rules quickly. Read some books, because that’s what good, nerdy tax guys do, but most importantly align yourself with a good accountant. I have two accountants, one that’s tactical (i.e. does the books and the tax returns) and one that’s strategic (looks at the big picture and helps plan for the long run). You won’t need to do that until it makes sense, but learn as much as you can as early as you can. I promise you, you will have an asymmetric knowledge advantage over all of your peers in the business. Most real estate professionals know little to nothing about taxes and tax rules.
Don’t waste time “professionalizing” yourself: This is one of my favorite points to bring up to young investors or entrepreneurs. When starting a business, so many people fall into this trap of trying to look the part. I did the EXACT SAME THING. I literally bought the newbie real estate investor starter pack: LLC from legal zoom - check; Stock website - check; 500 business cards - check; called myself the “CEO” - check! Looking back it is hilarious to think of those times and how naïve I was. Some of you are reading this and nodding your head that you probably did this too. It’s ok, just not necessary. Find a deal first, then do what you need to do. I didn’t need a website until we started a legitimate management business and had over 50 doors.
FINALLY – don’t waste your time doing things you hate: I hear a lot of leadership guidance that focuses on improving your weakest areas. I try and take the opposite approach and focus on the things I am strong at, and outsource the things that I’m not great at or would rather not do. It may take you a while to figure out what you love doing within real estate (or any venture for that matter), but get really good at something, and then triple down on it; THEN start offloading the things you hate doing (except taxes, always learn and get better at taxes!).
Looking back on my journey, it's clear that real estate is an ever-evolving adventure full of lessons, challenges, wins, and losses. From that first 4-flat in El Paso to the diversified portfolio my team and I manage today, each step along the way has taught me something. If there's one main takeaway from my experience, it's that taking action, even imperfect action, is the key to success. Embrace mistakes as learning opportunities, surround yourself with knowledgeable mentors, and always be prepared for the unexpected. Real estate is not just about properties and profits; it's about growth, persistence, and the pursuit of your goals. So, to all the aspiring investors out there, remember: start early, go big, and never stop learning. You can shape your future one property at a time.
