Real Estate Truths: 10 Mistakes We Made So You Don't Have To

**Michael Zuber** (0:00)
All righty, folks, it is a fact of life, all of us, including Casey and I, make mistakes. But what we're gonna do here is we're gonna find the silver lining in 10, yes, 10 mistakes we have made, five each, that made us better investors. And as always, we do guest first, ladies first.
Casey, what do you got? What's the first mistake that made you a better investor?

**Casey** (0:25)
Well, the first one is, of course, tied to my tenant whore story. But my first mistake is giving tenants too many chances.
Being too understanding about late payments, or being too lax with lease violations, and just accepting excuse after excuse, wanting to be nice and kind. This mistake actually made me a better investor. It was a very expensive lesson. It was a five-year lesson. I mean, this lady was there for five years, and it was just one thing after the next of giving her too many chances. But after this, I really toughened up my lease agreement. I formed the cake method after this, and now everything that I do, and everything that I teach, is just so much more rock solid, and kind of bulletproof. So I would say mistake number one was giving tenants too many chances.

**Michael Zuber** (1:25)
All right, so my first one kind of starts with the journey that ultimately became One Rental At A Time. It actually starts in a different asset class, and it was the stock market. I had a crazy run in the stock market where I personally turned seven grand into almost $200,000.
Again, that sounds impressive, and at the time I thought it was. I was very egotistical. I started out being a true investor. Then I became a speculator, ultimately became a gambler, and the creme de la creme was when I said out loud that I'm smarter than Warren Buffett. No, you're not.
No, you're not. What I failed to realize was the tide was going up, and the chips that I had put in the boat were going up because the market was. And I mean, I remember the day we were in Hawaii, and we were trading options, and I did something completely stupid, and came back after having buffet breakfast, and made like five or 10 grand. I mean, it was stupid times. And it took four years to build, and it took like four seconds to lose 80 percent of it. So I learned a very important lesson. You're not smarter than Warren Buffett. I learned that you need to stick close to your knitting, being an investor versus a gambler or speculator. The market's addicting.
I now run away. When everybody runs towards something, I run away. It's just a natural reaction. And that saves me all the time, because the herd usually runs off the cliff. And I'll be at the bottom picking up the pieces. So yeah, that's my first one. I'm not smarter than Warren Buffett.

**Casey** (3:14)
That's a big lesson learned there.

**Michael Zuber** (3:15)
Yeah.

**Casey** (3:16)
Oh, that one sucked.
Okay, my second one is over renovating. So early on, we did things to improve our newest properties, that our first one that we shouldn't have done. I mean, we were buying a $100,000 house in Memphis and scraping the ceilings, taking the bumper off. Like, why are we doing that? I mean, I got some good muscles from scraping the ceilings. As a matter of fact, I had to do it because Blake kind of blew his finger off. Remember, I had my Etsy shop, and well, I was still kind of doing that, you know? This is our first property, and I had him make for me an etching box. Like, I couldn't afford an etching machine to etch metal and glass, so I had him make me one. So he had used a circular saw and cut plastic, and it exploded, like, and it kind of messed up his finger. It grew back. But that being said, I had to scrape the ceilings with my mother-in-law.
But anyways, over-renovating really is something that I know a lot of people fall into the trap, and every once in a while, I'm still a little bit guilty of it, too. The last property we bought, not the one we just bought, but the one before, I really was in love with this. You know, it was the nicest neighborhood we bought in, and I'm like, I want to make this bathroom nice. And after buying this tile for the floor, I was like, how come this small bathroom tile was 400 bucks? Like, what did I just do? You know, so over renovating one, it's not going to increase the value of the property by much, you know, and over renovating when you aren't going to see that back in rent, you know? I get it if you are trying to do a cash out refinancing or getting an appraisal, maybe you want, or flipping, you want the value to be as high as you can. So some, you know, there is no real over renovating, I mean, to an extent as there is with long term rentals, but over renovating, spending too much money on things that aren't really bringing you the return is something that I learned and still once in a while continue to learn, and you have to run it through the filter of, if I do this, is it going to increase my rent and the value of my property? And if I plan on holding the property for long term, and it isn't really going to increase my rent or get the property rented faster, why am I doing it right now?