Story Time: My 3 BIGGEST mistakes (so far) in Real Estate and life...

What's up you guys, it's Graham here. So, one of the things I don't really talk too much about are my mistakes and my failures. So, I'm going to be sharing the top three just fuckups where I messed up, and hopefully, you guys can learn from my mistakes.

My first big mistake was not getting a credit card when I was a lot younger. I got my first credit card when I was 21 years old, and I actually got a credit card because at the time I wanted to buy some real estate. I spoke with the lender, and they flat out denied me because I had zero credit. Now, quick backstory here: growing up, my parents had been in crippling credit card debt. They lived paycheck to paycheck for quite a long time. My parents were amazing; they've been so supportive. They have done everything right in terms of parenting and in terms of advice, and everything. They've been awesome parents. But when it came time to credit cards and financial literacy, they weren't necessarily the best to teach me what I should have done back when I was like 18 years old.

So, growing up, I had the impression that not having a credit card was a positive thing. I grew up always paying with debit cards and cash because I believed in my mind, and growing up, I believed being able to buy something cash or with a debit card was the right thing to do, because it meant you could actually afford it. I just truly didn't understand people that were paying with credit cards, because I thought, like, what's the point of that? They're just going to pay it off anyway; they may as well just use a debit card and pay it off. In my mind, I thought that I was the shit never having to use a credit card. I thought that, like, I'm going to be the only person who's ever able to get through life without having a credit card ever, and that's going to be so cool. And I'm just going to do everything cash, 'cause I never need a credit card. I'm better than that.

What a mistake. What a mistake that was. In 2011, 2012, when no bank wanted to give me a loan, it was quite the wake-up call. So, I ended up getting a credit card shortly after that, but by that time, it was a little bit too late. I had ended up buying three rental properties, and I ended up paying cash with about 3 and a half to 4 years' worth of savings. Now, had I got a credit card when I was 18 years old and leveraged my money to buy real estate in 2011, 2012, I could have probably added about $500,000 to $700,000 in additional net worth had I just leveraged my money back then.

Now, of course, all of this is in hindsight. Everything is a learning experience; everything is a lesson. But at the same time, I look back, and that is probably one of the biggest mistakes that I made is not getting a credit card when I was younger. And again, it was just this backwards financial advice that I had just grown up with—that credit cards were bad, that credit cards were evil, and that I was a better person for not having a credit card. What a mistake.

But again, it's a learning experience. I got a credit card shortly after that, and now my credit score is about 780. I don't have any problems getting a loan, and growing my credit has been such a great experience. So, for all of you watching, if you don't have a credit card right now, I highly recommend getting a credit card as soon as you can. Even if it's like a $300 secured credit card limit, it doesn't really matter. Just get something. If you're under the age of 18, even ask your parents to co-sign with you for a small credit card—maybe just a few hundred—put your expenses on it, pay it off in full at the end of the month, and at least start building your credit. That is going to pay off huge by the time you're older.

So, seriously, take my advice on that. The next thing I messed up on was shortly after the credit card fiasco, and that was picking the first tenant that came to rent my property. Again, here's a quick backstory: In 2012, I had closed on one of my rental properties, and at the time, I was buying two other properties at the same time, remodeling those two properties at the same time, and essentially, I was wiped out financially. I had zero left in my bank account. At the time, I actually had to borrow almost $2,000 from my grandma to help pay off a contractor so I can finish the work because I got tapped out. I literally invested every single cent I had in these properties in real estate.

I had nothing left. My bank account was zero at the time, so I was a little bit anxious when it came time to rent out my property. I knew as soon as I rented it out, I would get first month's rent, I would get a security deposit. That would be enough to pay off my grandma and at least add some sort of cushion to my bank account. Well, I put my property online on Craigslist, and a tenant came in. He came to my office, and I met him, and he seemed like a really nice guy. Now, I hate to judge people based off their appearance, but this guy seemed like a pretty clean-shaven guy, was wearing a nice button-down shirt, khakis, and dress shoes. He seemed pretty well put together. He was there with his girlfriend as well; she also seemed fairly well put together.

We chatted for a minute; I got their application. Now, their credit was a little bit shaky—he had really bad credit from defaults. Now, back in that time, between 2009 and 2011, 2012, it wasn't uncommon for someone to have defaults. Everything with the economy happened at the same time; everything crashed at the same time. So, a lot of people were experiencing problems with their credit report. I honestly overlooked a lot of the red flags. He also had a cash business, and she was a psychic, so they couldn't really prove where all the money was coming from. It was really just like regular cash deposits in her bank account, and I was an idiot. I totally overlooked everything.

They were also willing to move in immediately, so I knew I really wasn't going to miss out on any rent, and that was quite the mistake. I signed them up the next day, and I should not have done that looking back in hindsight. But I was so focused on paying my grandma back and getting some sort of money in the bank. Essentially, I was desperate at the time, so I rented to him. Now, the first few months were fine, and then slowly after that, the rent started to be paid later and later. And then after that, he started asking me to pay in chunks. He wanted to pay the first week of rent on this day and then like the next week of rent on that day, and then he'll have like the full amount for the next month like two weeks later. It started not to all add up.

Now, one year into him paying late rent and him paying partial rent—that's about 2013—I wanted to refinance that property, use that as money as a down payment for another property so I can get another rental. Well, I tell him that I need to have an appraiser come in the house to appraise the property. He tells me that he doesn't want anybody going in the garage, and I said, why? He says, well, I don't want anybody to get the wrong idea. You see, I'm growing roses, and there's some stuff set up in the garage, and I don't want people to get the wrong idea. I'm like, dude, you're growing weed? I mean, just fucking tell me, are you growing weed in my garage?

Well, he said, yes, I am growing weed, but it's totally legal. I got my card and everything—I'm a licensed grower. But yeah, man, I didn't tell you because I thought you wouldn't accept me. I'm like, fuck no, fuck man, really? So, I had my appraiser go through the property, and sure enough, he sees the weed in the garage, and my loan is denied based off the weed in the garage. They said they'll give me the loan if all the weed is removed, but at that point, the tenant just stopped paying rent entirely. He knew that I was pissed off; he knew that I was going to be evicting him, so he just quit paying his rent 100%. I had to evict this guy.

It took me about three months to evict him. So, let me tell you what was involved in that: it was three months of lost rent, it was also over $11,000 in legal fees to get him evicted, and then when he left, he totally vandalized the property. He broke a lot of the windows; he broke a lot of the appliances. Now, I went to my insurance company afterward to tell them about all of this, and they called it hard living and that they weren't going to cover someone's excess wear and tear, even though it was like blatantly vandalism. So, all in all, he pretty much ruined my entire year's worth of profit on that home within about four months. Definitely was quite a learning experience.

Now, that all happened for a few reasons. One, I was impatient; two, I was desperate for money at the time; and three, I didn't do the proper due diligence into the background of who this tenant was. In hindsight, I should have done way more research. I should have been much pickier. I should have waited another week or two, because in the end, that really wouldn't have made that big of a difference, and I shouldn't have picked this tenant.

Now, my last mistake is not so much a mistake as it is a regret. As a lot of you know, I never went to college, so when I was 18 years old, I started selling real estate, and I had all of my group of friends from high school go off to college at that time, and then I pursued real estate. Now, most of them went off to college out of state or on the East Coast, and I was kind of left here all alone, being 18 years old, really not having anybody to hang out with. It's one of the parts I really don't talk too much about because for me, it was a really tough time.

But from 18 to 21, I barely had any friends. I had very few people that I could hang out with. I would go to work at 18 years old and hang out with people who were 35 to like 50 years old all day. That was all I was surrounded with, and not being 21, I couldn't go out with anybody to bars or anything like that. So, it was at this weird age where everyone I worked with was much older than me, and all my friends went off to college and were doing their own thing, and I really was somewhat all alone.

When I would see my friends, it was really weird. Imagine too, if you're surrounded all day by 30, 35 to 50-year-olds in a very serious professional work environment, and then you go see your friends, and they want to play beer pong and fuck around and just do nothing. It was a weird point too where I almost grew up too quickly because I would see all of this, and 17-year-old me would be like, oh man, that's awesome. But 18 and a half-year-old me, 19-year-old me would look at this, and again, being surrounded by working professionals all day long, I would see this and like, dude, what the fuck are you doing? This is stupid. Why aren't we doing anything?

It was this weird thing where I didn't really relate or identify with anybody like 35 and 40 years old, so I couldn't really hang out with them. That was just kind of like a strange dynamic. And I couldn't hang out with my friends because they were all acting like they were immature, you know, children, and I was like some holy, you know, professional guy that had want to have nothing to do with that.

It's a very, very, very tough time for me, and I really had to work on that. I spent really about two solid years without any friends, learning how to make friends, and that was something I would not want to wish on anybody. I mean, it was very difficult. Like, it's easy to make friends when you're in high school or I'm sure when you're in college, but when you're outside of that, actually meeting people outside of work—where everyone that I was working with was a lot older—is really hard. I mean, I maybe had two or three friends at the most that I'd be able to like actually hang out with, and those were introduced to me like by work contacts and stuff like that.

So, it was very tough, and I spent probably about two to three years really trying to like actually build friendships. I mean, it was really tough; it was really hard to do. Thankfully now, I've been able to cultivate some great friendships that I wouldn't trade for anything, but at the same time, those three years for me were really difficult. I started putting a lot of effort into making friends and having people to hang out with and shoot the shit with, and without that, I've noticed you just kind of become this shell of a person who's all about one thing.

And for me, from 18 to 21, I was just like this robotic person who was all real estate. I didn't do shit other than just real estate. I had no other interest; I had nothing else to talk about other than real estate. And that makes for a very boring, sad, uninteresting person when all you have to talk about is real estate. Looking back now, I mean, I realize that you need to be a well-rounded person. You need to have other interests; you need to have other things going on besides what your career is.

You could totally love your career, but it's still important to have other things going on, have friends, have people to talk to, because without that, it's kind of pointless if you're just doing one thing and you have no one to share it with. So, that is my advice going forward in terms of people, you know, focused on a career. Just make time for friends and really work to cultivate those friendships. It just makes life so much more exciting when you have people to share it with.

So, to recap my mistakes: my first one was not getting a credit card when I was much younger. I highly recommend to everybody now: if you don't have a credit card, get a credit card. If you're under the age of 18, see if you can co-sign with a parent just for a small secured credit card; it's really going to help you out in the long run. My second mistake is not being more selective with the tenant that I picked because I was desperate and because I really needed the money at the time. If you guys ever become landlords, do not make the same mistake as me. Fully vet your tenants and make sure they're good tenants and that everything lines up before you get them in your property.

My third mistake was not spending more time cultivating friendships when I was 18 to 21. I think that's so important to do. So, if you're at that point in your career where you're really focused a lot on your career, make some time still for your friends. That's very important, or make sure to put yourself out there and learn the skills to actually meet other people your own age.

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