90% of Investors Lost Money on a Rental at Some Point (Here's How To Avoid It) | Ep 103

James: Here's a not so fun stat. Almost nine in 10 investors lose money in real estate at some point in time during their investing career. So we're actually looking at some stats on why that is and then how to avoid it because I found some cool stats on it. Alright, so that's what we're gonna talk about today on the Furlo Capital Real Estate Podcast, where we dive into the statistical.

Real estate investing. Shoot. We dive into this statistical intricacies of passive real estate investing where our mathematical goal is to equip investors to invest wisely in both property and people and the numbers, so that together we can build mathematical wealth. Well, improving housing. I got it. I'm James.

That was a lot of, this is my wife, Jessi. A lot of

Jessi: math.

James: Oh yeah. A lot of math talk. A lot of integration in there. Fun, which is another type of math concept.

Jessi: Uh, I don't know. This is, this is not my style of podcast here. Oh, come on. Math one. Stats class. No. Was it stats? No. You took a math econ You took a calculus class.

That's even worse. Thought you took a calc class or some sort of math class. Well, I did. I took a Cal class and then I dropped it because I changed majors and I didn't need it.

James: That was really hard. Oh, I don't think so, but yeah, I get it. It wasn't stats. I took econ

Jessi: You convinced me to take econ and I did, and I was so confused.

James: But it was amazing supply and demand. I picked a good teacher for you. You

Jessi: picked a good teacher. The teacher was, was great. I did learn things. I

James: learned things, but

Jessi: I also was very in, very frustrated about how economics works.

James: Mm. Which, well, those are, I would argue then you did understand it if you found it frustrating.

Well, but, uh, yeah, no, I, I hear you. Perhaps I did understand it. I just, perhaps

not my.

No, I understand. Well, we're not gonna talk about economics. We're just gonna talk about, just straight up some stats, some interesting numbers. And really it's the story behind the numbers that we care about. Um, 'cause I found this interesting report that was talking about how nine in 10 real estate investors have lost money and have regrets about their investments.

Yeah, right.

Jessi: That's a, that's a really high percentage of people, which it doesn't surprise me that they lost money. 'cause I'm like, okay, if you're doing multiple deals, inevitably yeah, you're gonna, yeah. I said, I've lost money on it. Yeah. You're gonna have a deal that doesn't quite go through. It breaks even.

It you, you lose money. Yeah. It doesn't sell for as high as you thought. Like, but

James: some of these are reasons where you go. Yep, that'll do it. Mm-hmm. And so we wanna talk about those. Okay. And there's, there's math behind like, interesting percentage of people. Interesting. Okay. Yeah. So, you know, oftentimes, you know, people invest in real estate for that thing called passive income.

Yeah. Amazing. Um, but for many, it's, especially DIYers, it's anything but passive. Mm-hmm. And sometimes it's not even income. So 40% of people wish they'd actually never started investing in real estate, which is, that was a

Jessi: high number. Wow. Nearly half. Dang. Huh?

James: Uh, I would say a little more than two thirds is new.

Is this how,

Jessi: how are you, how are they counting investors?

James: Um, these were, oh shoot, I wrote this down. It was data from a survey of 485 American real estate investors who invest in rental properties. Hmm. So I wonder

Jessi: how they, I, I wonder how they measure it, you know? 'cause might be self-reported. It's a, it's a drastic difference between say like you who are pulling funds together.

You're investing in real estate. Yeah. You do multiple deals. Not that as opposed to like just selling that I, you know, stumbled across this house. I bought it and then I moved out and decided to rent it because I couldn't sell it and Yeah. That's fair. Yeah. Accidental

James: landlords. Um, I don't know. Hmm.

Probably all of it is my guess. Um,

Jessi: well, yeah, it just seems skewed maybe towards. People who don't wanna be doing it.

James: That's fair. Well, I, I think that is fair because the stat is true that you've lost money, but you don't regret it in order to be successful does require some intentionality. Yeah. You can't just stumble into it.

That is true. I think that's a bigger takeaway there. Right. Well, let's talk about some of those specific reasons. Mm. Oh. Um, before we get there, uh, 23% of people wrongly believe that real estate investing would allow them to quit their full-time jobs. Hmm. Well, 24%. Regret being on call for tenants and others.

Yeah, that's a thing. I

Jessi: mean, that's, I, it's often a deceiving piece of managing real estate, I feel like because people are, they look at the numbers. And they look at like, oh, it's a, it's a property. Like I could take care of stuff. But really managing rental units is a, is a people business. Like you are caring for people and responding to people and like, it's more like hospitality and.

I don't know. You're interfacing with human beings Yeah. Most of the time. So if you're not ready for that, like I could see that being a little bit like, Ugh, this is so annoying.

James: Yeah. So that's actually really good. So number, number one reason, um, that we have, which stat's already off? I must have misplaced a, a number somewhere.

Um. Oh, there we go. 29. Um, so 51% of the regrets are 51 per 51% of the people who said like the different regrets they have. Mm-hmm. Um, said that one of them was dealing with bad tenants. Hmm. Um, and closely related to that is property damage. Mm-hmm. That they do as a result of it. Right. And so the root cause is behind that.

It's a few things, like it's just weak screening. Mm-hmm. Or no criteria. Yeah. Whatsoever. Which honestly, um, that was our first one. Mm-hmm. Or rush to fill a vacancy. Yep. Also where first one, um, poor property management oversight. Mm-hmm. So if you do hire someone else, like you're just like, and they're done.

Yeah. Just take care of it. Yep. And or where you have no systems for communication inspections or enforcement. Mm-hmm. You just kinda, you're just kind of running. Yep. Right. And so, uh, a lot of it just turnover costs are crazy expensive. Like there's the. The actual cost to fix things up, but then it's the lost rent as well.

And so, um, especially if there's damage and stuff, stuff cost. If you have to evict them. Yeah. I honestly, that's one of the cheaper things. Yeah, that's true. It really is. The vacancy. Like if you imagine you got a rental unit that rents for $2,000 a month and because of some damage you gotta go through and reduce some floor, reduce some paint.

Like you're spending three grand right there, plus two grand for the lost rent. The vacancy, like that's a five grand. Turnover that's gonna take you two and a half months to break even. Yeah. On um, so it can be bad. Um, yeah. So, um, good operations though, can eliminate like 80% mm-hmm. Of tenant problems before they even happen.

And, um, and this is, uh, I've talked to people about this before, like tenant quality is the number one driver of returns.

Hmm.

Um, it's more than everything I was talking with, um, I was talking with my team. Last week. Mm-hmm. And I was like, tenant screening, I went, that's number one.

Mm-hmm.

If we get that right, the rest of this business is super easy.

Yeah. If we get that wrong, it becomes incredibly difficult. And we actually have that right now where there was a tenant who we rented to them and it was, it was an interesting situation where it was like everything on paper was fine, but I definitely had like that, that spidey sense, like, ah, something's maybe not right here.

And um. We ended up renting to 'em and yeah, it's just been, it's been a pain since like literally day one. Yeah. And we're only like day 45 oh boy, into it. I'm just like, Ugh, A month in and what a, yeah. It's been super frustrating and I was like, so even today I make those mistakes where I, and I know what happened.

It's, I've got owners who really, really, really wanted it rented out. So I was like, well, okay. And you felt rushed. Yeah, because I, I had someone lined up and they backed out.

Yeah.

And it's just, I was like, I don't, I don't know what to do. And so the next people came along and, and I was like, man, they're out the border.

So even I, um, fall for that kind of stuff. And, um, yeah, it's tough. So, um, so yeah. Um, so you do wanna ask your, your sponsors, Hey, what is your screening process? Mm-hmm. You know, what percentage of tenants renew, or how often do you inspect units? Like, what are some of those things you're doing to catch those issues early on to try to minimize.

Turnover. Yeah. Um, 39% of people, this is the number two reason. Mm-hmm. Um, said, losing money, is it regret? I'm like, yeah, of course.

Jessi: Yeah. You don't get into real estate to lose money,

James: but I mean, but there's even somewhere, and the next one's kind of closely related to it, uh, which is overpaying for a property.

Oh, that was 33% of people. Interesting. Said that was an issue,

Jessi: and I would imagine,

James: yeah, we're gonna bundle those two together.

Jessi: I would imagine that's just because. For, for both of those, it's like either you didn't have accurate numbers when you were evaluating the property Uhhuh, or,

James: or what's, you know, my phrase that I like to use for that using perfect math.

Jessi: Ooh, yeah. You tweaked it to be like, okay, if everything works perfectly well yeah. It'll make money. Mm-hmm. Mm-hmm. It doesn't ever work perfectly well. Mm-hmm.

James: Yeah. That's true.

Jessi: Yeah.

James: Or you just forget to account for things like vacancy and turnover and maintenance. Sure. And. CapEx, you know? Mm-hmm. All that stuff.

Mm. Um, or you overestimate the rent growth, which Yeah. Recently has become an issue. Like, rents right now are flat to declining.

Oh.

Which has been really hard. 'cause I feel like I'm walking in conservative on rents and they're just sitting

Interesting. And

Yeah. Which, yeah, like we, I've got one rental where he had it rented out at, I think it was like 29,000, and then that person moved out.

I took over and I did a rent analysis, and I'm like, dude, the rent's like 2,400 in this area. Which he was like, well, I'd like to get 26. And I went, well then you would like to watch this sit. And we watched it sit for two weeks until finally he was like, well drop it to 25. I was like, okay. We sat for another week, we dropped it to 24, and I finally started getting phone calls.

Interesting. It was like, yeah, man. Like that's just, that's the market. Yeah. This

Jessi: is what the market's demanding right now. Yeah.

James: And by then it had been a month, and so now he's like, dude, get this thing rented. Yep. And it's been like, okay, okay. Like we're okay, but it's a process, so. Right. Um, yeah. Uh, yeah.

And then, like I said over, uh, closely related to that, one is doing an emotional. Emotional purchase. Yep. Right. Which is fine if you're gonna move into the house, but if you're genuinely doing it as an investment, like you shouldn't do that.

Mm-hmm.

Or you're trusting a realtor or the seller instead of the numbers Right.

Or the one I've fallen for. This one, uh, cheap house equals a good deal fallacy. Um, I've got somewhere in here my notes where we bought a place for a dollar. Yeah. I was like, how could you, this is amazing. How could you

Jessi: not make money? Yeah. Well, I, I can tell you how,

James: um, we have super high rent fees mm-hmm.

For the lot that it's in and have it sit vacant for mm-hmm. Like six months. Yeah. You'll lose money. It's guaranteed. Um, or not running comps or a cap rate, just kind of like, just kind of going for it. Hmm. Um, yeah. So, uh, the fix is kind of the same for both of these, right. Do full, do a full underwriting.

Mm-hmm. Stress test the numbers. Mm-hmm. Look for the downsides, especially if you're talking to a sponsor and be like, Hey, can you, like what are the downside scenarios? What are the risks of these things? Sure. Um, and you just want to use, uh, like data driven acquisition models. Uh, if you have a buy box, kind of stick within it, which mine's like.

Yeah, it makes money.

Jessi: Yeah.

James: And generally in the area ish, um, for the most part, I, sometimes I will yeah. Have your criteria and follow the criteria, but it's interesting. There's this place in Klamath Falls right now. It's uh, it's an 11, I think it's 11 unit. It might be bigger than that. It's 11 unit apartment building.

That one a million dollars for it. Mm-hmm. The numbers look pretty good. Mm-hmm. But I find myself, like it's in Klamath Falls, like there's nothing distinctive about this building. It is like. It's a big rectangle. Two stories. Yeah. Um, and like, sounds like

Jessi: one of our other buildings.

James: Yeah. But I have zero infrastructure, zero knowledge, right?

Like Yeah. You, I mean there's that market. There's like. Bigger tower is interesting one. Mm-hmm. Because it's like, it's an actual iconic landmark. Like Yeah. Like I'll, I'll figure that out. Mm-hmm. Um, but this one I'm like, it's just a box. Like, and I can't, I can't leverage any of the existing systems I have here.

Hmm.

And so even though the numbers look pretty good, I find myself being like, you know what? I more and more of my buy boxes, like, can I leverage my property management team to run it? Right. Because it's just so valuable to have that. Mm-hmm. Um, so you wanna ask those kinda numbers? I

Jessi: think. I think another like valuable.

Maybe step or or something you could do is have somebody else take a look at your numbers. Ooh. You know? 'cause like that's good. I would obviously do that. 'cause I'm not a numbers person and I would be like, I have no idea what I'm doing here. Like, I need somebody who knows what they're doing to look at this and tell me does it work?

Can I trust it? Mm-hmm. But also like they're not emotionally invested either. Like you were saying, you know, if you found this deal. Yeah. And it's so great and it's so amazing and the numbers work really well. They could take a look impartially at it, kind of, and be like, I'm just gonna analyze, you know, the property for what it is with the market and you know, all the other aspects.

But yeah. Yeah.

James: That's wise. Yeah. What you want, and I'll tell people this 'cause, 'cause I'll mean it like every once in a while someone will have me look at a deal. And, um, I told him on more than one occasion, I'm like, Hey man, if you end up passing on this, let me know. Yeah. This is deal. Deal. Good deal. This is deal deal.

Um, I haven't had a friend, he actually bought the pla I manage it for him and he was contemplating, does it make sense to sell or hold onto it? And I was like, well, if you're gonna sell, let's talk. Yeah. Um, I was like, depending on the price that you're looking for. Mm-hmm. But, uh, but yeah, 'cause he got a good deal, which is.

Awesome for him. Yeah. Um, but yeah, no, it is helpful to have that third party. Mm-hmm. They don't care. That's part of the role of an appraiser. Mm-hmm. But this is like the step before that. Sure. Um, yeah, a hundred percent. Um, another issue that 33% of, Nope. Sorry, I already read that one. Um, 31% of people, I'm just making sure.

Yeah, that's right. Um. I have the chart in one place and I have my notes in another, so I'm just like, I'm going back and forth making sure they're right. Um, it's just long periods of vacancy. They don't define long, so I don't know. So they,

Jessi: 31% of people regret, one of their regrets

James: is that there's just long their investment.

'cause it's that vacant. Yes.

Jessi: Yeah. Yep. Which I feel like that's, I feel like that's related to like screening and possible market analysis. Like if you just didn't

James: totally do your due diligence and it's not filling up like well it's like we were talking about you could have it overpriced for sure. Yeah.

Um, you could have a slow turnover process. That's totally a thing. That's true. Um, I've got. I've got another set of people who want me to manage their property for them. Mm-hmm. It's a studio. Mm-hmm. It's tiny. We talked probably five months ago. Mm-hmm. They're like, yeah, we're just trying to finish up some stuff to get it ready to rent.

And they were working with some contractors. It's kind of out of town, and so it's a, it's a drive. And at the time I asked 'em, I was like, Hey, do you want me to help like shepherd this process and get this thing over the line? Like, no, no, no. We got it. Five months, I'm still not managing it. 'cause it's still, it's in the final, I guess they've finished their thing and now they're, there's some other stuff.

They're like, Hey, how winter's upon us, we have more things to do ing

Jessi: Wow.

James: And so it's just a slow Yeah. It's not

Jessi: making money.

James: Well, yeah. Well and part of it is, it is just a studio, but it's also this out of outta sight outta mind thing. Right? Something comes up on the weekend, they don't think. Oh, it's a Tuesday night.

I should drive over there and get an hour's worth of work in. Mm-hmm. They're probably waiting for like the, well, there's work. We gotta wait for the five hour chunk, which never comes. 'cause life happens. Yep. And so it's just a slow process and it's like interesting. Well, it's a beautiful day. I would love to be going out, doing fun stuff for the family.

Yep. Would I rather go hiking, swinging a hammer? You know, which I, which I totally get as opposed to say like. Uh, like where we're at. It's like, no dude. Like we, I, I have people who I've hired to do this stuff. Yeah. And yeah, it costs money, but man, it gets done right. And it's

Jessi: much faster than if you were doing it yourself.

So, yeah.

James: And I get it. The trade off. It's a trade off. Yep. Both of 'em. Time. Just one of 'em, like you have to write a check. The other one you just don't, you just don't receive a check. But yeah. But it's totally one. Um, and like I said, not paying attention to the marketing stuff. Mm-hmm. And just saying, oh, I got this last time.

I'm gonna increase it. Whatever percent could be a thing. So you can ask what's the average days on market or, um, if they do tenant satisfaction scores, which we don't. So I don't, I'm sure we could, but we don't. Um, kind of related to this one, which is. It's just poor screening. I dunno why they broke it out in the two.

So dealing with bad tenants is 51% and then not screening tenants enough is 30%. Yeah. So I'm pretty sure like that's a solid 80% is, which I would say is, yeah, that's issue. Yeah, I at least that's how I would interpret. I mean they're related for sure. Hundred percent. 'cause

Jessi: if you don't do good screening, you often end up with poor tenants.

So. It's, it's related.

James: Yeah. And it's trues just a classic, right? You don't have a consistent standards. You're not checking for their income. You're not doing a background or credit check. Yeah. We actually have an interesting one right now. Um, yeah. What the heck? We'll, we'll put this on tape. Uh, so we've got some people who have applied to a place.

Mm-hmm. Um, it's a group of, actually, here, this will be really interesting. So it's six dudes. You wanna move into this roommate? Yeah. Okay. You wanna move into a single family home? Yeah. Three bedroom, two bath, which in Oregon the rules are you can two per bedroom plus one. Mm-hmm. So max is seven. So they're within that.

Mm-hmm. But it's just not normal to have Sure. Six buddies. So, um, we're trying to go through the screening process. Mm. And we cannot verify like. Their identities and therefore can't do the background and screening check. 'cause that's dependent on verifying their identities. Yeah. It seems like an important thing.

I should qualify this, which I have not directly spoken with anybody who's going to be renting there because we've been working through a translator.

Jessi: Oh, okay. That adds another layer of, another layer complication.

James: So the reason why we haven't been able to verify identities. Is because they may or may not have the proper United States identification, I guess,

Jessi: can you, what the, what's the rule around that?

Can you deny?

James: Nope. Oregon an applic has explicitly made a law saying, no, you cannot, uh, you can't even ask.

Jessi: Well, but you can require. Verification of their identity. Yes, totally. And if they can't provide that, then you could say, sorry, it's an incomplete application.

James: Yes, you can, but you can't. Okay. I should.

Alright, fair enough. I cannot, um. Discriminate. It would be the word that Yeah. The Oregon legislator would use, I can't discriminate upon like their country of origin or where they're from or even where they would like Sure. All that stuff. Yeah. You're not even supposed to ask in anymore. Um, and that's,

Jessi: it's a little, it's a little awkward, but within your, yeah.

Within your screening criteria, I feel like you could, you could definitely say like, we need to have some sort of identification, proof of identification on file. And

James: so we've run into this, which some people could argue is, uh, is a indirect form of discrimination. 'cause if you require them to do something that only a certain nationality would have then there for, but you're

Jessi: not.

James: But I'm just saying you gotta, so it's, it's still like legally, you gotta be careful if

Jessi: they're here then. Because if you're

James: like, they

Jessi: should

James: have

Jessi: documentation that

James: one, one would think yes. Um, I

Jessi: could, I could see it. How I can see how it's sticky.

James: The, one of the questions that the trends are asked was like, um, do they have to have papers?

Mm-hmm. It's like mm-hmm.

Mm-hmm. Mm-hmm. So, but this is something that we're grappling through Right. From a tenant screening standpoint. Sure. And we're like, and it's like six guys, which I get it. They're, I, I mean, I get what's happening. Mm-hmm. Right. And, um. And I've, it's, it's a tricky situation. And this time of year is a horrible time to try to rent something.

Jessi: Yep.

James: And I've always told people, anytime you try to rent something between Thanksgiving and New Year's, like it will 100% of the time be a funky situation. Yep. It just always is. And if it doesn't seem like it is, you just haven't figured it out yet.

Jessi: Yeah.

James: Because,

Jessi: because nobody, nobody wants to

James: move that.

Nobody wants to move this time of year. Yeah. So I'm just like, I So they're moving 'cause they have to, so I got this application and was like, yep, that feels about right. Interesting. And so now we're headed down this route of like, well, can we at least talk to a current or former landlord? Mm-hmm. To try to get a sense for what it was like having them live there.

Sure. Maybe that landlord will be honest with us and give us something. Hmm. Yeah, it's been an interesting, but like, but this is the thing, right? Like this owner, it's hurting like he wants me to rent this place out.

Mm-hmm.

And I'm like, well, I mean, I've got these guys, they've, they collectively, they have enough income.

'cause they all work. They're just trying to save some money, which I totally get. Mm-hmm. And it's just, I can, they all give

Jessi: proof of income.

James: Uh, yes. They can. Interesting. It's interesting though, 'cause they all work seasonal jobs, but they are constantly working some sort of seasonal job,

Jessi: right? So they bounce employers.

Correct. But it, yeah. Yes.

James: But they're regularly bouncing, I guess. Uhhuh. Yeah. So they can show six months of income, not necessarily six months of the same employer, but just six months of, of income. That makes sense. And especially all combined, it's not like, it's fine.

Jessi: How does someone get paid if they.

Can't prove their right ity. Well, you can open, open a bank

James: account. I'm pretty certain, dude, I don't know. Or they just get, you have to prove their identity. They get a check and they cash it. That's a thing. And then they just have it. Well, yeah, but the employer

Jessi: has to report like what they've paid and everything.

I mean, I guess they do supposed

James: to. Yeah. It depends. Yeah. And they might, I don't know, dude, I don't know. I do know you have to fill out an I nine for anytime you have an employee, but they're probably not employees. They're probably contractors.

Mm.

And so you just, they just write 'em a check and don't worry about it.

That's my guess. Interesting. It's just all contract, all 10 99 work. Anyways.

Jessi: All right. We went down that rabbit hole.

James: So, um, poor screening is a thing. Yeah. Poor screening. And I guess the point that I'm trying to make is that it's not always obvious. Like there, there are definitely tricky situations.

Jessi: Yeah.

James: That, so even if

Jessi: you have a clear criteria, there's some exceptions that you're like, uh, I know what I wanna say here, but. Well, sometimes I, I can't just directly,

James: which is why 30%? That's like, that's a regret of 30% of people. I didn't have a good enough screening process. Mm-hmm. And again, well, I've got, like, ours is super rigorous.

Jessi: Right.

James: And it's to the point now, and I've seen enough and we've done enough patterns where I'm like, okay, I can see this pattern coming, recognize it. What's the right way to navigate this so I don't get in trouble.

Mm-hmm.

But I'm also fair, like I do wanna rent it out and these guys do wanna rent to me.

So what do I do to set up those safeguards? Yeah. And like one of the things we're talking about is like, well if we just doubled the security deposit mm-hmm. Like now we're good for two months if there's a problem. Okay. Mm-hmm. So, um, there's things like that, that, but you gotta have that process in place.

Mm-hmm. And if you don't, yeah, I could totally see that being regret. Um. We're kinda getting lower down the list here, but managing from a distance mm-hmm. Is a regret. Especially if you're doing like the DIY Yeah. Type of thing. Oh yeah. Because

Jessi: you're investing travel time now too, if you are the one going back and forth or, or you miss stuff 'cause you're just not there.

You don't see it and

James: Yeah. No, totally. Or you just slow to respond. Mm-hmm. That's a big one. Yep. Uh, yeah. And I get wanting to save some money, but, um. Yeah. Uh, or just not setting appropriate rent rates. Mm-hmm. Um, they're either like, it's priced too high, and so they have a vacancy, or it's priced too low.

Mm-hmm. Um, that's another 27% of people say that.

Mm.

Um, so you wanna ask, Hey, what is your pricing methodology and how do you do your market comps? Mm-hmm. Um, someone like me, I. I've got a bunch of different sources mm-hmm. That I use in addition to just my own stuff. Yeah. Um, and at this time in the market, again, having seen enough things to recognize if I see a comp.

I'm actually gonna go a little bit underneath it because I could just, I just know from my experience of watching this thing sit where I'm like, yeah, like I know it says I could get 1600 for this. I'm gonna go for 15 and actually get this thing rented and have whoever rents it from me. Be happy. Mm-hmm.

And all I'll reevaluate a year from now, I'm willing to forego the $1,200 a year for it to not sit for a month. Yep. You know, that's the balance. Um, 25% say each, uh, legal issues and bad vendors. Again, that just comes back to that they're doing it themselves and they're not vetting any vendors and they don't really do it enough to, to be a high priority for the vendors.

'cause like, oh, it's just one house, whatever. Yeah, it's just one. Okay. Yeah. It could totally be a thing. And then I thought this one was interesting. Here's my final one. 24% of people not being knowledgeable enough about investing

Ooh.

Is a regret.

Yeah.

Like, yeah. I guess if you're like, Hey, I'm doing this passive thing, and then you just kinda.

Mm-hmm.

I don't have to worry about it. It is not investing in the stock market. It is not an index fund. Mm-hmm. Um, it does definitely require some education there. Um, so fixes are pretty easy. Watch shows like educated, um, pretty good or partner with people like myself who do have decades of, um, you know, experience and yeah, pattern recognition and seeing all these things and, and reading these reasons and going, yep, yep, yep.

I can see how those would be problems for sure. Um, so I got five things that, uh, that you can do, um, to mitigate, to, to mitigate. To mitigate, what a fancy word.

Jessi: Regrets in invest. To mitigate the

James: regrets. Yes. To not be. Ideally one of those nine in 10

who lose

money and definitely not one of those 40 who are like, oh, why'd I do this?

Right.

Uh, so number one, underwrite your deals with real numbers. Mm-hmm. Not fantasy. No. Perfect math here. Um, treat tenant quality as a core investment. Me. So gran screening. Wow. Tenant screening is super important. I would argue again, number one, even more important than the buying price, though, that's definitely up there,

Jessi: both having a criteria and following it.

Yep. You wanna

James: judge the operator more than the asset, which might be yourself that you need to judge. And you might have to hire someone else 'cause you may not be willing to put in the time and or energy to pull it off. Um, if you are working with an operator like myself, demand transparency, you wanna see like quarterly and monthly reporting.

Ours is all on demand. Mm-hmm. So you can see it at all times. And then, um, just ask better questions before writing a check, and you'll avoid. 90% of these regrets. Wow. So

Jessi: it's kind of sad. It makes feel, makes me feel bad for investors. I'm like, no, this could well, so much. This could be so good.

James: So much of investing is about wealth preservation.

Yeah. Not necessarily, um, multiplication. Mm-hmm. Which is fine. Um, but that's why Yeah. You wanna watch out for, for some of these things. So, um. I think, uh, again, it's just, it comes back to weak underwriting or weak operations. If I had to really boil it down to two things. Um, so if you do a good job with that and partner with someone who is doing good at that, like you'll be fine.

And it's all good. So there you go. I thought it was an interesting, interesting chart of numbers that wasn't, wasn't toot so much. Yeah, I was just

Jessi: about to say that wasn't so much like stats. There were numbers, but. That wasn't bad.

James: It wasn't bad. It was, the numbers were, I said it was the story behind the numbers.

Yes. Yeah, yeah, yeah. So we're all good. Just give you some context. So there you go. Again, if you don't wanna be one of those statistics and you wanna be on the plus side, would love to talk to you about that. And so you can check us out, learn all about our investing thesis. We got this awesome due diligence checklist with a bunch of questions that you can ask as well.

So you can check us out online at furlo.com. So with that, thanks for listening. Have a great day.