255 Real Estate Investing Mistakes and How You Can Avoid Them---Stephen Roulac

Roulac is a big picture guy. He tends to write about the most basic fundamental concepts that underlie real estate investment and changes within it. He often uses academic phraseology like “the importance of place” or “societal spatial patterns” that are new ways to think about real estate for the typical individual investor. However, these phrases and words are also useful to expand your mind and gain better insights into the business. 255 Mistakes has many examples of both the huge picture and the microscopic picture. For example, one mistake is failure to set aside the cash to pay for tenant improvements in office and retail properties with vacancies.

Here are some examples of the brief descriptions of the mistakes:

• Viewing real estate primarily as an inflation hedge
• Overall strategy has a bigger impact on return than deal making
• Insufficient diversification
• Hidden costs of seller cash flow guarantees
• Overemphasizing visibility and underemphasizing access
• Overlooking hidden relationships between landlords and nonresidential tenants
• Nothing down occasionally makes sense but it’s usually too time consuming

Many of Roulac’s “Mistakes” are classic rules that investors ought to know, but often don’t or forget, like doing construction and development without a permanent financing commitment, using before-tax numbers when the after-tax numbers are significantly different, or signing a property sale agreement without first checking out the buyer’s capacity or inclination to perform as agreed.