How to Fail at Real Estate Investing in 2026

Summary

Podcast Summary: BiggerPockets Real Estate Podcast

Episode Title: How to Fail at Real Estate Investing in 2026
Air Date: May 1, 2026
Hosts: Henry Washington (A), Dave Meyer (B)

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Episode Overview

This episode dives headfirst into the common pitfalls and mistakes that real estate investors make—especially those that can lead to failure. Drawing from their extensive combined experience (over two decades), Henry and Dave offer a candid, step-by-step breakdown of the specific errors they've made (and seen others make), along with practical advice on how listeners can avoid these costly missteps. The goal: Learn from their scars rather than collecting your own, so you can speed up your path to financial freedom.

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Key Discussion Points & Insights

1. Trust, but Verify: Don’t Rely Blindly on Others (01:51)

• Main Idea: Over-trusting agents, contractors, or partners without proper due diligence leads to costly mistakes.
• Quote (Dave Meyer, 01:51):

  “The number one way to fail in real estate is overly trusting... not doing my due diligence on the people that I am going to be working with is probably the thing that has led to the most difficulties and losses in my real estate investing career.”

Actionable Takeaways:

• Always perform your own analysis, even when working with trusted agents or partners.
• Call multiple agents/contractors for quotes and opinions.
• Ask for references and speak to other investors who have worked with prospective team members.

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2. Lazy Cash Flow Calculations: Subtracting Mortgage Only (04:28)

• Main Idea: Many investors make the rookie mistake of calculating cash flow by simply subtracting the mortgage from rent. True net cash flow must account for all expenses.
• Quote (Henry Washington, 05:46):

  “Rent minus mortgage, minus taxes, minus insurance, minus expenses. All expenses equals net cash flow. All expenses includes things like vacancy… Be realistic with your expense numbers.”

Actionable Takeaways:

• Include property taxes, insurance, capex (capital expenditures), repairs, vacancy, and property management (even if self-managed, to future-proof).
• Underwrite conservatively; plan for underperforming rent and longer vacancies.
• Don’t raise your bids to match competitors unless your underwriting supports it.

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3. Waiting Too Long to Talk to Lenders or Agents (13:40)

• Main Idea: Many new investors delay making contact with lenders and agents until they believe they are "ready," but this is backward.
• Quote (Dave Meyer, 13:48):

  “Talking to a lender and talking to an agent, even if those conversations go poorly, is an absolutely essential… first step.”

Actionable Takeaways:

• Engage with several lenders and agents early to learn the ropes and what products/options exist.
• Different lenders offer different products – ask specifically about programs, down payment assistance, and new or local loan products.
• If turned down, ask specifically what you need to fix to become bankable.

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4. Skipping Inspections—Especially if You’re New (16:14)

• Main Idea: Forgoing inspections may save a few hundred dollars but can result in catastrophic, expensive surprises down the line.
• Quote (Henry Washington, 16:41):

  “If you are not in that boat, you better be getting an inspection. You just don’t know what to look for… It’s a few hundred dollars. Spend the three to six hundred dollars and sleep better at night.”

Actionable Takeaways:

• Always get an inspection, unless you’re highly experienced at renovations.
• Use inspection findings for negotiation leverage (discounts or repair credits).
• If a seller resists inspections – consider it a red flag and be prepared to walk away.

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5. Letting Deferred Maintenance Pile Up (23:13)

• Main Idea: Post-purchase, neglecting repairs and allowing problems to accumulate leads to outsized, compounding costs and operational headaches.
• Quote (Dave Meyer, 24:13):

  “A problem that costs $200 to fix, a year later will probably cost $2,000 to fix. I know this because I’m replumbing a house that just cost me $80,000 to fix.”

Actionable Takeaways:

• Build cash reserves and allocate funds for preventative maintenance.
• Create systems to track, schedule, and complete needed repairs promptly.
• Monitor maintenance expenses per unit and review at least annually for problem trends.

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6. Poor or Inadequate Tenant Screening (27:19)

• Main Idea: The “landlording” failures that kill investment returns most often come from hasty or insufficient tenant vetting.
• Quote (Henry Washington, 27:31):

  “Our job as landlords is not to rent properties... it’s to get really good at tenant selection.”

Actionable Takeaways:

• Always check applicant references, especially previous landlords and employers.
• Ask employers about reliability and responsibility (“Would you let this person rent your house?”).
• Screening saves you from the real killers: bad payers and extended vacancies.

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Notable Quotes & Memorable Moments

• On Trust and Due Diligence:
  (A: Henry, 01:08)

  “If anybody tells you they’ve never lost money in real estate, either they’re not doing deals or they’re lying to you.”

• On Newbie Calculations:
  (A: Henry, 04:28)

  “They would just take their mortgage, subtract that from the rent they get, and tell me that’s how much cash flow they were making... Crazy.”

• On Getting Beat Out:
  (A: Henry, 08:03)

  “You start to get beat out on deals… That’s when people make the mistake… You’re not missing out on deals. What you just signed up for is losing sleep.”

• On Inspections as Leverage and Protection:
  (B: Dave, 17:40)

  “Inspections… are one of the best ways to save money. You’re going to get five grand back in concessions, or they’re going to fix something that you would have had to come out of pocket for.”

• On Tenant Selection:
  (A: Henry, 30:06)

  “One question I always ask [employers]... If it was your house, would you let them live in your house? If they’ve said no to that and I’ve let them live in my property, I’ve regretted it.”

• On Mindset and Extra Effort:
  (B: Dave, 33:42)

  “Take that one extra little step when you want to quit and you’re tired… that’s the way to not fail.”

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Timestamps for Important Segments

• 00:00-01:32: Episode intro, transparency about failures, and theme of learning from mistakes
• 01:51: #1 Mistake: Over-trusting and skipping due diligence
• 04:28: #2 Mistake: Cash flow miscalculations
• 13:40: #3 Mistake: Not talking to lenders/agents early enough
• 16:14: #4 Mistake: Skipping inspections (especially as a beginner)
• 23:13: #5 Mistake: Letting maintenance and repairs slide
• 27:19: #6 Mistake: Poor (or missing) tenant screening
• 33:42: Final reflections and summary advice

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Takeaways and Final Thoughts

• Most real estate failures can be traced to cutting corners, rushing processes, or ignoring hard lessons learned.
• Each misstep on this list has impacted the hosts personally, underscoring their practicality and importance.
• Adopt a “trust but verify” approach in every phase: deal analysis, relationships, property condition, finances, and tenanting.
• Accept that mistakes will happen, but stack the odds in your favor by learning from others—and always taking the extra, sometimes tedious, step.

Closing wisdom (Henry Washington, 34:13):

“Live to fight another day. There are more deals to buy. Just don’t bend on these six things, and it will keep you safe, it will keep you in the game, and it will keep you on the path to financial freedom.”

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For more resources and episodes, visit biggerpockets.com.

Transcript

[A]

This is how you fail at real estate in 2026. Dave and I have more than two decades of combined real estate experience and let me tell you, that means a lot. A lot of failures. I have a deal right now that I'm going to lose at least $10,000 on.

[B]

We've all been there, dude.

[A]

But the good news is we've learned enough to create an entire blueprint of real estate investing failures. Now all you need to do is the exact opposite of these mistakes. The crazy part is I, I still achieve financial freedom in less than 10 years even with all those errors along the way. So imagine how quickly you could do it if you learn from these failures first. What's going on everybody? I am Henry Washington and I am joined by my co host, none other than Dave Meyer. What's up buddy?

[B]

Not much, man. I'm excited to talk about this because hopefully everyone listening to this could just do the opposite of all the things we've done wrong and just coast through real estate investing with no issues.

[A]

Yeah, that'll be exactly what happens.

[B]

You'll be the first person to ever do that. But maybe at least reduce the amount of mistakes that you make.

[A]

If anybody tells you they've never lost money in real estate, either they're not doing deals or they're lying to you. What we want to do is be transparent, share with you the mistakes that we've made so you don't have to make them and hopefully that makes your journey a little bit easier. Are you still going to screw up? Yeah. Yeah you will. But hopefully those screw ups won't be as impactful by learning from knuckleheads like Dave and I.

[C]

Losing a little bit of money on

[B]

one deal or not being perfectly optimized is part of the game. The goal in real estate is just don't have a catastrophic error. And that is definitely possible.

[A]

Well, with that let's jump right in. And Dave, I'm curious to hear what you think the number one way of how to fail in real estate is.

[B]

The number one way to fail in real estate is overly trusting other people or random people

[A]

trust no one.

[B]

It just. Yeah, I know it sounds incredibly cynical, but I am not saying that there are some people are trustworthy. It is me just go like not doing my due diligence on the people that I am going to be working with is probably the, the thing that has led to the most difficulties and losses in my real estate investing career.

[A]

There's some truth to this one. There is. I hear you. And you know what? I Like about this one, for real, is that when you're new, you depend heavily sometimes on other people's analysis and perspectives and opinions. And I think you do need to weigh those things out. But I also think you've got to get yourself to a place where you can do enough analysis on your own and feel confident in doing a deal deal based on you and not what someone else is telling you.

[B]

I see this all the time. I work with new real estate agents now when I'm looking at new markets and they'll send me deals. And probably earlier in my career, I would have just taken their word for what the rent comps were going to be or what the ARV of the project was going to be or what vacancy was in that particular area. Now I am much more skeptical. Not that they're always wrong, but I'll talk to several agents and really do my due diligence.

[C]

Almost more on them than the deal.

[B]

Especially if you're building a permanent team like an agent or a lender. Like, these are people you're going to work with a long time. You should be learning about them, calling references, calling other people who have worked with them and gotten their experience. Like, I know it sounds like a pain in the butt and it is a little.

[A]

It is a pain in the butt,

[B]

but yeah, it is, but it is so worth it. And I want to be very clear here that I am not trying to blame other people for my failures. It's my fault. I did not do an enough due diligence. Or just as like the simplest possible example, if you were to go out and just use the first quote you got on any deal, like you call a contractor, you call a tradesperson and they show up, they give you a quote and you're like, oh, that seemed reasonable. I'll take that quote. As we all know, quotes can vary

[C]

by tens of thousands of dollars.

[B]

So like those are like the basic kinds of things you need to do and not just trust that the first person that you interact with is the right person for you and your business. All right, so then what's number two? What is the number two way to fail in real estate?

[A]

Man. Dave I remember as I was getting started in real estate and I was seeing the things that people were buying and hearing how people were making this calculation, and I just remember thinking, this is wrong. Why do so many people do this? And that is calculate cash flow that easy way, no other words. They would just take their mortgage, subtract that from the rent they get, and tell me that's how much cash flow they were making. The amount of people that were doing this was just mindboggling to me. Crazy. The conversations I would have with people, oh, this, the agents too, everybody, this deal. Cash flows, $1,000 a month. Your mortgage will be a thousand, the rent's 2,000. And I'm like, this is wrong. Yeah, that is not cash flow. What you want is net cash flow. Rent minus mortgage, minus taxes, minus insurance, minus expenses. All expenses equals net cash flow. All expenses includes things like vacancy, not just maintenance and repairs. Calculate vacancy and calculate real vacancy, not calculate, you know, I put 3% for vacancy. That won't cover one month's rent. You need to figure out, what does two to three months of vacancy look like. Be realistic with your expense numbers. Underwrite them. So ridiculously conservative that if you're cash flowing on top of your underwriting, it's a bonus because you're obviously hopefully going to perform better than that, than the other expense. The other one people love to leave off is property management. I'm going to self manage. Yeah, you may. You probably are until you get to a certain point or until your job changes or until your spouse is like, no more self managing. You don't know how long that's going to last. Calculate management fees so that when and if you decide not to be your own property manager, you don't give away all your cash flow because you didn't underwrite properly.

[B]

You want to ensure the highest probability of success. Underwrite conservatively and then you'll know what could happen. And the downside, because you're underwriting for that, you're saying, hey, what if things don't go well? That's why you have a vacancy contingency. What if rents aren't what I thought they were going to be? You already know what that's going to look like to me. The only times I've ever really gotten like upset about a real estate deal is when I didn't see the risks coming or didn't account for them. I personally, I don't know about you, I don't get upset. Like if I'm like, oh, you know, there's a vacancy for a month. Yeah, I plan for that. That's fine. It's frustrating. I'd rather not have it. But, you know, I planned for it. Or maybe, you know, the rent comps were 1500, I got 1400. Okay, I plan for that too. I underwrote for that. And I actually put all of the line items in my underwriting, like vacancy, capex and all of these things drives me absolutely insane to see people say they're getting 10, 12% cash on cash return when they're just not counting half of the expenses.

[A]

I think what makes it challenging is when you do underwrite conservatively and you start making offers based on those conservative numbers, obviously the offers that you're making are lower than what maybe some other people are offering.

[B]

Yeah.

[A]

And then you start to get beat out on deals that you really wanted. And that's when people make the mistake. That's when they start going, oh, well, I can come up ten grand on my offer. Oh, well, I can come up 20 grand. I'm tired of losing out on these deals. It's not the initial underwriting. It's the monotony of making several offers, not getting a yes so that you're like, well, these other investors seem to be doing it. They're paying a little more. So maybe I'm missing something. I'm going to pay a little more because I feel like I'm missing out on deals totally. You're not missing out on deals. What you just signed up for is losing sleep.

[B]

This is a hard balance to strike because we also say on the show all the time, we're like, go out and get your first deal. Just like, go do a deal. That is true. You should go do that and not expect a home run. I think, like, that's kind of the point. Like, you can't analyze your way out of any risk, you can't analyze your way out of uncertainty. But you need to analyze your way out of the big risks, the known risks, the known things that you have some control over, which are things like doing your numbers right and your rents and your vacancies. When you find a deal that works with all those things, that's when you go execute. Don't just go out and buy anything, but also don't expect to find some perfect deal that's going to have every number perfectly lined up for you and you're never going to have any chance of failure. That's also not going to happen.

[A]

All right, obviously I think these are great points, but I'm curious to know what you think the third best way to fail in real estate is. And we'll jump into that right after the break.

[D]

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[B]

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[C]

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[B]

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[B]

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[A]

all right, we are back on the BiggerPockets podcast and Dave and I are talking about how you fail in real estate in 2026. We've already covered Dave's number one way to fail, which is don't trust anyone and way to fail, which was the second item on our list, was to stop calculating cash flow the easy way and just subtracting your mortgage from the rent and calling it cash flow. So Dave, what is the next way people fail in real estate?

[B]

The number three way to fail in real estate is not talking to a

[C]

lender or agent until you are quote

[B]

unquote ready to buy. I get it. I know people want to think about the end in mind. They want to create these businesses and have a perfect business plan. But you need to go in a logical order of operations to get to your first deal. And talking to a lender and talking to an agent, even if those conversations go poorly, is an absolutely essential. I don't know if you call it first step, but it's in the first two or three steps to being a successful investor. And if you don't do this, you will fail, right? Like you're not going to get a deal if you are unwilling to talk to agents and lenders.

[A]

What I would add to this is talk to more than one. Every lender is a little bit different, especially if you're talking to local community bank lenders. And also, I think people just have a lack of understanding of exactly how many different types of loan products there are. So yes, go talk to a lender and find out how much you're qualified for. But be specific and ask them, hey, are there any types of loan products that are specifically for the kinds of deals that I'm doing? Or are there any kinds of loan products that are new or that are coming out soon that I need to be aware of?

[B]

What about asking them for down payment assistance programs or grants that are available in your area because that might mean you're eligible or can borrow more or have down payment assistance that you never knew about.

[A]

Absolutely. And lenders will talk to you as if they speak for every lender. Lender. So don't take what they say as the holy grail of getting a loan. Take it, write it down, take the notes, and then go talk to another one. You'll learn something different. But the more lenders that you talk to, a, the more you can prepare yourself and B, the more information you'll have about what types of loan products are out there.

[D]

Yep.

[A]

And then the other key with this, guys is it will help you figure out what it is that you need to go fix if you're not getting the answer you want.

[B]

Yep, exactly. Yeah.

[A]

Don't just get a no or get a hey, we can't pre qualify you, or hey, we don't think you're ready. Ask them why. What is it that I need to fix? What would give you more comfort to lend to me so that now you at least have a plan for what to go fix to make you more bankable?

[B]

All right, well, that was the number three way to fail in real estate. Henry, what is the number four way?

[A]

This is, especially if you're new, not getting an inspection.

[B]

Oh.

[A]

And I know that's a lot for me to say because I do not get inspections when I buy property.

[B]

I've always got an inspection.

[A]

Yeah, well, you buy mostly on the market, right?

[B]

Yeah. And I don't flip, so.

[A]

And you don't flip. I buy off market and I typically don't get inspections because I'm experienced enough now to walk a property and feel comfortable on whether that thing is going to cost me a ton of money to fix.

[B]

You're your own inspector.

[A]

I'm my own inspector at this point, but it takes a lot of looking at houses, a lot of buying houses, a lot of renovating houses, and a lot of dispositioning those houses before you can feel as comfortable as I am doing that. So if you are not in that boat, you better be getting an inspection. You just don't know what to look for. And there are things that you can miss with the naked newbie eye that can literally price your deal out of being profitable and put you in a very tough financial position. It's a few hundred dollars. Spend the three to six hundred dollars. Yeah. And sleep better at night. It is well worth it even if you get that inspection report back and there is nothing wrong. Good. That's what you wanted. I will pay Three to six hundred dollars for peace of mind all day long.

[B]

There's no reason to do this anymore. Like, during COVID I guess you could have made the argument that, you know, things were so competitive and if you knew you had a great deal, like maybe waive the inspection, that has totally changed. Like, honestly, not only inspections help protect you right now, they're one of the best ways to save money. Like, most people are getting leverage during the inspection period and negotiating concessions or discounts off of the sale price during the inspection. So for most people, this is not going to be true for everyone, but you're actually going to probably make money by having an inspection because it's going to cost you 500 bucks, but you're going to get five grand back in concessions from the seller or they're going to fix something that you would have had to come out of pocket for. So I just like, there's no reason to do it. The one thing I will say that I have done that has been pretty effective when I'm trying to be aggressive about a bid is doing like a pass fail inspection where you basically say, I'm not going to nickel and dime you on the inspection. I'm going to get one and then I'm going to tell you if I'm buying the property or not. But I'm not going to ask you for money.

[A]

Yeah, no, we have done that in the past where we said, look, I just need someone to get eyes on this property with a little deeper look, I'm not going to ask you for anything. I just need to know what's going on. And I will give you a decision, buy or no buy, right after I look at that inspection report. Because you're right. A lot of the fear that sellers have with buyers doing inspections, it's just that most people understand that inspectors are paid to find things and they're going to give you a list of things that they think is wrong with the property, and then the buyer is going to want you to fix those things, and that's going to cost them time and money. But at the end of the day, if you're new in this business and you want to do an inspection and you're dealing with a seller who does not want you to do it, walk away. There's more deals.

[B]

Yep, totally.

[A]

Even if you think it's a great deal, don't take that risk because there's probably some reason. And if they're not going to tell you what that reason is and they're not going to allow you to at least get a professional size on it. Just move on. There's other deals.

[B]

100%.

[A]

All right, so there's my number four. Make sure you get those inspections. Dave, I'm curious to know what you think the fifth way to fail in real estate is. But again, we'll find out after the break.

[C]

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[B]

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[C]

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[B]

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[D]

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[C]

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[D]

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[A]

all right, we are back on the BiggerPockets podcast. Dave and I are breaking down our list of ways to fail in real estate. We are working on number five. Number one, don't trust anyone. Number two stop calculating rent the easy way. 3. Don't wait to talk to lenders. Talk to lenders as soon as you can. Number four is not getting inspections that'll kick you in the teeth every time. Yep, number five is what Dave all

[B]

right, this is a mistake I've made in the past. I see it all the time. But the number five way to fail in real estate is to not repair things properly and allow deferred maintenance to accrue on a rental property.

[A]

Are you talking directly to me right now? I feel personally attacked right now.

[B]

My wallet is feeling personally attacked recently for some bad decisions I made about this. People love buying, right? It's fun. You know, you feel good. You get to tell your neighbor that you got more doors. But man, the way you make money in real estate or you fail in real estate is how you operate your business over time. Acquisitions are important. You got to do the under writing. But a surefire way to screw something up is to ignore what's going on at your property each and every day because these things compound a problem that cost 200 bucks to fix. A year later will probably cost $2,000 to fix. I know this because I'm replumbing a house that just cost me $80,000 to fix. So yeah, just pay the money up front. One of the reasons you need to underwrite and have cash reserves is to pay for this stuff upfront. There is no point if you're in your first or fifth or your 10th year of investing in real estate and Saying, you know, I'm going to save 300 bucks and not do it. Right now you're investing for 10 or 20 years from now, 30 years from now.

[C]

Pay the money upfront.

[B]

It is worth it every single time. You know, meet with a lot of contractors, find the best person to do the job and just do the job.

[A]

There's two ways that this has bit me in the butt. The first way is buying something that does need work that I planned on working on, but there was tenants in the property, right?

[B]

Oh, yeah.

[A]

Oh yeah, yeah. So what that means is I bought it, but I didn't put the tenants out because they're paying decent enough rents. They've been living there, they want to keep living there. That's cool. They do. What is supposed to happen is when they move out, then you do the renovation. But what happens, guys, is you forget, right? By the time they move out, I'm done flipping three houses and I'm renovating two other rental units and you just forget and it just gets re rented. And so now I didn't do the renovation and that's lingered and it's lingered and the maintenance bills start coming in and this property is costing me a ton of money. And I'm like, what? Oh yeah, I was supposed to spend $40,000 renovating that unit and I just didn't, right? Bad operator problems. I wasn't organized enough to be ready to jump on that renovation when it happened. And it ended up costing me more money in maintenance along the way. And I've sold properties because of that, because I just didn't get to the renovation in time. And now I'm at a place where I don't have the bandwidth to do it and I'll sell that property. And is that the right thing to do? Probably wasn't. I should have jumped on it right when I needed to. But it requires you to be a good operator. So that's one way it's bit me in the butt. The other way is maybe you did renovate the property when you were supposed to, but. But it just got super maintenance heavy. And when you have a bigger portfolio, you get maintenance requests all the time. And sometimes you're just approving things or you're not approving things and you don't realize, like, hey, this is the sixth time I fixed something at this unit. When you have 60 units, right, it's hard to sometimes remember that, like, oh, I've fixed this thing. It doesn't place several times. Or I've spent money at this place several times and you realize that maybe this is a property that I should have stopped taking a holistic look at and figured out how much money do I need to spend to stabilize this thing or do I need to sell this thing?

[B]

Exactly.

[A]

I am guilty of these things. So I am speaking from experience. You've got to stay on top of your maintenance. You've got to be able to look holistically at your properties and see how much you're spending on maintenance and do it more than once a year so you can recognize these trends before you get that seven thousand thousand dollar bill and make informed decisions. But this is real. This is real right here.

[B]

All right, so that was number five. But Henry, let's finish it up. What's the last way to fail in real estate?

[A]

Number six on our list. And one of the ways that can absolutely cause you to fail in real estate is not screening your tenants. Dave.

[B]

It seems so bad.

[A]

My mind when I talk to people who, who self manage and I asked them, did you call your tenants references? Did you call your tenants past landlords, not just the one they just moved out of, but two landlords ago, and they say, ah, no, we, we didn't. Like, I just, it blows. I don't understand my mind and I think it's because it's a tedious thing to do and calling random people sometimes is uncomfortable. Maybe that's why they avoid it. But the amount of, of landlords that I talk to that don't call tenant references, that don't call tenant employers, and that don't call past tenants beyond just the one they just left, it is mind boggling to me. But our job as landlords is not to rent properties. I mean it is, but our job is to get really good at tenant selection. If you want to make money in real estate investing as a landlord, tenant selection is the way you do it. Because what kills you as a landlord isn't just bad tenants who hurt your properties, but what really kills you is vacancies. And so finding good tenants with a good history who want to be in your properties, like it's a skill set that you have to develop. And part of that is due diligence. And part of that due diligence is uncomfortable. But it will literally put money in your pocket or keep you from bleeding money out. Like it's mind boggling to me that people don't do this consistently.

[B]

Like you said, it's not just about limiting vacancies. But you, when you have a good tenant, they're going to let you know about the problems, like the stuff we were just talking about, like the repairs, like when you have a good tenant, they're going to come to you and be like, hey, this problem's the issue. I really think we need to fix this and this and this. And you trust that because you know them, you screen them, you have a

[C]

good rapport with them.

[B]

It saves on so many different things. I, I've had units where I've had tenants move in for four or five years. You know, I'm not even talking about families. I'm talking about young professionals stay for a long time.

[C]

They take responsibility for the property.

[B]

They meet with contractors for me regularly because they're people that I've built a rapport with. Like this is a business, these are your customers. It is your job to be a good service provider to them and find people who you feel like you can work with. It is a mutually beneficial thing. This is someone's home, this is where they live. It matters to them. Find someone who's going to treat it and think about it in the same way that you can and you're both going to be so much better off.

[A]

The best screening technique that I have found for tenants, the thing that's usually worked out well for me is calling tenants current and past employers and asking them what kind of employee were they? Did they show up on time? They'll tell you, they're like, oh man, this guy. They were always late. They never did what they said they were going to do. Right. That feedback has always translated well for me. And then one question I always ask them, as I say, if it was your house, would you let them live in your house? And if they've said no to that and I've let them live in my property, I've regretted it. And if they've said yes to that and I've let them live in my property, it's usually worked out pretty well.

[B]

Yeah, I think this is just a no brainer. It's honestly crazy to me that people wouldn't do this. This is someone who's moving into your house. Like I, I dropped my car off to get a tire repaired and I was like interviewing the person to make sure they were going to do it right. Maybe this is just me that I'm skeptical of everyone.

[A]

Well, your number one rule was don't trust, trust people. So it is not a surprise.

[B]

This is such like, I grew up in New York. This is such a good New York.

[A]

Oh, that's so true. I forgot about that. Yeah, that is very New York.

[B]

Such a. New York.

[A]

New Yorkers don't talk to anyone. They. They don't trust anyone.

[B]

Yeah, it's just like, oh, you're talking to me. What the.

[C]

You.

[B]

What do you want?

[A]

So New York. You're right about that.

[B]

No, but I. I really mean that. I just, like, I. I think I approach it, like, in a friendly way, but I just want to make sure I know who these people are. Like, this is the. This is the challenge of real estate. As you were working with so many people.

[A]

Yes.

[B]

Work with great people. There are. I. I am not saying don't trust people because most people are untrustworthy. I actually find that most people are trustworthy and most people do a good job. But it is your job as the investor to make sure you. You screen out the people who are the exception to that rule.

[A]

And you make a good point that, like, typically, once you get to the point of calling references, you already have a pretty good idea if you want to rent to this person and you're doing some confirming. So it's not like you got to go do this for every applicant. That is not what we're.

[B]

Exactly.

[A]

Once you've gone through your normal application process and you've narrowed it down to a couple of people, even if you've got that good feel, even if they've given you the good vibes, confirm those vibes. If you've got the good vibes, somebody else should have the good vibes about them, too. And if what you're hearing doesn't fit the good vibes, well, you've got a hard decision to make. But I'm telling you, you. When I have talked to past employers, that is where I've got the best feedback.

[B]

All right, well, we've given you six ways to fail. Any other last thoughts, Henry?

[A]

The last thoughts for me are, is a lot of these just seem like trust, but verify. Verify these things. You've got to do due diligence. Not just due diligence about the purchase process, but due diligence about the renovation process and inspection process and due diligence about the tenant screening and tenant process. These are the places that are going to make or break you. These are the places that are going to either put money in your pocket or take money out of your pocket. And what can really hinder people, especially when they're first getting started, is taking a big loss on your first deal. It can set you back years. If you've saved up a bunch of money to finally buy a deal and you stumble on one of These six items, it could set you back to where you've got to save up a whole lot of money again or just put a bad taste in your mouth so that you. You don't end up investing and setting yourself up for a future of financial freedom. So trust us, we're saying these things not because they're trendy things to say, but because we've made these mistakes on some level. Dave and I have made all these mistakes. Don't do it.

[B]

Take that one extra little step when you want to quit and you're tired and you don't want to make that extra phone call. That's the way to not fail. Like, if you had to summarize it is just take that one extra step and you can be successful. Your chance of failure, if you're willing to put in that little tiny bit

[C]

of extra work, is pretty low.

[B]

So that I think is. Is super encouraging.

[A]

And I know it's going to be hard when you're staring at a deal that you think could be profitable. And one of these things that we've talked about just isn't computing. And you're like, man, do I really want to walk away? Yeah.

[B]

Yes, you do.

[A]

Live to fight another day. There are more deals to buy. Just don't bend on these six things, and it will keep you safe, it will keep you in the game, and it will keep you on the path to financial freedom. Well said. All right, guys, thank you so much for joining us on this episode of the Bigger Pockets podcast. Hopefully you have learned from Dave and I's mistakes, or you will learn from Dave and I's mistakes, and it will keep you safe. It's been great talking to you. We'll see you on the next episode.

[B]

Thank you all for listening to the

[C]

BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify,

[E]

or any other podcast platform.

[C]

Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com.

[E]

the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember past performance is not indicative of future results. Biggerpockets, LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.