“You’ve got some big cojones!”
At least that’s what I’ve been told… many, many times. Probably because I have a tendency to break a few traffic laws (shhhhh, don’t tell anyone).
And also because I’ve never had trouble taking the big leap to start a new business. Several, as a matter of fact.
In 2007, after a few months of watching “Flip This House” and “Property Ladder” on cable and saying “I could do this”, I took the plunge and bought my first rehab in November of ’07. Mind you that by then the housing prices have already started to decline, but I was just as clueless as most people at the time about the impending real estate collapse. Luckily, I was able to successfully flip this house 4 months later. Yes, the mortgage lenders were still lending to anyone with a pulse.
Not realizing the market was about to collapse, I bought 2 more houses shortly before the sale was finalized on my first flip. It would take me 9 months to sell House #2 because by then, lenders had finally tightened their lending criteria to the point where you had to be Donald Trump to get a loan. Thankfully, I found a cash buyer that did not need to kiss some lender’s ass for a loan.
One reason why you shouldn’t file a joint income tax return unless you’re really married…
So I had this buyer lined up ready to close on the 3rd house, but at the last minute we found out the buyer filed his taxes as “married” even though he wasn’t . . . officially. Why was this important? Well, because according to the lenders, he is considered married and any real estate transaction in Texas requires the signature of the spouse. So now he either has to divorce his common law “wife” or add her to the title. Oh, and did I mention that he has no idea where she was except that she has left the country, and there was no way to locate her?! Needless to say, the deal was dead.
By this time the housing market has collapsed, lenders weren’t lending, and the market value of House #3 has plummeted 25% since the purchase. So what happened to House #3, you ask? Well, welcome to my humble abode. Yup, that’s right, I’m currently living in House #3.
You know what, though? I don’t regret it one bit. I’ve learned so much about the real estate market, running a business, how to find customers, and about myself. All of which is proving useful in my online business.
Lesson #1: Know what you’re getting yourself into because it takes a LOT of hard work.
Being your own boss can be great, just don’t fool yourself into thinking that it’ll be easy. You’re gonna work twice as hard because you have to do the job of the boss AND the employee. Forget The 4-Hour Workweek, it’s a gimmick used to sell a book. Just because you like what you’re doing and don’t consider it “work”, it’s still time and energy expended achieve a goal: making money.
For my first flip, I tried to save money by doing a lot of the work myself. I trashed out the place, pulled all the carpet, personally painted the entire interior of this 2,400 sq.ft. house, and even built an entry gate to the backyard from scratch. All the while tending to the “business” side of the flip like dealing with the hard money lender, the insurance company, different subcontractors, and sourcing materials. Having to juggle a lot of things at the same time, I learned to organize and prioritize. This is a necessity for any entrepreneur.
And as much work as it turned out to be, I’m still glad I did it because now I know exactly what it takes. And I really liked the sense of achievement I felt at the end of that project. It was a natural high. But I learned not to do the same thing for House #2 and #3. Why? Because it’s just not the best use of my time.
Which leads to…
Lesson #2: Learn to outsource whenever you can.
By doing a lot of the work myself, it took longer to rehab House #1 and put it back on the market for sale. Each month the house went unsold was another mortgage payment that had to come out of MY pocket. Had I spend a little money to outsource some of the work (like painting), I could’ve sold the house earlier and ended up making more money.
Applying this to my online business, I learned when to save money (by setting up the bulk of the website myself) and when to outsource (when certain programming tasks are beyond my skills and the time it would take to figure it out on my own reached the point of diminishing returns). In other words, my time is better spent on tasks that will make me much more money than trying to save a few bucks on freelancers.
Lesson #3: Make sure you have some financial reserves.
When the housing crisis finally hit and I had a really difficult time selling the houses, having a financial reserve helped me get through those months when I had to pay 2 mortgage payments.
When you’re starting a new business (online or offline), it will take months or even years before you make a profit. Forget the get-rich-quick schemes. You may be able to start generating a profit within a few months, but as you’ll see, sometimes life just doesn’t cooperate. Besides, you really need to reinvest these profits back into your business to take it to the next level. So, don’t count on those initial profits to be able to support you, especially in the early stages of your business. Things can change in an instant.
Lesson #4: Know when to get out and move on.
I liked flipping houses and might’ve been very successful at it . . . if I’d gotten into the business a few years earlier. It was bad timing, but at least I didn’t lose my shirt over it. Once I saw the writing on the wall, I knew it was time to move on to something else.
And that something else was an online business. I had many ideas, but didn’t really pursue any of them seriously until a little more than a year ago. Since then, I’ve built a couple of relatively successful niche affiliate marketing sites. But I know that these are not sustainable long-term businesses. That’s why I started AppsBlogger. This is the online business that I always wanted to build, but wasn’t ready for . . . until now.
Lesson #5: Life throws you unexpected curves; it’s how you react that defines you.
Not being able to sell House #3 turned out to be a blessing in disguise. Moving in gave me my first home ownership experience. This is not a small thing for an Asian girl who’s lived with family all her life. There’s a lot to be said about being able to walk around half-naked in your own house (sorry, too much information ).
“It’s only after we’ve lost everything that we’re free to do anything.” – Fight Club
Because being in the club means you are getting one step closer to achieving your dreams. It also means you are still trying despite your age; trying to achieve a goal through non-traditional routes; trying to accomplish something that no one else think you can. And because you didn’t settle and give up on your dreams, you are doing something that most people are too afraid to do: join the Failure Club.
For me, a business “failure” ultimately led to something better. My “failure” in real estate led me to really focus on an online business. The “failure” of my first affiliate website led to the building of my second more successful website. And it’s the combination of all the years of trial and error on and off-line that’s led me to the creation of AppsBlogger.
I’m really glad that I’m not one of those people that get gun shy after many false starts. If anything, I’m a bit trigger happy when it comes to starting something new. When life throws me a curve, I decide that there must be something better I should be doing. And I do it.
So what lessons have you learned from your past “failures”?