Avoid These Mistakes in Real Estate Investing

Tim Cook (00:00)
I’ve never lost a deal at the closing table. So, and I’ve had title company tell me about that too. You know, it’s just my clients, my sellers or buyers seem to be very well versed on what’s going to happen at the closing table. So that goes very smoothly. And I just attribute that to…

my overall business and still being here 25 years, I’m a good communicator when it comes to buying, selling houses.

Erika (02:00)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika. And today I’m thrilled to be joined by Tim Cook, a seasoned real estate investor with over 25 years of experience. Tim, it’s great to have you here.

Tim Cook (02:15)
Thank you very much, appreciate the invitation and ⁓ looking forward to it.

Erika (02:19)
Yeah, yeah, I think our listeners are going to learn so much from you, Tim. So let’s jump on in. You’ve got an incredible background. How did you first get started in investing and what drew you to it?

Tim Cook (02:33)
So when I, right out of high school, I went into Marine Corps and ⁓ really didn’t think about real estate investing at all, except my dad back home, he was buying rental properties and fixing them up and I’d go home on leave and he’d have me over there working on the houses. So that probably planted the seed early on. And then later in life, when I started buying houses at duty stations, I left.

you know, when I transferred, kept that house as a rental property. So that gave me a little taste of, you know, the income and the tax deductions and stuff. And then when I retired, I, by that time I knew that real estate was what I wanted to do. I didn’t want to work for somebody else for the rest of my life after having so many bosses in the Marine Corps. And, ⁓ I wanted to have a little freedom and only have one boss, my wife. So.

I got the bug to do it. I was given an opportunity to go to a ⁓ seminar on buying ugly houses and that, that really hooked me. And I’ve been studying ever since the year 2000. And that’s how I really got started. I was working full time at my second career, while I was going to all these different training courses and learning how to buy houses creatively and help people. So.

That kind of sums it up. 25 years ago when I got started.

Erika (03:50)
Yeah, yeah, that’s awesome. Well, let’s fast forward today a little bit. What would you say your main focus is and what kind of properties are you looking for?

Tim Cook (04:00)
So my main focus today really hasn’t changed an awful lot. I’ve always been excited about the buying houses with no money type of strategy because that keeps my money in my pocket and it protects my credit. So I learned all the creative strategies for taking over mortgages and ⁓ doing owner finance type transactions. If I’m doing cash,

Purchases at using other people’s money. So it’s a great way to protect your Credit and keep your cash in your pocket I still like those things today But in addition to those, know, there’s a big opportunity with wholesaling houses meaning buy low sell higher and And help somebody that needs to sell fast, but help somebody else ⁓

is looking for their next home. Maybe it might be a rehab property or it may be their dream home. It’s just hard to say, but I’ve always enjoyed doing that and I’ve been doing that for 25 years.

Erika (05:50)
You know, I’m sure this has changed, you know, over time with experience and market changes, but for you, how do you determine if a property is a good fit for you when it comes to making those deals?

Tim Cook (06:02)
So I’ll look at anything, even if somebody else can’t make the deal work for them, I go through and I have a formula looking at what the after repaired value is going to be and what the repair costs are. But one of the big things I look at that I think some new investors make a mistake with is that I look at the location of the home heavily.

And what the home looks like and what’s the curb appeal could be not what it is today, but what it could be and I see people going into neighborhoods that you know, maybe has a bunch of homes that have been boarded up and or should be scraped and and They go in there and do a full rehab in it and then they can’t sell it That to me is just a big mistake I think people

those kind of people need to step back and think about that and making sure that once you’ve invested all this time and money in that house, can I get my money back out in a timely fashion? You you might be a gorgeous home, but if it sits there for six, nine, 12 months on the market, you’re eating all your profits up and holding costs.

Erika (07:10)
Yeah, yeah, absolutely. Tim, I wanna talk a bit about the group that you’re in, the West DWF REI group. Tell me more about it and what kind of advice would you like to pass on to our listeners that I’m sure you’ve shared with that group as well?

Tim Cook (07:29)
Absolutely. ⁓ The West DFW REI Group is, I created that 16 years ago in November. So it’s been a while. Again, my hair was your color earlier when I started that group. But I love that group. I love giving back and I love giving new investors the opportunity to get started in this great opportunity we call real estate investing.

and as well as the seasoned investors helping them take their business to the next level or maybe implement new strategies for buying houses. We do a lot of training. Our calendar of events shows you all the different events we hold on a monthly basis and we cover all aspects of the single-family home business. We don’t get into any kind of commercial property. It’s just the single-family home.

but we talk about all kinds of things, rehab and houses, creatives, buying and selling strategies, owner finance, wholesaling, rental property. Last month we did a rental property management and 10 most common mistakes for landlords. that kind of education is very helpful to the new investors. We also have a list of vendors that you can trust.

These are people that have been around in the business a long time and just love helping the members Do the right thing and make sure their business is profitable It hurts to see people go in and spend tens of thousands of dollars on education with the wrong gurus and Then end up getting out of the business because they didn’t learn it right and we try to help those people

If they’re interested, we want them to come to the group, take advantage of us, learn, and ⁓ enjoy the community. The community is there to help them and help them be successful.

Erika (09:53)
Yeah, yeah. With running that group, would you say that there’s, you know, common pitfalls that you notice with some new investors? Maybe you could share some of those things so that way our listeners don’t have to experience the same mistakes.

Tim Cook (10:06)
Absolutely. One pitfall I see quite frequently is new investors, a lot of them like to go have a partner. And it’s great to have a partner in a lot of different things, but they don’t, I’ve seen a lot of friendships, even family members trying to work together in this business. And one, they don’t formalize it.

They don’t have any kind of written partnership agreement. And then they say, I’ll do this, you do that. And then one of them’s not doing what they promised. And the other one’s maybe going overboard trying to compensate for it. And they just, in the end, they end up breaking up and splitting those friendships and family, families and stuff. it just, it’s frustrating because they don’t find out what they should be doing.

They don’t do the due diligence on their potential partner. And nowadays, how hard is that? Everybody’s got a phone and an internet, so they can go do the due diligence on their partner before they get into it. I see a lot of people trying to wholesale deals with a handshake instead of having a contract that gives them equitable title in that deal. And they’re just trying, hey, Joe, can you help me sell my property at…

one, two, three, Main Street. yeah, I’ll do that. And they’re breaking the rules, breaking the laws by doing those deals without written documentation to allow them to do it. that’s a big one. I also see a lot of new investors want to jump into rehabbing houses, flipping houses, because it’s on TV. It’s got to be cool and easy to do, right?

and they jump into it without really knowing and they go get any Joe Schmuckatelli that calls themselves a contractor and turns out they get ripped off. so it’s sad to see that kind of stuff happen when, you know, we try to educate people as much as possible, but we can only educate the ones that come to us, right? That find us and come participate and…

and ⁓ indulge in all the great education that we share with them.

Erika (12:05)
Absolutely. So speaking of pitfalls, let’s talk about your experience. I’m sure you’ve seen a lot over the years. Maybe there’s some wild moments, a deal that went sideways, maybe you had to pivot. What happened and how did you handle it?

Tim Cook (12:06)
Thank you.

Well, I first off will say, and this isn’t bragging, but

I’ve never lost a deal at the closing table. So, and I’ve had title company tell me about that too. You know, it’s just my clients, my sellers or buyers seem to be very well versed on what’s going to happen at the closing table. So that goes very smoothly. And I just attribute that to…

my overall business and still being here 25 years, I’m a good communicator when it comes to buying, selling houses.

want everybody on the same page. I, you know, some of our deals are really creative. And if they don’t understand the deal, what’s the confused mind say? It says no. And if the title company ever tried to explain a subject to deal to one of my…

sellers, the title company wouldn’t really know how to do that. It’s not their deal, right? But I explain that in great detail, document in great detail what we’re doing and they understand it. So I, from that perspective, I’ve done well. I have never been ripped up. said, I got ripped off just recently. Here it is 25 years.

by a contractor. Fortunately, I saw it coming and I cut it off. I only lost a couple thousand dollars because of it. So, and I recovered from that. It was quite easy, but this goes back to my point about vetting, you your partners and your, your contract support, your power team, vet them thoroughly. And I broke some of my own rules with this particular guy, but I got past that. But I have had,

Some wholesalers tried to jerk me around it on closing on a house. what I did from that was I took that experience and I just expanded my knowledge and my documentation even more so for my group members so that hopefully they will never run into the problem that I did.

But this wholesaler that was buying this house for me tried to tell me I didn’t give them documentation and I did. And then they tried to get me to reduce the price, which I was not gonna do. then, and they were so unprofessional that they started saying words that they should never say to anybody, let alone saying it to the title company that’s trying to close the deal, you know?

So, all the documentation and stuff that I have is now so detailed that even after I sent it to an attorney to review, they didn’t make a change. How many attorneys would you ever, have you ever seen an attorney you give them a document say review this please and they don’t make any changes? So that gave me a pretty good feeling. You know, so.

⁓ Hopefully any of my members that are going to use the documentation that we have available, they will be well protected too. So I really don’t have a whole lot of bad experiences to tell you how I dealt with them to overcome them because I’ve just not had that kind of experience. I’ve been pretty fortunate over the years.

Erika (16:02)
That’s great. Yeah, you told me before we started that you were consistent and persistent. So that fits right in line, Tim. I want to talk about what’s next on the horizon for you. What’s on your radar in investing for the future?

Tim Cook (16:18)
So I want to keep doing rehab properties, fix and flips, improving neighborhoods is what we’re doing. And the most recent one, just as an example, and this kind of gives me the motivation to keep doing this, accidentally met the buyer of my latest rehab. And it turned out, as a young lady, that

probably looked like she was 18 years old. Turns out she’s a nurse and she was so proud. She’s been saving all of her money to buy her first house and she bought my house. And her and her mother was telling me that they looked at so much garbage. At one of them, they even caught, geez, slips me now. They got some sort of bite and stuff in this house. It was that bad.

They were all garbage and they’d been looking for about a year and they said, as soon as I walked into this house, I thought this was the house. As soon as they walked in and that gives me a good feeling. So that gives me the motivation. I’m going to keep on doing that and trying to train others in my group to do that same thing. You know, I want to keep buying houses separately from the investor group that I run as well.

And, you know, I want to keep helping people and teaching people to do that very same thing. And I don’t think that I’m changing my strategy at all. You know, I’m at the retirement age, but I still enjoy doing what I’m doing. And until that day comes when it’s no longer fun, I’m going to stop doing it, you know?

⁓ I’m actually heading out tomorrow morning to a real estate investor group association conference for three days in Ohio just to try and learn ways of improving, learn how to give more to the membership and additional membership benefits, which we’re very proud of. No other REA group in North Texas offers anything.

membership wise, membership benefit wise than what we do at the West DFW REI group. So it’s been fun and we want to keep doing that. We want to keep offering more benefit for those that do come and want to learn.

Erika (18:26)
Yeah, that’s great. And I’m sure you’re changing people’s lives with what you’re doing there, Tim. If someone wants to connect with you, learn more about your REI group, or maybe work with you on a deal, what’s the best way for them to reach you?

Tim Cook (18:42)
So if they’re interested in checking out the group, go to www.westdfwreigroup.com. westdfwreigroup.com. And then just look around. There’s several different things in there to look at. There’s investor resources. There’s an events calendar. There’s a Contact Us button on the top right corner of the website.

I can give you a phone number too, but if you forget it, just go to the top corner of the website. Best phone number is 817-599-8058. My assistant and I both monitor that, so you can call or text to that number and ⁓ we’ll get back to you ⁓ quickly. Other than that, mean, it’s pretty simple if you just remember that website.

If you want to look at my real estate website, www.ibynorthtexashomes.com. That’s where I send all my home sellers as well as investors.

Erika (19:40)
Great. Thank you so much, Tim, for sharing your story and experience. And we just love your passion for helping others succeed in real estate.

Tim Cook (19:47)
Thank you very much Erika, it’s been great talking to you. If I can do anything for you, let me know.

Erika (19:52)
Sounds great. for everyone tuning in, if you got value from this episode, make sure that you’re subscribed to the Real Estate Pro Show. We’ve got more conversations with pros like Tim, who are out there building incredible real estate empires. We’ll see you on the next episode.