Learning from my Mistakes
I read the news today Ė oh boy.
That was my homage to the Beatles and it appropriately captures my feeling. What the news I read was youíll learn in a minute but first a little background.
People donít get rich over night. Hard work, careful planning, luck, good choices, timing and smart investments all play a role in gaining wealth. But even when you know what the good choice is and the time is right it doesnít mean you can or will do the right thing.
My road to wealth began when I decided to save for my own home. My decision to work toward that goal was made long before I was out of school and once I began working full time I saved as much as I could. When I was 25, thanks to working quite a bit of overtime, I bought my first home, a townhouse.
I couldnít afford much and since I lived in the northeast, near a major city, I would have to look quite a distance away. About 45 miles south of the city I found an area I could afford that I would feel comfortable living in. After looking at both new developments and existing units, I decided on the townhouse I would eventually buy.
At this time I hadnít been following the real estate market anywhere near as closely as I do now. I had no idea that this was a particularly soft time to be selling a home. I offered $92,000 for the townhouse and although the owner had turned down more in the past, he accepted. Those higher offers were long gone and he was forced to sell to me for less than he originally paid. Yes real estate can lose value.
What I didnít know and what is so hard to know is that I bought near, if not at, the very end of this soft patch. Life happens, and in the next few years my life changed significantly. In just four years I moved out of my townhouse and into a new home my future wife and I had built (after her house burned down). Now came the question of what to do with the townhouse.
My gut feeling was to keep it and rent it. I could easily afford it even without a tenant and my future wife could afford her house since she had it before meeting me. This would have been an easy choice if I didnít hate the homeownerís association. I couldnít bear the thought of having to deal with them any longer than I needed to, however so I decided to sell.
Rather than give a realtor six percent I decided to sell it myself. This was the second mistake with the first being the decision to sell. Not that selling a house on your own is a bad idea, on the contrary I think it makes perfect sense, but you have to do your homework and price it properly. I didnít. So eager to get away from the evil homeownerís association I accepted the first offer for $113,000. That represents a profit of a bit over $5,000 a year. Not a bad return but it could have been better.
The couple I sold it to were very nice and another deal they were close to making had recently fallen through so I was glad to be able to give them some good news. Iím not a greedy person and while I could have backed out of the deal and waited for a better offer I was happy with my profit.
What I didnít know was that while the price had appreciated nicely over the four years I owned it, it was nothing compared to what would come over the next four or five years. Yesterday I opened the newspaper to check the prices of recent home sales in the area and saw my former townhouse was sold by the people I sold it to. What I couldnít believe was the price.
What I bought for $92,000 and sold for $113,000 just sold for $275,000. I have achieved a lot over the years and yes, Iím a millionaire but that doesnít change the fact that even successful people make mistakes. I should have kept the townhouse and rented it out but I simply couldnít see it then.
Iím satisfied with my decisions so far and if Iím comfortable at the time of making a decision, then I shouldnít have any regrets. I should, and have, learned from my mistakes and itís that ability that will serve me well in the future. No one has all the answers.