A certain “convention” that most married couples follow shortly after tying the knot could be a huge real estate mistake if either of those individuals happens to be a real estate investor or aspire to be such. Think Realty sat down with Sherman Ragland, the award-winning founder of DC-REIA and a number of local meetup groups in the Baltimore and D.C. area, to talk about his personal strategies for success in real estate investing. Along the way, Ragland revealed what he believes to be the biggest mistake that most real estate investors make early in their investing careers – and it ties directly to tying the knot! Ragland is a graduate of the Wharton School and a long-time investor in the D.C. area. He received the CREONLINE® Blue Vase “National Real Estate Investor of the Year” award in 2003 and has been featured in Forbes, Entrepreneur Magazine, Black Enterprise, and USA Today, as well as on CNBC and Fox News.
This article features a personal, exclusive Think Realty interview with award-winning real estate investor and Wharton School graduate Sherman Ragland. He will be presenting at Think Realty’s National Conference & Expo in Baltimore, Maryland, on June 24, 2017. Reserve your spot in his session now. (Reservations open in a new window. You will not be taken away from this page.)
Despite decades of successful and highly lucrative real estate investing, Ragland insisted that one need look no further than himself to find “the single worst mistake” he’d ever seen a real estate investor make.
The “Single Worst Mistake”
“The single worst mistake I ever made as an investor was selling my own house!” he said, noting that he sold his two-bedroom/two-bath house in Alexandria, Virginia, shortly after getting married. “It was walking distance to the waterfront and seven blocks to the metro,” he recalled. After marrying his wife, Clare, “without consulting her, I just decided to sell the house because ‘that’s just what you do.’” Ragland said that about a year after the sale, he was discussing with a friend how passive income had changed that friend’s life and, upon investigating, Ragland discovered that passive income stemmed from ownership of rental property.
“I remember saying to him, ‘Where is it coming from?’ and he said, ‘I own a couple of rental properties. When my wife and I got married, we were smart enough to realize we should keep our houses and turn them into rentals.’ They had enough cash flow coming off those properties not only to cover the mortgage payments but to also pay the mortgage payment on their new house [in a high end area],” Ragland recalled. “I remember coming home and saying to my wife, ‘Gee, honey, why did I sell that house?’ and she looked at me and said ‘I don’t know. I didn’t tell you to do it!’”
Ragland went on to say that he then committed what he terms the “cardinal sin” of real estate investing, which, in his book, is investigating what might have been, by looking up the property that he had sold and learning that he could have been making thousands a month in rent had he kept the property. “That is, by far, the worst mistake,” he laughed. “I give it as an example for two reasons, though. First, that mistake is fundamentally why I wanted to be part of some kind of meetup or real estate club: because I did not want to repeat the same stupid mistake I had just made. Second, because I think a lot of investors, especially new ones, are quick to do the fix-and-flip or wholesale thing [only] and true wealth is built in real estate by holding onto it for the long term.” Ragland noted that he supports using the “faster” strategies in real estate to build up capital, but warned that investors may “get comfortable” and get stuck in that fast-cash pattern if they do not expand their investing strategies.
Looking at Real Estate the “Right Way”
“Look at real estate like a building,” he said. “Most buildings don’t go from the ground straight up. They have a deep, deep foundation and at the base, it’s wide, and then it steps in like a wedding cake. It’s really easy to plateau as an investor [at one of the lower levels] and never really build that real estate empire you had in your mind when you were first getting started because you got comfortable getting that quick cash.”
Ragland will be a featured speaker at Think Realty’s National Conference and Expo in Baltimore, Maryland, on June 24, 2017, and he’ll deal directly with how to reach the next level in real estate investing through crowdfunding and “raising unlimited funds to do deals.” Reserve your spot in that session by registering HERE.