1. You become like those with whom you frequently associate.

Look at the people with whom you most frequently interact.
Are they going where you're going?
Are they further ahead or are they holding you back?

To answer those questions, you must be clear in your own mind (and hopefully, you've put it in writing) as to where you are going.

What are your goals?
What principles are shaping your career and business endeavors?

If you aren't clear on the answers to these questions, this is where you need to begin. This is where you escape the shiny-object phenomenon for clear, identifiable goals regarding what you want to do. Instead of saying, "I want to be a Real Estate Investor," be specific and say, "I want to be a Real Estate Investor who uses the BRRR method with a reasonable LTV", or "I want to be a Buy-and-Hold Investor." or "I want to be a Fix-and-Flip Investor taking ugly houses and making them assets in my community" to these questions, look at the people with whom you most closely associate in non-family environments.

Do those people hold you accountable?
Do they inspire. and motivate you?

Are they a sounding board and a resource for helping you solve problems?
If you can't answer "YES", then you need to find a new group of people with whom you can associate. For example, If you are a buy-and-hold investor, you may not be getting the right information, if you are hanging out with wholesalers all the time, or vice versa.

2. Real Estate can go down in Value AND rents can Drop.

If you doubt me, look at the pricing of commercial office space and the cost to rent that space or a one similar.

Prices are down and it's because of the second fundamental rule, which is...

3. Interest rates can go up and the Fed is not your friend.

From 2011 through early 2023, we were in an environment where interest rates were kept low for far to long. Low interest rates are like pouring an accelerant on a bonfire.

Interest rates are the fulcrum on which the tool of leverage pivots. They can be up or down and you must be risk-aware to determine what will happen if the leverage swings the other way.

4. Not all Real Estate transaction techniques are transferable.

Just because you can assign a wholesale deal and make a fee, it doesn't mean that you should  be assigning any type of deal to make a fee, like subject-to transactions, for example. I'm not sure where this concept originally came from and how it took root but it has led to a watering-down of skills that is leaving thousands of homeowners in significant financial peril. When properly done, subject-to transactions  can be very beneficial for everyone involved.

Because of my experience, I can tell you that one of the most dangerous trends I see is thinking that we can take the tool of "assignment" from the realm of wholesaling. (by the way, several states are cracking down on this, as they should)  and use it in other areas.

If you know someone who systematically assigns subject-to deals, please share this with them. They are leaving a lot of money opn the table. because they don't know any better and thet are creating a transactional, moral  and ethical nightmare going forward.

Subject-to deals should be done with the understanding that they are long-term relationships. These deals are not suitable for assignment. Period. End of story.

5. Clarity, Integrity, Accuracy and Persistence are necessary characteristics in every type of Business Transaction.

The No. 1 problem I see in transactions that cross my desk from Investors who want me to fix them is a lack of Clarity and unclear communication as to a meeting of the minds between the parties. Something was assumed, misunderstood, or misinterpreted. Instead of taking an extra 20 minutes at the right time to talk something through, assumptions were made which caused problems that will take multiple hours to figure out later.

Even worse than the issue with Clarity in a deal, is the lack of Integrity. I've seen some business and Real Estate deals where one or more parties to the transaction clearly lacked the requisite integrity to be someone with whom I would want to be associated with in business. It doesn't matter how good the deal or the paperwork or the financing is. If the deal has someone involved who lacks integrity, it's a bad deal.

Accuracy is one of the many characteristics for which I am grateful for my assistant. She strives for accuracy in all that we do, whether it's the grammar and punctuation in what I write, or the accounting  for my various businesses. Records and bookkeeping must be kept up-to-date. This is a fundamental aspect  of a successful, sustainable business. If you are "too busy" to make sure your records are handled properly, then you are probably someone who is "too busy" for me to do business with you. If you lack accuracy regarding your finances, you probably don't even know if you are truly making money or losing money.

Every Real Estate Investor will face challenges. There will be days when you want to quit because it seems like everything is going wrong. Those are the times when you must have Persistence. You must dig deep, remember your goals and objectives and think about what you want to accomplish. You must refuse to quit. Everything you want as an Investor is on the other side of hard work and Persistence.

I hope focusing on some fundamentals has been a good reminder for you to be careful in your business dealings, particularly as we navigate this challenging time in the Real Estate Market.

Jeffrey S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on Investing and wealth protection. He has tried more than 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio four times via litigation. Read more of his viewpoints at WatsonInvested.com