What To Do If You Cannot Make Good On Your Promise

Sharing my real-life experience here gives you insights to this business that many teachers or ‘gurus’ (which I’m not) won’t reveal. But I think it’s important to expose every aspect of real estate investing because “deals-gone-sideways” happen to everyone, and if I didn’t educate you on how to work through them, well it wouldn’t be much of an education.

When it comes to investing in real estate, either you’re making money or you’re getting an education. It’s just that sometimes, the education costs a little bit more than you wanted to pay.


Last year I had my very first real estate deal go bad. Or, rather, it was the first one that didn’t meet my expectations. In this case, I paid for some education, but to make it worse, I was using a private loan – so it was somebody else’s money on the line.

Here’s what happened; the deal didn’t go as planned and there was a balloon payment attached to it. When the balloon came due, I didn’t have the money to pay it.

Remember the one thing I’ve fervently impressed upon you about your private money people? You ALWAYS pay them when you say you’re going to pay them. By any means necessary.

It’s a credo I run my business by. So, in this scenario, I knew the deal wasn’t going to produce what I thought, but I had to find a way to pay the loan, even if it was to my own personal detriment.

After exhausting all my options, my last resort was to refinance a building I own in Los Angeles. It was uncomfortable; it stung; I didn’t want to do it, but remember, by any means necessary.

While the refi was underway, I learned it wouldn’t be complete until after the balloon payment was due. Uh oh. Unacceptable.

So to honor my word and fulfill my obligation to pay up, I took out a hard money loan – that’s wicked expensive money by the way – and used my refi as collateral to do it.

I was able to make my balloon payment to the first lender, but now I’ve got another balloon due in 90 days. It should have worked out because the refinance was supposed to be complete right around that time.

60 days in I learned my refinance was declined. Holy mother of up the creek without paddle. My heart dropped.

I had 30 days to come up with a 6-figure balloon payment.

30 DAYS!

It wasn’t possible.

Now here’s the lesson, as soon as, and I do mean AS SOON AS, you know FOR SURE that you won’t be able to make good on your promise, you need to get into communication with the impacted party and tell them what’s going on.

This is a last resort, but when you’ve tried everything, tried some crazy things to make it work, and it can’t, then you need to pony up and TELL THEM. Then you need to get into negotiation and re-promise when you can deliver.

No shoulder shrugging and sorrys; you need to re-promise, and come through.

So I informed my hard money lenders about the situation and asked for a 90 day extension.

Now I had 120 days to make 6-figures. Let me tell you, it was a very uncomfortable 4 months.

But I did it. I made that happen, and I’ll share how in the next post.

This post, however, is about keeping your promise and how to proceed if you have tried EVERYTHING and cannot keep your word.

You have to suck it up, and talk. You just do. This principle doesn’t only apply to real estate either. This will serve you throughout your entire life.

It could be something as simple as you’re running late for an appointment. As SOON AS you know you’ll be late, call the person who is waiting for you and tell them. Don’t wait one minute before you arrive. When you know, they should know.

It shows respect. It shows integrity. It honors the people in your world.

And people like to do business with people of integrity.

Simple right?

Yes, but the majority doesn’t do it. They’ll put the pain off till later, hoping it won’t materialize.

You will set yourself apart from the masses if you conduct your business and your life with transparency. Always do whatever it takes to keep your word, but if the situation comes up (and it has for all of us) where you simply cannot – be honest about it and present a new solution.

Do that, and you’ll have business associates for life.

Fail to do it, and you’ll see bridges burn, and burn fast.

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