Even if you’ve broken most or all of the other so-called “rules” of Real Estate investing, if you follow this one magic rule, you can emerge victorious, a little wiser but unscathed by crippling losses. Let me illustrate.

Recently I purchased a single family home, and in so doing I broke many of my own rules. I bought a house nearly an hour from my home, I bought a house for the wrong reasons (I really, really liked it), and I bought a high end house in a low end neighborhood (a classic no-no). I also bought it without having a clearly defined exit strategy (another classic blunder). I just knew I could do something with this house.

Additionally the house had one of the most investor-unfriendly features I have ever had the misery to run across- an indoor swimming pool. When I wasn’t busy finding and repairing leaks in the liner, I was struggling to refill the pool using the property’s seriously overtaxed well. The water would run for a while, then shut off. I would prime the pump, wait for the well to recover, and turn the water back on. Then repeat. Repeat again. Again. I still have nightmares about it.

This house took me three times longer to sell than I first imagined, and holding costs were eating me alive.

But… I owned this house right because I had bought it for the right price. I had foreseen that this house, with all it’s beauty and features, could also be a very difficult house to rehab, hold, and sell. Based on that, I structured my offer with plenty of room, which is a good thing, because much of that “room” was eaten up before I was finally able to sell.

Much, but not all.

Why was I able to withstand all of those expensive problems and still walk away with a tidy profit, and some hard-won wisdom? Because I recognized and applied the first and most important rule of Real Estate investing- YOU MAKE YOUR MONEY WHEN YOU BUY.