When I was 16 years old, I aspired to become an airline pilot. Using the money I’d earned from a week of bagging groceries, I took one flying lesson a week at our local airport after school. Learning to land an airplane was an incredible experience. After you complete your first unassisted landing, you feel like you are at the top of your game.

One day, my instructor set up the airplane on final approach to the runway. He intentionally set up the plane so that we came in too low with an airspeed that was too slow. It’s a condition called “being behind the power curve”—a concept I had not yet been introduced to.

“You have the airplane,” my instructor told me. It was time for me to take over the controls and complete the landing.

As I crossed the runway threshold I cut the throttle, just as I had done on every other landing (not that I had done many in my whopping five hours of experience). And then, almost immediately…WHAM!

The plane literally fell out of the sky. Fortunately for me, we were only about 10 feet up or so, so instead of a crash it was just a very hard landing. Surely I must have damaged the airplane, I thought. I’d never felt such an impact before.

We assessed the damage: there was none. I had dodged a bullet this time.

What happened? What did I do wrong? Well, a lot. And also nothing.

I failed to recognize what was going on because I’d never experienced this particular configuration before. I didn’t realize that I should have gone full throttle to get the heck out of there and start over. On the other hand, I did nothing wrong because I did what most students do when they are learning and lack experience. We make mistakes. And we learn from them.

Never again will I get behind the power curve on a final approach. Never again will I cut the throttle when I’m going too slow for the airplane to keep flying. The point is, you learn these things in training so you don’t learn them with passengers.

What Does This Have to Do with Real Estate?

Everybody wants to talk about their successes. But talk about their failures? No way! What failures?

Come on. We all have them, so just be up front about it. Here’s why.

Other people’s money fuels the growth of our real estate businesses, right? Attracting that money requires that you have a spotless record and never make mistakes. It is perfection that impresses investors and makes them want to invest with you. No one wants to invest with someone who has screwed up. Right? No; wrong!

In just the past few years, I’ve raised over $60 million, so you can imagine that I’ve talked to my share of investors. I’ve found that plenty of investors will trust you because of all of the things you’ve done right. But nearly just as many have decided to invest with me only after hearing a story about one of my failures. Failure is where the best lessons are learned. Your true colors show when you fail. Investors don’t want to get caught up funding the “rookie mistake” phase of someone’s career. But they do trust their capital with those who act with integrity in the face of adversity.

The Rookie Mistake

If you’ve read my articles on Multifamily Myths, you know that there are many things about investing in income property that new investors don’t yet know (think: student pilot). Proceeding under the assumption they have all of the knowledge necessary leaves them vulnerable to mistakes that lead to hard landings.

Such was the case early on in my multifamily investing career.

My rookie mistake was underestimating the power of an adverse economic cycle and its effect on economic vacancy. And overestimating the relevance of buying at a discount to the previous owner’s basis.

It was spring of 2008, and the real estate market had already seen a significant collapse. This allowed me to buy a 60-unit apartment building for half of the price the previous owner had paid. This (incorrectly) convinced me that I was getting a great deal, buying after a downturn at a steep discount. What could possibly go wrong?

At first, nothing went wrong. The business plan was ticking away flawlessly. I was renovating the property, upgrading units, replacing roofs, you name it. Occupancy went from about 80 percent to 99 percent. I was getting higher rents on my new leases. Life was great. It looked like this multifamily syndication would go…