Real Estate Investing isn’t for everyone, and it’s important that we all take a realistic look at not only what makes it a good investment, but also why some people may chose to look elsewhere – enjoy! Add me on Snapchat/Instagram: GPStephan
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One of the biggest reasons I think a lot of people get excited about real estate is that they believe there’s a LOT of money to be made with minimal effort. If you’re not prepared to put in a LOT of work upfront, real estate investing isn’t for you. What most people will see happen is that they’ll invest a substantial amount of time and money buying the right deal, and then once they buy that deal, it’s less exciting than they thought. Real estate investing is often something you set up now, where the benefits and payoff comes years later.
Second, you should NOT invest in real estate if you don’t understand how it work. This isn’t limited to just real estate, this is ANYTHING you invest in…stocks, cryptocurrency, businesses, it DOESN’T MATTER. If you don’t fully understand it, don’t invest in it. Largely, the people who lose money in real estate simply don’t understand values, don’t know what they’re doing, over leverage themselves, and become emotional in the event the market goes down…or get too greedy and hold out when they want to sell.
Third, you should NOT invest in real estate if it’s meant to be a short term play. I’ll be the first to admit, this doesn’t apply to everyone in every circumstance…and people could disagree with me and they wouldn’t be wrong. But chances are, if you’re learning about real estate investing, you should NOT invest in real estate for immediate short term profit. The reality is that we don’t know if you will absolutely be profitable within 1-5 years to a point where it makes sense to sell. A lot can happen in the market in the short term, and if you go in with a short term outlook, there are so many variables with could disrupt your plan. Long term holding can overcome a lot of other obstacles along the way.
Fourth, don’t invest in real estate if you don’t have the TIME to devote to it. It’s NOT a passive investment without a substantial amount of work from the very beginning. If you don’t have the time to dedicate to this, either factor in the cost of a property manager or don’t invest. The last thing you need is to plunk down a significant chunk of money on something that you can’t give the attention it needs to make it worth it. This will be a time intensive process to get it streamlined to the point where you won’t need to spend much time on it..
Finally, don’t invest in real estate if you don’t like real estate. I know this doesn’t apply to most of you, but you’d be surprised that some people JUST DON’T LIKE REAL ESTATE. They don’t like tenants, they don’t like dealing with people, they don’t like the responsibility, they don’t want to be be tied down to a location …instead, they’d rather make money from a laptop on the beach without having to deal with anyone. And there’s nothing wrong with that, but it should go without saying – you should only invest in real estate if you actually have an interest in real estate. There are a lot of nuances when it comes to looking at properties, areas, architecture, styles, and trends that if you just aren’t interested in it, you won’t give it the attention it really needs to be profitable. Things will fall through the cracks, they don’t be done as well as they could be, and that means less money in your pocket.
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