By Rachel Hernandez
Many people want to become real estate investors. They watch television shows about others who have made it rich. They hear stories about those who have been successful and made money with their real estate investments. Though, people fail to realize this is only part of the story – not the whole piece. Real estate investing is not easy.
Successful real estate investors have been through cycles. Periods of highs and lows. They have gone through changes, not only in their business lives but their personal ones as well. Those who are pros have decades of experience, not years or months.
What separates successful real estate investors from those who are not is their ability to adapt to change. We’ve all heard it before: change makes us uncomfortable. But it’s periods of change where we are forced to do things outside of our comfort zone. And, that is a good thing. If we never did, we’d be too comfortable. Status quo remains and we would not be able to grow.
The benefits of real estate investing far outweigh the cons but there are some things to think about.
Real Estate Investing Involves Management
Despite what you’ve heard, real estate investing involves management. Whether it be your own properties when buying and holding or if you are fixing up properties for resale, you still need to be involved. Someone needs to be there to make sure things get done. On time. The right way. Even if you hire property managers to help you manage your properties, you still have to manage them. I’ve been there, done that.
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Real Estate Investing Involves Time
Success does not happen overnight. It takes time to build up a successful business. Real estate investing is no different. Many people who go into real estate investing want immediate results. Don’t we all? Going in, remember it will take time. You will need to try new things to see what works and does not work. You will need practice building a team of professionals to help your business. It could take months or even years until you do your first deal. If you are clearly in it for the long haul, don’t give up. Success will come eventually.
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Real Estate Investing Involves Sacrifice
With the amount of time involved, you may have to give up things you did before. Attending parties, watching television, or taking an afternoon stroll on the weekends are all activities you may miss. Sure, you can do all these things with the little free time you have. But then again, you could also use the time to be out looking at potential investment properties. Personally, I’ve sacrificed a lot. Due to the time needed to focus on my real estate investing business, I’ve missed many activities and events. But looking back, I’m glad I did. As a result, my life improved.
Conclusion
Real estate investing can be rewarding but it isn’t easy. Success will take time. When investing in real estate, there are situations that will take away from your day-to-day life. Though with enough passion and determination, you will find success eventually creating a better life for yourself and your family.
Rachel Hernandez is the author of Real Estate Investing Sucks: How to Deal with Change and Find Success as a Real Estate Investor and Adventures in Mobile Homes: How I Got Started in Mobile Home Investing and How You Can Too!. Find her at: www.adventuresinmobilehomes.com.
After watching my parents deal with the stress of renters, I’ve always been a bit leery of real estate investments. The housing market is still a bit of roller coaster in my area, too, so I know a few people who are struggling to unload houses that they’ve flipped recently. This post does a great job outlining a lot of important considerations that I’m afraid some people don’t make until it’s too late.
Thanks Penny! When it comes to real estate investing, there’s a lot of hype out there. Unfortunately, people don’t see everything that’s involved with being a real estate investor. Sure, there are positives. But like anything else, there are negatives as well. It’s never going to be perfect. Though sometimes, you just have to do the best you can.
These are great points that those “reality” TV shows gloss over. It makes me cringe when I see them, all the mistakes the flippers make, and then miraculously they turn a nice profit. One more thing to think about:
Real Estate Investing Involves Having Reserves
That house you just bought may seem perfect right now, but homeownership involves repairs and upkeep. Having a reserve fund for repairs is a must for anyone who wants to keep their home. Appliances break, the HVAC needs routine maintenance, the water heater won’t last forever. Put money away each month for CapEx (Capital Expenditures) so you aren’t caught off guard when something needs replacement quickly. Having a good handyman you can trust is worth its weight in gold.
Great observations Mindy!
I’ve heard many of those shows are staged. I guess that’s why, it’s called entertainment…even with reality television.
And yes, there are always unexpected factors that come up especially as a buy and hold investor. Properties are just like cars: they are used everyday. It’s common to have plumbing, a/c and heating, and even roof issues. You just never know. Preparation is key. Though, many times it comes with experience!
I acquired some rental properties from my mom and I hated every minute of dealing with them. Too many people think that owning rental property Is a passive activity involving just the receiving of rent. I had a couple of dream tenants but a couple of others left the property dirty and trashed. You must take an active role in inspecting the property regularly or you face having it really deteriorate and lose value. If I was going to get into real estate again, it would be through an investment group. I’d kind of enjoy flipping houses, but that involves another set of problems, Give me the stock and bond market any day.
It depends what kind of mindset you go into it with. I think if you are ready for the nitty-gritty and don’t expect all rainbows and butterflies (rolling in money every month), then you will be fine.
Plan for the worst, hope for the best. As with all things in life. 🙂
You’re completely right, Kathy!
In real estate investing, nothing is ever set in stone. As in life, things are always changing. Great story about the dream tenants. I’ve had those as well. But after awhile, they too moved on and I had to deal with another set of issues. Guess you live and learn, thanks for sharing!
Great Article ! I would add one a little bit. Understand how much risk you can take
Knowing how much risk you can tolerate is crucial when deciding what investment strategy to adopt. You can start to self-assess your risk profile by looking at the following:
Your age and years remaining until retirement. The closer you are to retirement, the less risk you will likely want to take on because you will not have time on your side to rectify any potential mistakes and you will not want to squander your nest egg.
Your buffer. Do you have a savings stash to tide you over in the worst-case scenario?
Extra income. Do you have excess income between your job and your property portfolio (and other investments you may have), and how reliable is this income?
Thanks for you post . Awesome
Great article pointing out some of the qualities it takes to be a successful real estate investor. I’ll second Kathy’s comment…you need a strong stomach as well. Sometimes you have a serious mess to clean up when a tenant leaves. Patience is needed too. Tenants (especially college kids) think they can ask for all kinds of crazy things. One tenant wanted us to clean the bathrooms….2 1/2 weeks after she got the keys and moved in.
I think saying “Real estate takes patience” would hit the nail on the head a littler more accurately than it takes time…or maybe as an addition to your list. If you don’t have patience to wait for the value of your property to grow significantly, then it’s not for you.
As someone who is trying to enter this field without much knowledge or experience, I really appreciate this information. I remember a friend telling me if that I could be very successful, but it would not be easy. I wonder how many people would have better experiences in real estate if they knew these things. Thanks for the information.
What they don’t tell you is all of the problems you may come across when you own real estate properties. We have dealt with renters who have trashed my folks property before moving out, folks who refused to pay rent and gone through two evictions- one actually took 6 months to complete and no rent payments for 8 months. Rental property can be lucrative but the headaches can also be great. You really need to have the stomach to deal with the good times and the bad. Great article with some good points.
This article is spot on! Real estate investing can be rewarding but it takes time, to learn how to do it and continuing managing your properties once you have invested in them. I have learned a lot about real estate investing and highly recommend joining a real estate investment club. It is beneficial to join a real estate investment club because you can then be introduced to people “in the know” in the real estate world as well as other people, just like you, that are interested in gaining knowledge about becoming a real estate investor. Learning the ropes of the trade is most important and I have found that doing good research, and continuing to research, even after you have made your investments is crucial to your longevity in the real estate investment world.
Many people are thinking of something that would make their lives change for better. A business that will allow them to get the income that they need for the future of their family. Property Investment is a business that many investors have known to be successful.
Who said? I think Real Estate offers high capital growth and help you to save tax