Why Real Estate Investment Might Not Be Right For You

For many, investing in real estate is a great way to build wealth. That being said, like many types of investments, there are pros and cons to it. After all, it’s a big investment of your time, money, and energy. If you’re new to the real estate industry, you’ll have quite a few things to learn, such as how to fix and flip homes, juggle tenants, find the right properties, etc. 

Here are a few things you’ll want to consider before diving into the world of real estate investment. 

It’ll cost money … at first

Unfortunately, when you first invest in real estate, it can cost money to get your feet on the ground. However, once you get up and running, it’s almost always worth it. Some people withdraw equity from their homes in order to get started. If you have a home you can do this, it’s one of the top ways to get started. Once you have this money, you’ll have to figure out the best way to spend it – finding the right home, renovations, and improvements that need to be done, if you’re going to flip the home or hire a real estate company to help you sell/rent it. 

However, in this market, once your property is ready to go, you will likely see a return and then some pretty shortly after. You will have to fix things as they go along, but for the most part, you’ll mostly see income for the property.  

Time, time, time
You probably already know this, but when you invest in real estate, you’re also investing a lot of your time. This investment of your time starts from the second you begin looking. You have to research the areas you are interested in, the homes, and what they have to offer, and then begin the purchasing process. Unfortunately, homes are always perfect as is. The next chunk of your time will be spent repairing, remodeling, and tweaking odds and ends throughout the house. If you plan to rent out the property, you may have to do even more remodels to make it desirable. 

Then comes the searching for the right tenant – you want to find someone with a good credit history and track record of consistent payments. Finally, once you find them, you will have to collect the rent due, fix anything that breaks, and deal with any problems that may pop up along the way. The downside here is, the more properties you own, the more work will likely have to be done. However, once these investments start becoming profitable, you can hire people to do the things you no longer want to do, such as property maintenance. This way, you will be taking in a large profit and only having to give back a small amount for repairs and maintenance.

Babysitting tenants

In an ideal world, tenants would be happy, rent would be paid on time every month, and everyone would live happily ever after. This may be the case …. If you hire a property management company. Otherwise, you may feel like you’re babysitting your tenants. You may have tenants who pay the rent every single month right on time. You may also experience tenants who will give you every reason under the sun why their rent hasn’t been paid on time. You may have to make the difficult decision of evicting the tenant and starting the tenant search all over again.

If you have friends with real estate investments, you may have heard horror stories about what happens when the tenant realizes they are getting evicted – theft, damage, a totally trashed property. These things happen. 

This is why a screening process for tenants is so important. You want to make sure you have a tenant who has never had an issue paying rent on time; this way, you can keep the process drama-free, handle issues if or when they pop up and focus on your real estate investment.  

Following the rules

One mistake many people make: thinking that owning a real estate investment is a lot like owning your own home. There are rules and laws that need to be followed in order to keep the process fair. That is why the Fair Housing Act exists. The Fair Housing Act “…prohibits [this] discrimination because of race, color, national origin, religion, sex (including gender, gender identity, sexual orientation, and sexual harassment), familial status, and disability.”  Want to advertise that your property is near a synagogue? This could be considered a violation, risking a very expensive lawsuit. Or, since this is new territory, you could accidentally make a mistake on your taxes and be faced with a difficult audit from the IRS.

Much like when you branch into any new area, you need to do your homework and make sure you have a solid understanding of the different rules and regulations involved. This part can be extremely time-consuming but also extremely important; you don’t want to accidentally violate any law or regulation. This is a delicate area that needs to be handled with care. If this is a new venture for you, or even a new area for real estate investment, you will want to do your homework. 

Luckily, there are real estate professionals and experts who can help you navigate this new area. These professionals will help you build wealth within the real estate market and help you navigate this space, allowing you to make the best choices – and avoid any sticky situations. 

Contact Honest Home Solutions Today

Ready to start taking advantage of the real estate market? Honest Home Solutions is here to help! Contact one of our experts today. As leading professionals in the real estate industry, we know a thing or two when it comes to real estate investments. We can help you figure out your next move. No more wondering why real estate is a good investment; we will show you why! Contact us today. 

Related Posts

Let’s Socialize

Popular Post