Real estate investing often seems like a surefire way to make money: buy a property, wait for it to appreciate, and eventually sell it at a profit. While it’s true that investing in real estate can yield significant returns, it’s not a get-rich-quick scheme. It’s important to know the hard truths about this industry if you’re considering investing in real estate.
Real Estate Investing Is Not Completely Hands Off
Many get into real estate investing because they think it will provide them with a steady stream of passive income. While this may be true over time, it’s important to understand that real estate investing is not a completely hands-off venture. Passive income doesn’t necessarily mean you don’t have to put in any work—it simply means that it’s less work than you’d put into a typical 9 to 5. As a landlord, you’ll have to deal with maintenance issues, tenant disputes, and other landlord responsibilities.
It Takes Money To Make Money
You’ve probably heard the phrase “it takes money to make money” before, and it definitely applies to real estate investing. While it’s possible to invest in real estate with little to no money, it’s much easier if you have capital to work with. You’ll need money for a down payment, closing costs, and any repairs or renovations the property may need. Additionally, you must put money into upgrading the property if you want to actively increase its value, especially if you want to sell it for more down the line.
Rental Income Is Not Guaranteed
One of the most attractive features of real estate investing is the potential for rental income. However, it’s important to understand that rental income is not guaranteed. You need to find the right tenants, price the property competitively, and ensure that you always have tenants occupying it to make a profit. Additionally, market conditions can impact rental prices and demand, which can have a significant impact on how much rental income you can make.
Real Estate Markets Can Be Unpredictable
Real estate markets can be volatile and unpredictable. It’s important to remember that just because a market is hot today doesn’t mean it will be tomorrow. Economic conditions, housing inventory, and other factors can all affect a market’s viability. That’s why it’s important to take a long-term view when investing in real estate and take the time to consistently keep an eye on your local real estate market.
Real Estate Investing Is Not for Everyone
Lastly, not everyone is cut out for real estate investing. It requires a specific mindset, personality, and business acumen. Property owners and investors must have strong negotiation skills, the ability to multitask while staying focused, and an understanding of the market and financing. The stress and pressure of owning and managing a rental property can take a toll on the owner if they’re not prepared.
While these hard truths about real estate investing can be a difficult pill to swallow, that doesn’t mean it can’t be a lucrative investment decision.
Excalibur Homes is an Atlanta property management group dedicated to helping landlords and investors like you get the most out of their investments. We’ll handle everything from marketing your property to handling maintenance requests and more so your tenants stay satisfied. With the pressure of ownership off your shoulders, you can watch the rental income roll in.
