May 2016 Rental Stats Indianapolis AreaJune 7, 2016
Evictions….weird for sure….June 28, 2016
Some investments just are not good for everyone. Real estate is one of those investments.
If you identify with any of these following Top 7 Reasons why investors fail in real estate investing, please seek professional guidance before something goes catastrophically wrong for you.
- Insufficient Capital–things break, plans go sideways, tenants misbehave. This is, in my professional experience and opinion, the Number One reason investors go crazy or go broke. Almost every investor I know can easily, if not guided by hard numbers and calculations compared to ‘their gut, their instinct’, will commonly Over-Estimate Revenue and Under-Estimate Expenses. Both cause trouble, but in different ways.
- Inability to Control Your Emotions–The old saying of “If it was easy, everyone would do it certainly applies to real estate investing. The ability to control your responses to certain events is what separates the folks who last in the business and those who flame out early on. Creating margin in your investing is paramount….read more about how to do this simple concept here.
- Inability to understand people’s lifestyle choices–Smart investors understand which way the wind blows, both in macroeconomic decision issues as well as in people’s personal microeconomic decision issues. An ability to grasp, without judging, other’s decisions, can make you a lot of money. The inability to do so will always cost you hard money or at least lost opportunity.
- Inability to deal with conflict. People are messy. Physically, financially, and emotionally. If you are not willing or able to deal with the conflict created by people, then get out of real estate and buy stocks and bonds. Or put your money under your mattress.
- Unwilling to cooperate with legal and court system. Our country is, fortunately, governed by a system of Laws instead of governed by Men. It can be to your advantage or to your detriment. How the system treats you is ultimately up to you.
- Unreasonable expectations on the financial returns generated by real estate. Get rich quick. Yeah, right. That’s like expecting a Ford Pinto to not explode.
- Unwilling to get educated about the risks of real estate investing–Risk and Return are two sides of the same coin. It is impossible to increase Return without increasing Risk. Try it sometime and let me know how it works out for you. If you figure it out, you’ll own the world, literally. Investing in real estate carries with it unique risks due to the complexity of the forces impacting the real estate market, the complexity of the operation of the investment itself, and it being an investment with liquidity issues.
Take Away from this Top 7 list?
Everyone, including ME, is weak in one of these areas. The trick is acknowledging it, addressing it, and mastering it. Or accepting the consequences of it.
Your choice. What will you do?
P.S. Do someone a favor today they will THANK you for soon….forward them this article with a gentle nudge suggesting they sign up to get the FREE weekly email updates like this.