When you’re a real estate investor, it’s not all about making thousands of dollars in passive income and retiring early. There are challenges that come along with the job. Things will not always go smoothly. So if you’re a prospective real estate investor wondering about the downsides of the job, keep reading to find out.
You will have finance-related stress.
Sometimes you see a great property that would be a perfect addition to your portfolio, but your money is tied up or you have trouble qualifying for a loan. Sometimes you lose money on a deal and you struggle to stay afloat. Other times, just crunching the numbers will cause major headaches, especially when it comes to more complicated deals.
The flipside: You’ll learn as you go, and if you keep persevering, you’ll more than make up for the financial stresses that once seemed like such big threats to your business.
You will have stressful tenants.
Some tenants are just terrible, and unless you have a property manager taking care of everything, you will probably have to deal with them. Stressful tenants might be destructive to your property, rude, or chronic late payers. They might call your office with weekly complaints. No one likes to deal with bad tenants, but they’re part of the business.
The flip side: You will also meet, and work with, many wonderful people along your journey.
You’ll probably have to evict someone.
When tenants get really bad, you will have to evict them to avoid further loss of money (and loss of sanity). Unfortunately, it gets worse before it gets better, because eviction can be stressful and costly in and of itself.
The flip side: The majority of the time, you will have good tenants. Evictions aren’t very common as long as you have a good screening process in place.
Some properties will have huge repair costs or other unforeseen problems.
All buildings have issues, some bigger than others. If one of your properties turns out to be severely damaged, you will have to deal with the repair costs and you might lose money in the process. Not every deal is as good as it looks, and repair costs happen.
The flip side: Some properties might feel like money pits, but other investments are diamonds in the rough and they pay off even more than you anticipated.
You’ll make mistakes.
Yes, while sometimes problems come from outside sources, there will be times when you make a big, fat mistake that is 100% your fault. You’ll feel terrible about it, and might even lose a lot of money.
The flip side: Every time you make a mistake, you learn a valuable lesson that you probably wouldn’t have learned otherwise. And you’re not the only one making mistakes. We all do it, in investing and in life.
Why It’s All Worth It
In the end, there will be challenges with any venture you decide to take, real estate investing included. With perseverance, you can overcome all the headaches and experience great success like so many investors have done before you. Realize that things don’t go smoothly 100% of the time and move on to the next deal!