I am often frustrated by books and seminars that make real estate investing sound easy. I love real estate, and have built a wonderful life through investing in real estate. However, it is not easy. Success in anything is never easy. It takes work. Here are some realities I rarely (if ever) hear mentioned.
Wealth Takes Time
I’m sure you’ve heard it stated on infomercials and written in books, “Get rich quick through real estate!” Guess what. They are lying to you. Real Estate is NOT a “get-rich-quick” investment. It is true that I have made a lot of money in real estate, but wealth is not built overnight. Success in real estate requires time. It is a long game, one of slow consistent growth, full of ups and downs. It’s a great investment, but to succeed you need to be in it for the long haul.
It Can be All Consuming
There are many moving parts to real estate, and it can take over your life. Real estate is a true entrepreneurial adventure. This is your business, and you will always be looking for ways to improve your business. If you bought right, you will have the budget to pay a management company to oversee the maintenance details and service calls. Yet, they are always in your thoughts. This is a business, and owning a business requires your attention.
People Can Be Difficult
From contractors to deadbeat tenants to bankers and other challenging individuals, sometimes you will encounter difficult people in difficult situations. Eventually, there will be times you must fire contractors and evict tenants. You can certainly limit your exposure to difficult people by proper management, screening, and due diligence. Futhemore, you can outsource the work you don’t like to do. Yet, it is still your business, and you cannot avoid it all together.
There is Paperwork and Bookkeeping
There is a TON of paperwork! And all of it is important. Therefore, you must maintain accurate bookkeeping and accounting records. It took me a long time to build the right team and develop the best systems. You can streamline your systems faster by hiring a management company. However, you are still responsible for proper accounting and compliance.
You Can Lose Money
Finally, here is the truth. Real estate investing is just that…investing. By the definition of investing, you could lose everything. Not every rental property owner is successful. You must have a smart investment strategy. There are certainly ways to decrease your risks and increase your chances of success. However, there are no promises. As Clint Eastwood once said, “If you want a guarantee, go buy a toaster.”
The above realities should not stop you from investing in real estate. It is a wonderful industry, one that has created incredible wealth for many people. It has done a lot for me personally, providing my family with all of our needs, putting my four children through school, and funding my passions of adventure and giving back to the community. I would encourage anyone interested in pursuing a life of real estate investing. However it is not a lay down. Funding your dreams does take work.
If you would like to know more about investing in real estate, or would like to discuss building a real estate portfolio, please contact me anytime.