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Why Do Real Estate Investors Fail?

Why Do Real Estate Investors Fail?

Why Do Real Estate Investors Fail?
(Dreamstime)

Investing in real estate is a good way to earn high returns, if you invest prudently, with your long-run interests in mind. But many investors are not too sure whether investing in real estate is a particularly good idea. The stories they hear about tenants who destroy property and tenants who refuse to vacate deters them. Such fears stop people from buying property and renting it out.

MakaaniQ lists the reasons why real estate investors fail in their ventures:

Poor understanding of real estate markets

People who try to do everything on their own tend to fail. Smart investors educate themselves to be able to manage their portfolios well. By studying more about real estate markets, you can convert failure into success. Read books, attend seminars and learn through local networks. Successful investors always learn from other people. To become successful as a real estate investor, open yourself to advise and criticism. It is important to learn about ways to find and structure deals, and to fix problems. Find people whose strengths compensate your weaknesses.

Lack of financial acumen

To be successful as a real estate investor, you should learn more about finance and accounting. A good understanding of cash flow statements is very important. The single biggest reason why investors fail is that they do not have a clear blueprint. Estimate the return on investment before you enter a transaction. It is important to understand the investment you are making, including the cost of repairs if any. Then compare it with the rent it would earn, and the overall value of the house.

Relying too much on emotions

Successful investors take numbers more seriously and base their decisions on the research they have done. The best way to be successful is to set aside your emotions and focus on finding good opportunities. Do not let your emotions take precedence over facts.  

Not being able to overcome fears

Usually, fear prevents people from investing in real estate. They read books and attend seminars, but they do not have the courage to go forward. Overcome your fears by taking small steps. Earning from real estate investment is a slow process. It is important to persevere even when the fear is overwhelming. Contrary to what many gurus would have told you, real estate investment is not a quick path to riches. Have a confident and clear mind before you proceed.  

Last Updated: Tue Aug 23 2016

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