Real estate investing is a stable, reliable, and profitable method of making money, but it’s far from foolproof. And while huge numbers of investors have been able to accumulate wealth, secure a good quality of life, and plan for their retirement through real estate investing, many aspiring investors have also jumped into real estate and failed.
To help you succeed in real estate, we want to give you 3 of the top reasons real estate investors fail.
#1 Mismanaging Cash Flow
In order to buy investment property, you need the credit and cash to close deals and rehab the properties. But many investors fail to manage cash flow. In other words, they fail to buy and manage or flip properties that produce enough cash to pay all expenses and produce cash profits year over year.
Often times, mismanaging cash flow results from numerous real estate investing mistakes. An investor could be selecting the wrong properties and paying too much, mismanaging the rehab, not managing rental properties well, not selling flips for a profit, and mismanaging his business organization. A serious mistake in any of these areas can result in negative cash flow and unprofitable investment properties.
As with any business, managing cash flow is critical to success.
#2 “DIY” Mindset
As a real estate investor, you should be focused on profits.
If you are a small investor with a successful real estate and/or building background, you may be able to have a “DIY” mentality. If you don’t have expertise in these areas, though, a DIY mindset will probably be the death of your business.
But in the end, any investor who is going to have a high volume real estate investment company generating handsome profits will have to eventually get away from the DIY mindset and use professionals in most every facet of their business.
Industry experts you might use in your real estate business include wholesalers, real estate agents, property managers, contractors, accountants, lawyers, and office staff.
#3 Failing to Research
Even if you use a wholesaler to find and purchase real estate investments, you still need to perform due diligence and review the research.
Understand which cities and neighborhoods are most desirable, which property types yield the most cash flow and highest profits, and which features homebuyers and renters are seeking in those neighborhoods. Review comps for the area, and study the analysis that should include projected cash flow and net cap rate.
Most importantly, make sure the property fits into your real estate investment plan before purchasing an investment property.
Graystone Investment Group
We hate to see any investor fail, so we are glad to share information with everyone about succeeding in real estate.
As a real estate wholesaler, we specialize in high cash flow investment properties in the greater Tampa Bay area that are highly profitable.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.