JAN 23, 2023
With the recent explosion in popularity of real estate investing, there's a lot of noise out there that can confuse a potential investor into getting pulled in multiple directions.
As both investors and brokers at Closed By Mo, we understand that all that glitter is sometimes not gold when it comes it investing. Below are the top bits of advice for all newcomers into the game of Real Estate Investing (REI).
REI is a great way to build passive income and is a sexy side hustle, but did you know that most new landlords often end up hating the experience?
Most landlords that get into REI for the money or the social status don't understand that things will inevitably not go their way. There will be issues with tenants, plumbing emergencies, and late night calls from people that are locked out of their units — it's a normal course of business.
What we see often is those that aren't quite sure why they want to be in real estate, or end up only being in real estate for the money, are also the ones that end up giving up the quickest.
So make sure you have a very clear cut reason for WHY you're getting into real estate, because that's what's going to keep you motivated as you run into hurdles.
There are a lot of different ways to invest in real estate, and besides putting your money into a real estate fund, none of them are truly passive. Sure, REI can be incredibly profitable if done right — but the myth of collecting checks in the mail is only perpetrated on social media to sell a guru's online course.
REI requires active involvement. Depending on which avenue of investing you choose, you need to be able to manage tenants, contractors, vendors, etc. all while dealing with the day-to-day hurdles that pop up (e.g. a flooding basement in a house).
In REI, a bad deal to one person, can be a treasure to another. Most first time investors end up making the common mistake of not having a clear goal they're wanting to achieve and so don't have a strong criteria to mark their deals against. For example, a new investor may view a rental property that cashflows with $300/month as a great deal — but she might miss the fact that others that are putting down as much as she is and investing in the same area are cash-flowing at $700/month.
Deciding on your targets and reminding yourself of them as you look at properties is a good way to declutter a lot of time, energy, and money spent on bad deals.
This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
