The Silent Profit & Time Killer All Real Estate Investors Need to Avoid
With the housing market decidedly turning around in many areas of the country more and more investors are jumping into real estate every day. The problem is that many overlook this one factor that kills profitability and sucks your free time dry. Are you prepared?
Real estate investors are getting into the business to make great money and chase more free time so that they can enjoy life more and retire earlier and more comfortably. Unfortunately while many real estate investment books, programs and gurus are great at pumping people up and providing information on finding deals few address the elephant in the room who likes to wreak havoc on even the best laid plans and ideas - property management.
Buying and renting out properties can be very rewarding and profitable but few new investors realize all that property management really entails and how trying it can actually be. For a start the money and time required to polish the property, market it for rent, show it and screen tenants can be considerable, immediately decreasing the ROI of the entire deal if not already accounted for.
On top of this daily property management can be far more challenging and time consuming than anticipated. Between rent collection and dealing with middle of the night and weekend maintenance calls being a landlord can quickly mean more hours a week than a regular 9-5. Worse it can mean being chained to your rentals and unable to take off and travel or really enjoy the time off you hoped to realize from getting into real estate investing in the first place.
If all this wasn’t bad enough the liability that comes with DIY property management can be astronomical. Tenants will pressure you for repairs and upgrades, threaten to sue you for injuring themselves or for hassling them too much for the rent they owe. Most of these attempts at law suits probably won’t go anywhere but they can become expensive and it only takes one vindictive tenant to say that you threatened them on the property to find yourself spending the weekend in the slammer and facing huge compensation agreements that can bankrupt you.
Finally, with the rise of the Occupy movement and increasing trend of squatters taking over homes keeping them vacant for long periods of time may not be any better either.
Yes this is scary but it shouldn’t dissuade you from investing in real estate. There are few other opportunities for building wealth and crafting your dream lifestyle than real estate investment can provide. Just be prepared and educated on what you are really up against.
So before going out there and signing a contract on another foreclosure deal, sit back for a minute and contemplate your real goals. What is it that you really, ultimately want real estate to do for you? Lots of money and freedom?
Then you will definitely want to consider bringing in professional property management and budgeting for it from the start. Or perhaps switching your strategy to flipping houses, using flash funding so that you eliminate these risks altogether is the best move for you?
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