One Man’s Warning Over ‘Too Good to be True’ Promise of Real Estate Investment
It’s easy to think that someone’s success can be duplicated and grant you a stellar passive income. But, unfortunately, that is rarely true, and one man has a cautionary tale about why real estate investment can be risky.
Real Estate is Anything But Passive
While there’s no doubt that you can make money by investing in real estate, the idea that you can buy a property and make a profit is rare. Finding turnkey real estate is like finding a needle in a haystack; if you’re fortunate, it might happen once.
One man wants to warn potential investors that turning a real passive profit from real estate takes time, energy, labor, and capital.
There are several reasons why real estate can be a great investment opportunity for the right person and even more reasons why it can be a living nightmare for everyone else.
- Property Management: The time involved in managing real estate property can be overwhelming if you must do it yourself. Even affording a property manager can be difficult if you can’t find an ethical, qualified person.
- Renovations: The likelihood of finding a turnkey property that you can immediately rent out is very slim. You can guarantee that each piece of real estate you purchase will need upgrades. Sometimes they need much more work than you can tell upon inspection.
- Insurance and Taxes: Keeping up with property insurance and taxes can be a significant pain point for anyone hoping to turn a rental into a passive income. Even with a great manager, these bills can add up if you need more initial capital to see the project through.
- Renters: Of all the areas where real estate hiccups can and do occur, it has to be with finding decent renters. Those who pay on time, every time, and keep your rental property well taken care of. This issue has to be the most troublesome area for anyone with experience using rental property as an income source.
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It’s Not All Bad
Creating a healthy passive income from real estate can come in many forms. You can sublet an apartment, rent a single-family home, or flip a duplex to generate revenue. But going into the real estate game with your eyes open to potential and likely obstacles is the best course of action.
Creating a plan of action for contingencies like needing to find a new renter, hikes in insurance or taxes, and unforeseen but needed repairs can go a long way in smoothing the road between purchasing real estate and renting it out or selling it off.
By doing so, you’ll have a fallback if you should run into renovations, upgrades, or the more usual last-minute problem that might arise with one or more of your real estate properties.
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People Share Their Own Stories
Sharing a cautionary tale, so others don’t fall into the same trap is akin to being kind. It also helps others open up about their own experiences.
While the man with the warning would much rather put his money into stocks and get an excellent dividend return, one individual had a great point about real estate — cash flow.
By investing wisely in real estate and taking it slow, especially in the beginning, you can free up some cash flow after all the payments for the purchase. Most people consider the extra cash a bonus, even if it’s a few hundred a month.
This thread inspired this post.
This article was produced and syndicated by Parent Portfolio.
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