Everybody and their brother wants to invest in real estate, right? It’s the hottest asset class that will allow you to retire in 5 years and sip margaritas on the beach.
So what’s holding you back? As a real estate investor myself, I’m here to share the darker side of rental property investing.
Here are 5 reasons why you should NOT invest in real estate – from the perspective of a potential investor!
1. I Don’t Have Any Money
Everyone knows you have to have lots of cash to invest in real estate. I certainly don’t have $30,000 sitting around to make a down payment. If only there were ways to invest in real estate with no money…
I guess I could try to save up a little every year, but where will the money come from? Between 2 car payments, private school for the kids, and a house we can barely afford, there isn’t any money left at the end of the month to put toward savings. I can’t give up my lifestyle, and I certainly don’t want to learn how to make an extra $500 a month or so with a side hustle – I work hard enough as it is!
I have a friend who’s always talking about all the rental properties he’s buying – but he drives a 10 year old car and lives in a 1,200 square foot house with 2 kids. How can he have the money to do that?
2. I Don’t Have Enough Time
I would love to invest in real estate, but there’s just not enough hours in the day. My spouse and I both have full-time jobs, and after coming home from work, cooking dinner, and putting the kids to bed, we deserve a break.
Where will I find the time to research deals, run the numbers, go see potential houses, or manage contractors? It’s just too much.
Sure, I spend an hour scrolling through Instagram before bed, and I go out for a long lunch with my co-workers several times a week. But that’s just dead time anyway, I couldn’t do anything productive with it.
What’s that about the weekend? Well, that’s me-time. After working hard all week, I need to recharge the ol’ batteries. Plus our kids are so involved in activities, it’s like a second job!
I always see my real estate investor friend dragging his kids around with him to go look at vacant houses, or check in on construction projects. They seem to enjoy it, but I wouldn’t want to do that to my kids…
3. Real Estate Investing is Too Hard
Real estate investing isn’t really for average people like me. There’s no way to learn everything I need to know to be successful.
I’d have to learn how to be an appraiser, a real estate agent, a handyman, and a property manager. Oh yeah – not to mention learning how to become a bookkeeper to keep up with all the receipts and crazy real estate tax codes!
I think anyone who’s really successful in real estate has a connection somewhere. Just look at all the former professional athletes that get into real estate – you have to know people to make money.
I’ve heard real estate investing is supposed to be passive – basically free money! But it sure seems like more trouble than it’s worth to me.
4. What If My Tenant Calls Me at 2AM?
Speaking of not-so-passive income, I’ve heard the horror stories. Tenants, toilets, and termites, amirite?
What if there’s a plumbing leak in the middle of the night and the tenant calls me? How am I going to deal with it? I don’t need that kind of stress in my life.
What about if the tenant doesn’t pay their rent? Or worse, causes all kinds of damage after being evicted?
That real estate friend of mine has told me he gets paid to “solve problems”. But I don’t want all that worry – too many what ifs. I guess I could hire a property manager, but finding a good one…that sounds hard too!
5. The Real Estate Market is Due for a Crash
Everyone knows the next recession is around the corner. I don’t want to get in at the top of the market, so I’ll probably just wait until prices go down.
My real estate friend says he keeps buying as long as he can get a good deal and make the cash flow numbers work. But it’s so competitive, there’s no way anyone can get a good deal these days!
I had the same feeling about the stock market at the end of 2018 – there was no way it could go higher. So I sold everything in my retirement accounts and went to cash. And of course, the market was up 30%+ the next year – but who could have known?!
I’d rather wait it out and buy when I can get a steal after the next crash. Surely that’s right around the corner…
What Are Your Reasons for Not Investing in Real Estate?
Obviously our fictional character has some exaggerated fears and negative mindsets holding him back from investing in real estate. But his ideas are shared by many would-be real estate investors (even me sometimes!)
As they say, there’s no such thing as a free lunch. Real estate investing can seem like a sexy way to make a ton of money and retire in style. But in reality, it’s just like any other path to wealth – it involves a lot of hard work and sacrifice, it moves slower than you hoped, and often it’s pretty boring.
Not everyone can or should invest, but in order to have a real conversation about it, you need to sort out your valid reasons from fear, negative thinking, and going along with the crowd.
So what’s keeping you from being a real estate investor?