5 Reasons You Shouldn’t Invest in Real Estate

While property makes a good investment option, the real estate game is not for everyone. So, before you jump on the real estate bandwagon, know what you are up against. Here are the five reasons why you shouldn’t be investing in property.

  1. You must work for it.

While property is one of the best ways to earn passive income, there is really nothing passive about real estate investing. You must work hard to succeed – from hunting for a property that will give you the highest return on investment to screening tenants.

  1. You must invest not just money, but time and effort.

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Here’s the thing, most of the tasks involve in managing a property cannot be simply deferred until your schedule is free.

Property ownership entails screening and interviewing potential tenants, responding to inquiries, taking calls or personally visiting maintenance specialist to fix problems, chasing late payment, dealing with tenants’ problems/issues, and so on. In some instances, it may mean working overtime on weekends to prepare the flat for the arrival of a new tenant.

Your regular time can be greatly affected. So, before you invest in property, decide first on how it will fit into your schedule.

  1. You must have extra money.

Having enough money is not enough when it comes to property investing. For one thing, you will need to pay at least 20% to 30% of the property’s price for down payment. For another, you will need to have extra cash for home improvement works, repairs and maintenance.

Investing in property may mean using every penny you have for the payables and expenses.

  1. You may have to get a loan.

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Unless you are sitting on a pile of cash, it is just impossible to invest in real estate without borrowing money. So, be prepared to deal with bankers. Establish a good credit rating for easy loan approval. Most important, be prepared to carry a considerable amount of debt for many years.

  1. You must be patient.

While real estate investing promises sure ROI, they really won’t be that much. Capital growth takes time. Are you willing to wait?

 

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