WHY PEOPLE INVEST AND FAIL IN REAL ESTATE

The Johnsons started investing in real estate about two decades ago after getting a piece of advice from a family friend. With so much enthusiasm for their future, they decided to acquire some units of apartments and soon they had a rental portfolio that would make anyone proud. They actively managed their properties and worked hard to make sure they were operating at peak efficiency. Then, several years ago, the husband and wife decided to retire from their 9–5 jobs and rather, pursue their rental property business which was fetching them awesome cash flow.

Do you know what? This year, they are filing bankruptcy and losing a majority of their properties to foreclosure- a legal process by which the owner forfeits all rights to his acclaimed property because He fails to pay the mortgage.

Unfortunately, this is a true-life story of my friends’ parents lost their properties purchase with their hard-earned money to the bank. Most of these people, I would guess, will never again be active in real estate investing. They worked hard for years to build a financial future for themselves, only to see it come tragically crashing down around them, dashing any hopes for lasting wealth creation.

This begs the question: why?

This story really confirms that real estate is not as simple as rolling a dice and see where you stop on the game board. While nobody can guarantee that you will achieve success by following a set of instructions, many can agree that you are bound to fail for the following reasons.

NOT ALL REAL ESTATE GIVES CASHFLOW

Some people believe that because they are investing in real estate it automatically means that they are going to make money. It is very easy to say that you will buy a house and rent it out immediately at 5,000,000 and use 2,000,000 to repay the mortgage. Actually doing that successfully is a whole different matter. One of the top reasons why people fail in real estate is that they are not focused on the money side of real estate opportunities. They just want to own a property and then end up missing out on great opportunities. They invest in real estate for bragging rights and then fail to see the money side of the investment.

VOLUME

Another reason why most people fail in real estate is that they are looking at one unit rather than looking at volume. They fail to realize that they cannot sustain wealth on one property. There is a saying that, the more apartment, the more protection you have.

FUNCTIONALITY

Every property has its own function. The smaller the unit, the higher the functionality and the bigger space, the lower the functionality. People fail in real estate because they do not focus on the functionality of the apartment, they want to set up but the bragging right. They fail to realize that it is the functionality of the property that determines the wealth they are going to enjoy. The more functional a property is, the more tenant and income that property is able to attract. This also increases the value of the property.

EMOTIONS

Another reason why people fail in real estate is that they buy based on emotion.

To invest in a property, don’t ever fall in love with the property but fall in love with the market because the market is what brings profit by giving cashflow and consistent income. People are losing money in real estate because they are focused on structures and locations instead of the rental income market.

LACK OF KNOWLEDGE

Real estate requires knowledge. A lot of it. It is astounding how many people buy properties for investment without ever having even an in-depth look at population data, income levels, master plans, etc.

In conclusion, there are several reasons as to why real estate investor may fail. However, the aforementioned points have been the major reasons and they have played out time and time again in the lives of those who ultimately failed in their investments. If you want to avoid losing all the hard work you are putting in (or all the hard work you are about to put in), pay attention to the following points and the certainty of being a successful real estate investor will be guaranteed.

To know more about Middlechase Property Limited, click on the link below: Middlechase Property Limited or call 08186577504.