The nature of human beings dictates that all of us have this inner fear from risking, losing, and spending our savings away. This happens because we invest so much of our effort and time into building up whatever we can muster to secure our futures. The real estate market is not any different as a form of investment; it has its risks, its highs and lows. To invest in real estate is a scary idea for most people who are yet to make the leap of grasping the real estate market potential.
The real estate market is not a very complex area for anyone to fully understand and master so they can achieve success and overcome their fears to invest in real estate. The most common risks facing real estate investors are fewer than what you would expect because of the stability of the market itself. The world is changing and distances are becoming smaller with every passing day. That means borders and travel are more possible and therefore, the unlimited demand for properties to be rented. I will be discussing in details the fears or risks to invest in real estate and how to possibly overcome those fears.
Why are people afraid to invest in real estate?
Not enough money
The limited amount of cash available to most people acts as a solid enough reason to not risk whatever amount of money they have saved and spend it all on a property that does not have a 100% guarantee of success.
Daunting task of being a landlord
People think of owning a rental house and the baggage that comes with it. Being a landlord is not an easy task. It requires a lot of attention to details, availability and time to address the needs of your tenants or even the market to adapt with it.
Hoping for the perfect deal
Expectation is the real downfall of most investors. If you are looking to invest in real estate, waiting for the perfect deal will never ever happen for you. The investment you are hoping for is not going to come knocking on your door. You would need to search and extensively for the best deal out there for you.
Property value decline
This is one thing the buyer cannot control because it is about the economy and the market. As an investor tinkering around the idea to invest in real estate it is very scary thinking what if a sudden drop in property value happens.
This is probably one of the most common reasons, people will always claim they don’t have knowledge or expertise to invest in real estate and manage it effectively.
These are some of the fears people have before they invest in real estate property. Of course as with every problem and fear in life, there is a way to overcome them or to be cautious and prepared to deal with them as they go.
- Money and fear of losing what you have saved should be overcome by having a positive mindset; the only way to success is hard work. If you look hard enough you will find an investment that will suit your financial needs and just keep thinking that this is my big break that it will be my second source of income to change my life. Ask real estate investors; most would agree that their financial risks have definitely paid off.
- While I must admit that being a landlord is not an easy task for many people according to there first hand experiences. Most of them would agree that the experience in itself has helped them in so many ways. You learn basic management skills for starters and if you do a good job at it you earn money because you would be a good landlord. Personally, I think to invest in real estate is just the easy part, this is where the hard work starts.
- You can’t keep waiting for the perfect deal to come to you. It doesn’t work like that and it never will. There are millions of real estate properties out there that have different values, significance and taste, chances of the one that would tick all your boxes just being there after 10 days of searching are very slim. At the beginning to invest in real estate you have to thoroughly search the location you are intending to invest in.
- To be rid of the uncertainty regarding property value loss, it is wise to do a market study to see the best neighborhoods or cities to invest in real estate that has a rising value. Central locations and low-crime neighborhood are good shouts for a property that will have a stable or rising value. Mashvisor was created for exactly this reason – to help new investors quickly find the information they need in order to make smarter decisions, backed by data.
- Inexperience is a problem that almost everyone who makes the leap to real estate investment faces. There is an easy way to overcome it. Practice and learning from current real estate owners. The more you go into it the easier it will get.
The challenges and fears to invest in real estate are not that easy to overcome for most people but with some experience and knowledge, you will know you have made the right choice. Any investment has a risk, but it is important to be positive and to put it in the effort that your investment deserves to succeed. After you reap the rewards of your first ever investment, there is no doubt you will be hungry for more success and move forward to invest in real estate again.