Like any other career path, real estate investing has its pros and cons. You will face many different challenges. Being able to handle the challenges of buying an investment property can turn a pro into a con and vice versa. In this blog we will discuss the main positives and negatives of becoming a real estate investor.
Related: Advantages and Disadvantages of Real Estate Investing as a Full-Time Job
If you are considering entering the real estate investment business, you should keep in mind the following advantages and disadvantages of investing in properties:
Pros of Becoming a Real Estate Investor
Do you want to be your own boss? Call the shots? Have the final say? Well, all that is possible in real estate investing! Owning your own investment properties means you’re in charge. If you want to learn how to become a real estate investor, you need to understand the importance of independence and control. Of course, a real estate investor can’t control the actual real estate market, but knowing how to make the right decisions in the face of opportunities and threats can take you a long way in the real estate investment business.
- Cash Flow
Unlike other investments, investing in properties means you’re taking on the role of landlord. Every successful landlord has a secured positive monthly cash flow from rental income. This is what makes a real estate investment such a valuable asset. The income stream achieved from rental properties is what has mainly influenced many people’s interest in short-term investments in real estate. An example of what we’re talking about is the massive increase in Airbnb rentals recently. Real estate investors view this as an opportunity to make quick money. Property management here is key if you have multiple investment properties. Following the right investment strategies can pave the path to a wealthy future.
Related: How to Avoid Buying Negative Cash Flow Investment Properties
- Tax Benefits
The tax deductions when you become a real estate investor are too good to be true! You get to deduct nearly all the expenses you pay to manage the real estate property. This covers anything from the mortgage interest you’ll pay if you take out a loan to the stapler you use for the documents regarding your real estate investment business. You might not think much of it at first since the logic is that you basically need to spend money on the investment properties first in order to get the deductions. However, think about how you can use this saved money in other areas of your life or reinvest it in another rental property to make even more money. Or consider the fact that most other investments won’t give you this advantage.
Related: What You Need to Know About Real Estate Taxes as an Investor
Becoming a real estate investor definitely isn’t your everyday 9-5 job. You’re always facing a different set of tasks making your work days interesting and constantly providing you with a new experience. Don’t forget, you’re in control, so you work whenever you want to work. This doesn’t mean that you should be slacking off and postponing things just because you can. This means that, in order to be a successful real estate investor, you need to put in effort and have a good work ethic. Manage your time well, and as a real estate investor you should make time for socializing, meeting new people, and creating an investment network.
Cons of Becoming a Real Estate Investor
- The Challenges of Being a Landlord
When you make the decision to become a real estate investor, you’re usually also making the decision to become a landlord. Everything has two sides to it. We’ve all heard stories of the problems that arise between a landlord and his or her tenants, especially those regarding late rent. Making money can be difficult if you don’t manage your rental properties well. Facing troublesome tenants and keeping up with the maintenance of the property can be seen as overwhelming for a first time real estate investor, so it all comes down to the property management for your real estate investments.
- It’s Not Easy to Find the Perfect Investment Properties
Buying an investment property could be quite stressful. As a real estate investor, you’re looking for a property with value and high returns, which is hard enough on its own. Don’t forget you’re not the only one in the market looking for a great investment property. The real estate investment business is filled with an abundance of property buyers and sellers. Figuring out your path in this fast-paced business can be made a lot simpler. This is where Mashvisor comes in; you can use traditional and predictive analytics to find lucrative traditional or Airbnb properties in a matter of minutes. Forget the spreadsheets and the hours of searching. Your investment property search begins and ends with Mashvisor.
- Time Consuming and Risky
You can’t just decide to make real estate investments and expect to immediately see results. As a real estate investor, you have to understand the time and effort that need to go into this career. You probably won’t achieve a positive cash flow right away, and that’s okay. It takes time to build a name and a reputation in the real estate investment business. Even once you’ve achieved the stability you were looking for, being a real estate investor means taking risks. Investing in real estate properties will always involve some fraction of risk, that’s just how it is. Time management, patience, and good decision-making are necessary.
Yes, becoming a real estate investor isn’t a perfect dream, it has its advantages and disadvantages just like any other career. Going in with the right mindset, a good work ethic, and the right tools will help you benefit from all the pros in real estate investing. Don’t forget to take advantage of the tools provided by Mashvisor to help you minimize the occurrence of any cons.
Choosing to become a real estate investor could be the best decision you ever make career-wise if you stay determined to work hard!
To learn more about our product and how it will help you start off your real estate investing career, click here.