We can all agree that investing in real estate properties is one of the most secure ways to make a profit in the medium and long term. Having said that, becoming a landlord comes with plenty of real estates investing challenges that you’ll have to work through if you want to become a successful real estate investor. For some people, becoming a real estate investor is in itself an intimidating challenge.
One of the best ways to overcome these obstacles is to identify them in advance and take preventive steps to keep them from turning into huge issues. Below we have summarized some common obstacles related to investing in real estate properties and possible solutions to overcome them.
Investing in Real Estate Properties Challenge 1: Inexperience and Lack of Knowledge
Investing in real estate properties can be confusing with its often overwhelming number of choices. In fact, one of the main reasons that people are intimidated by becoming investors, and some beginner investors fail or quit on their real estate careers, is because they realize that they lack real estate knowledge.
Solution: In order to become a successful real estate investor, you first have to educate yourself about the ins and outs of the real estate market, including all aspects that could affect you investment career. This includes basic real estate knowledge such as the different types of investment properties and real estate investments strategies, as well as financial and legal aspects that you need in order to move forward in the real estate business.
You can gain the needed education through many available sources such as books, blogs, guides, and even mentors. Mashvisor offers hundreds of blogs and guides that are available for anyone to read. They cover all aspects of the US real estate investments business, from city-specific guides to expert tips and beginner guides that help new investors understand the world of real estate before they start investing.
Investing in Real Estate Properties Challenge 2: Qualifying for a Bank Loan
Many people have a hard time qualifying for a loan from the bank. This is especially true for the self-employed and people who have just started their job; they have a poor credit history and/or have a debt. This held people interested in investing in real estate properties down because, in order to be part of the real estate investing world, you need to be able to purchase a rental property.
Solution: There is no miracle solution for this, but there are some options you can choose from. You should improve and protect your credit score; if you have a debt, make sure you pay it down. There is also the option of paying in cash, but that requires either being rich or saving up for a very long time. Borrowing money from a private investor, a family member, or a friend is also something to consider. However, keep in mind that the interest rate will be determined by the private investor depending on the kind of relationship between the two of you.
Related: Buying Investment Properties With No Money
Investing in Real Estate Properties Challenge 3: Finding Properties
Another obstacle to investing in real estate properties that most beginner investors face is the challenge of finding an investment property. Typically, beginner real estate investors lack access to real estate investing sources and property listings which they can use to find the best properties for real estate investments. Moreover, beginner investors lack the connections or access to a real estate investment network of other investors or agents who can help them locate the best investment properties.
Solution: The answer to this obstacle lies in expanding your search methods, so you don’t limit yourself to possible opportunities. Technology has made it fairly simple for investors to find opportunities outside their own territory.
One way for finding properties is through using the Mashvisor Property Finder. This tool allows investors interested in investing in real estate properties to quickly find investment properties in any state, city, or neighborhood within the US through a number of metrics. It also allows finding investment properties of a specific type and even within a set range of cap rate.
Related: Finding an Investment Property: Traditional vs. Mashvisor
Investing in Real Estate Properties Challenge 4: Matching with a Real Estate Agent
Real estate agents are beneficial because they help real estate investors throughout the different stages of their investment. They act as advisors and will bring their negotiation skills and real estate knowledge to the table, which adds more value to your investment.
Finding professional and trustworthy real estate agents, understanding their role in the investment process, and knowing how to differentiate between a good real estate agent and a bad one, will help beginner investors tackle the real estate investing challenges they face in the beginning of their real estate career.
Solution: Mashvisor offers a network of professional real estate agents from all around the US, connecting these agents with future real estate investors to help them decide on the best investment property and succeed in real estate investing.
Investing in Real Estate Properties Challenge 5: Managing the Rental Property
Real estate investing is a business as well as a part-time job. Becoming a landlord doesn’t mean you only rent out your property and expect positive cash flow and get rich right away. It means that you will have to deal with your tenants and fix any problems that occur. Managing a rental property is hard work and will certainly cost you time and money.
Solution: The most straightforward solution to this obstacle is to hire a professional property manager. Sure, it’ll cost you some extra money, but it will save you plenty of stress and headaches. Therefore, when investing in real estate properties, it’s a good idea not to spend all your money on purchasing your rental property; leave some extra cash for managing it.
Related: Professional Property Management: Pros and Cons
Investing in Real Estate Properties Challenge 6: Vacancy
A rental property without a tenant loses money every day it remains unoccupied. That’s the reason why vacancy is one of the biggest concerns you’ll have as a real estate property owner, and it’s up to you to ensure that it doesn’t become a huge obstacle and affect your positive cash flow.
Solution: In order to avoid this issue, when you find good tenants, make sure to keep them happy by maintaining your property well and be responsive to their needs. If you evict a tenant and thus know that a vacancy is coming up, don’t postpone in preparing the property for new tenants and marketing it through multiple channels so it reaches the most people.
Bottom Line
Investing in real estate properties is a journey with many challenges and obstacles along the way. You don’t need to be an expert in order to succeed in real estate investing and get rich, but you need to take steps to minimize these obstacles and find the best solutions that save you time and money.
Generally, it is a good idea for you to start small and simple, look for a local real estate agent who works exclusively with investors, and do a lot of networking. Using Mashvisor also helps you overcome these real estate investing challenges and become a better investor.