DoorFly.com: 10 Common Reasons Real Estate Investors Fail

Real estate investment is the purchase of properties with the intent to invest and generate income rather than use as a residence. This can be done through repairing or improving the property and reselling or making an income through renters. Those in real estate investment make the commitment expecting the property to increase in value over time. Especially in the past few years, real estate investment has fallen on hard times. Here are just a few reasons that real estate investors may fail:

Wrong strategy: Many times real estate investors enter into the industry without a viable plan or strategy. If you’re looking into real estate investment, make sure to pick one strategy (that will work), document it into a business plan and master it before moving on.
Lack of time and effort: Those who are new to the industry will work hard for awhile, but its easy to slack off and not work too hard without real motivation. Its important to have a clear set of goals, and a plan to achieve them while hold yourself accountable.
Lack of knowledge: If you’re looking into real estate investment, make sure to do your research to the necessary extent. Many times the repair project on a house or finding renters seems easy, but in reality, its a lot harder than expected. If you make sure that you have a solid support system and know what you’re doing, you can make sure not to get in over your head with a property.
Being cheap: If you’re not willing to put money into a property, its likely that you won’t get any out. Make sure to leave jobs that you have no experience with to the professionals. Its better to have repairs fixed by professionals than have to explain a shoddy job to tenants or potential buyers.
Being a sucker: Just because you’re making money on an investment, doesn’t mean that the first deal will be the best deal. According to the Strather Academy, anything less than a 12 percent cash-on-cash return is not good. Its better to have patience and wait it out until you get the deal that will make you the most money.
Not watching cash flow: Its important to watch your finances to make certain that you will not get stuck in a hole. Don’t spend too much on a property that will cost more to repair, take on too much debt, ignore the true cost of such major expenditures like property taxes and capital improvements, or trying to operate a property without adequate cash flow.
Treating investment like a hobby: This industry takes a huge commitment to your work and shouldn’t be treated as a part-time activity. If you don’t dedicate yourself to your business, its not hard to let it fall by the wayside.
Scared: While you should make sure that you’re well prepared and comfortable to enter into real estate investment, you also can’t let your fear of failing inhibit your business.
Lack of self investment: Many of those in real estate investment take free online courses or enter into the industry without any preparation. Like any profession, taking the time and money to invest in yourself might be the best way to get the background you need.
Lack of technology: According to iNews, less than 1-3 percent of all real estate agents or investors have any real presence on the Internet. Compare this to the huge amount of people who use the internet as their main source of information and you can see how real estate investors can fail.