Owning real estate isn’t all fun and games and passive income. Some months it is, but there are many months where the expenses keep on coming. Sometimes it feels like the bleeding will never stop.
The Real Estate Influencers
How many of you have heard real estate influencers boast the following:
- Just use other people’s money and leverage all the debt you can
- Don’t play in the Wall Street casinos, invest for passive income instead
- Keep pulling cash out of your properties to buy more properties
- Retire at 30 with passive real estate investment income
- Just get a property manager
All of these things can and do happen but it’s not as easy as it looks. It’s not set it and forget it and five years later you’re financially independent.
The Truth: It’s Hard Work and The Unexpected Occurs
The truth is that real estate investing is hard work. First of all, you need to educate yourself about the investment and understand:
- Cash flow
- Costs like maintenance, capital expenditures, improvements, property taxes, management fees, etc.
- Appreciation
- Costs associated with buying, selling, and holding
Second, you need to be involved in all of the above. With a good property manager and other pros on your team, it’s much easier, but you will be involved to a degree.
A huge difference with real estate versus other investments is that real estate can cost you money now. A repair on the roof is actual money you need to spend right now. Whereas a stock that loses value doesn’t require you to add more money.
Conclusion: Real Estate Is Still a Great Investment
I believe that real estate is a great investment. It’s just not what it’s often advertised as: stress free, completely passive, endless cash flow, etc.
Real estate is a lot of work and it comes with ups and downs, along with the need to make unexpected repairs and deal with problem situations. So it’s still an investment I believe in but definitely not all fun and games.
