Real estate investing has always been popular. And it’s probably never been more popular than now.
Through podcasts like Bigger Pockets, and cultural movements like FIRE (financially independent, retire early), more people are being exposed to the benefits that investing can offer.
Some have started as a side hustle, and ended up building successful businesses that they now work on full-time. Others have done it part-time to earn a bit of side money. And others have bought their own investment property to supplement some of their income.
That said, investing is also hard.
And, really risky.
Now, that’s true for any business you’d think about starting (to varying degrees), so it’s valuable to learn what the hard parts are, before you get started.
If you can have some idea of what you’re walking into, you’ll be better prepared to weather it and endure.
So here are some of the hardest parts about real estate investing, according to active investors:
“The hardest thing about starting an investing business is the act of starting,” says Rorry, the founder of Rorry Buys Houses, “It’s realizing that you don't need to be the expert at everything before you do anything. Focus on one most important thing, (like talking to 3 sellers a day), and following through, every single day!”
Ricky runs Wabi Sabi Realty Group, and he agrees that simply “taking action” is the hardest part of getting started.
So many of us listen to experts give advice, read books, watch YouTube videos, and consume content, but we never do. Now, I’m not saying you should jump into investing blindly. Far from.
I’m just saying that after you’ve weighed out the risks, gotten good counsel, figured out a way how you can get started without putting yourself (or your family) in financial risk, at some point, you’ve got to start.
And that’s scary.
Which is why Rorry’s advice is so simple, but so foundational. But like I said, part of starting off on the right foot involves getting good guidance from someone you can trust, and that’s a challenge in and of itself.
“Finding the right mentor to learn from.”
When you’re new to real estate, having someone who can help you through your first few flips, or who is willing to meet with you once a quarter, is really helpful.
But finding the right person to guide you isn’t easy.
In fact, Dave, who is part of Collective Genius and runs Sell House Columbus, says “the hardest thing about starting a real estate investing business is finding the right mentor to learn from. The real estate investing space as a whole is completely saturated with information about marketing, raising money, rehabbing homes, property management, etc. Some of the information is good, and some is not so good. It's tough to know who to listen to when you’re first starting out, and sometimes you have to go through a few people before you find a credible source of information.”
In your journey to find a mentor, make sure you don’t settle.
Keep persevering until you find someone who is willing to help you, and who has been successful and has a proven track record of success. Make sure to (graciously) audit and vet them as much as they do you.
“Finding capital to buy properties, then letting go of responsibilities.”
As you may have discovered, there are multiple ways to get started investing in properties.
Some involve using other people’s money. Others may start small, and remain as a solo operator taking one flip at a time. Others just want to buy a single rental property that they’ll manage for years to come.
Eric is the owner of Valley Home Buyer, and believes that securing funding is the hardest part for aspiring investors. “I started long ago, but the hardest part was finding the required capital to buy properties,” he said. “The next hardest thing was learning how to let go of many of the responsibilities. In other words, letting others do the tasks that needed to be done. Hiring great team members and outside professionals to help us grow. It was a big leap but has certainly paid off.”
So after you secure funding and start to grow, the next challenge is entrusting other people to work on your business so you can focus on the areas where you’re most needed.
As you begin to grow, it will become clear to you that you can’t do everything. You may not be great at marketing. Or maybe in order to scale the way you want, you’ll need to train and trust a handful of other people who can handle tasks that you simply can’t, or shouldn’t.
“Learning a new market.”
Sometimes investors stick with properties in their main metro area. But many expand out to surrounding cities, and a few even expand to other states or move and start their investing in a whole new area.
That was the case with Frank, who runs Real Options and Investments. For him the hardest part to starting real estate was “moving into a new area from Fort Lauderdale, and learning a different market back 7 years ago.”
Whether you’re investing locally or making a move to a completely different market like Frank, plan on working hard to learn the market that you want to invest in.
You’ve got to have a good understanding of property values, trends, and what the local housing market is like.
“Keeping focus on what really matters.”
As one earlier investor alluded to, there’s a lot of noise in the real estate market.
A lot of self proclaimed gurus or experts. And a lot of strategies, tactics, news, and information.
So once you get started, even if you’re successful, one of the challenges you’ll have is the ability to focus on what really matters, and tune out all the noise.
The team over at Snappy Home Buyer says that the toughest thing about investment is “tuning out everyday opinions about real estate and what's on social media, while at the same time, tuning into the fundamentals of good business practices. This means listening to people and processes that cut into the real numbers and performance, rather than general strategies that seem good on the outside, but have not been fully vetted.”
Like I said, investing is popular. Maybe the most popular it’s ever been.
One of the natural side effects of that is that there’s more information than ever before.
So just be aware that one of the things you need to do is learn which information or advice is worth following, and which is a waste of your time.
“Persevering and going the long-haul.”
A lot of investors get started to make a quick buck. Of course, these usually burn out and don't become successful. But if you're an aspiring investor, having a marathon mindset to get you through the tough times is one of the most important things for you. Just ask Carter Fisk. He's been running Carter Buys Homes for over 14 years now. It's a tough thing to run any business for that long, let alone a real estate company. He gives the advice, "Understand that you should be in this for the long run. Slow and steady increases will get you through down markets much better than trying to get as big as possible as fast as possible."
One last thing…
I’m not an active real estate investor, but I have started my own business, so I thought I’d throw in a parting thought here.
I would encourage everyone who is considering getting started in real estate investing to spend time really doing the research, and having a thorough understanding of the costs. Get a realistic understanding of the work, the money, and the time you’ll have to put in to be successful.
And if you decide it’s what you want to do, then be prepared to go through a long slog.
It won’t happen overnight, and it won’t be easy. It shouldn’t be. If it were, everyone would do it.
As Seth Godin says, we should ‘quit early, and quit often’ if the juice isn’t worth the squeeze. So make sure you know what you’re getting into so you can be prepared to run the marathon that is starting a successful business.