Embracing Real Estate Realities: Why Property Investing Might Not Be for Everyone

Real Estate Investing is not for everyone.

I know many will disagree with me.

Personally, I can’t imagine doing anything else. But, let me explain.

Real estate is risky.

Anyone who says otherwise is lying.

A common chant is that real estate won’t go to zero. After 2008, it effectively went to zero for many.

Real estate has made so many people millionaires or billionaires.

But, so has software and the internet. Ask Bill Gates, Elon Musk, or Jeff Bezos.

Real estate has also bankrupted many people.

So has software and the internet. Visit the early 2000s dot-com graveyard for an endless supply of examples.

Don’t misunderstand me.

Unlike many investments, real estate has many advantages and I’m a huge proponent of investing in real estate.

But, if you don’t know what you are doing or you are risk-adverse, it may not be for you.

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Recently, I had a conversation with someone who had lots of what-if questions.

What if a tenant doesn’t pay?

What if a tenant damages an apartment?

What if a tenant has kids? Can you still evict?

What if it’s a bad neighborhood?

What if people don’t return to offices?

I finally said that real estate is not for everyone.

I’m not saying this to be critical of the person. I think many people have similar concerns.

Everything has a risk. Understand the risks and your risk tolerance.

Your 401K has risks. Remember the years when it dropped in value heavily?

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If you choose to invest in real estate, I encourage it.

You can read and learn how to invest. That will minimize your risk, but it won’t eliminate it.

You can invest passively with experts. But, if you pick incorrectly, that expert can lose your money.

I will never discourage anyone from investing in real estate. It’s an amazing vehicle for building wealth.

But, I won’t sugar-coat the realities.

Educate yourself to minimize your mistakes. Surround yourself with experts to learn and grow. Understand the risks, trends, and market cycles.

You will still make mistakes – many of them. Learn from them and grow.

And, if you decide software is a better route to building wealth, I will encourage you and give you the same advice.

Happy Investing!