WHY DO RENTAL PROPERTY OWNERS FAIL?
This blog is dedicated to my rental property investors that are
working towards 100% financial freedom through passive income with their investment
real estate portfolio.
Behind every success story is a stumble, setback, or complete failure. However, any
successful businessman will tell you that failure is inevitable and sometimes necessary
to succeed. You should look at these setbacks as your first steps to prosperity.
We have all heard the stories …
Walt Disney being fired from a Missouri newspaper because he “lacked imagination and
had no good ideas”.
Michael Jordan being cut from the varsity high school team his sophomore year.
Charles Darwin dropped out of school twice and ridiculed by his own father for being a
failure. Today, he is considered as one of the most influential scientific minds of ou
time.
“Success is stumbling from failure to failure with no loss of enthusiasm.”
- Winston Churchill
So let's get right into it … Why do rental property investors fail and how can you avoid their same fate:
Too Much Risk:
As discussed in my previous blog, we are rental property investors for a reason, our investment strategy incorporates low risk, consistent and conservative returns. You must make thorough calculated decisions before you “pull the trigger”.
You can minimize your risk by targeting areas and specific properties that have proven and historic track records. Do not hedge your bets and go all in on a new area that is “projected” to boom. Wait until you have already secured your real estate portfolio with several positive cash flowing properties and have established disposable income allowing you the freedom to make a bigger “risk / reward” investment. (Read: 4 Wealth Generators)
Surround yourself with the right team of professionals who specialize in your investment strategy. You will want experts who you can rely on and trust. This includes, your realtor first and foremost, the brokerage company that they work for and your real estate attorney. All of which should have their own team of experts disposable to you, take advantage of each and every one of them.
Not Enough Education:
Far too many people just jump into real estate investing without having the proper foundational education. I am not referring to the “get rich quick” books either. If you are not keeping up with new trends, local markets, demographics, laws, regulations, etc. it could bring you to your knees quickly.
Read real estate investing books, listen to podcasts, subscribe to local real estate forums, and read my blog every week. Seek out and speak with successful property owners, everyone loves to talk about their successes and will accept your invite with open arms. They can shed light on the difficulties of being a foreign investor, obstacles they had to overcome and what specific strategies worked and which ones failed.
Not Enough Analysis:
Choosing the right property in the correct location could be the difference between success and failure. If you just go out purchase the first property that “looks good” just because its a bull market and everyone is seeing stellar returns does not mean you are going to be successful. You have to have the mindset that you are investing in a bear market. Look for the property that will stand out from the comparables no matter where the market stands. Do not take shortcuts and sleep on your research because everyone is making 12% ROI in Tulum real estate. Weigh your options, study the comparable properties, review historic data, study current rental metrics and calculate performance indicators.
If you do not have past dealings with your current realtor then listen to their expertise but do not rely solely on their word, you must cross reference their data and conduct your own due diligence.
Over Leveraging:
As we know by now Riviera Maya real estate is a cash market. Whether you need to liquidate stocks, refinance your home or utilize your retirement account, make sure you DO NOT over leverage. Since there is no traditional financing in this part of Mexico you are going to be tying up a sizeable amount of capital. Make sure you are comfortable with where this leaves you financially.
To avoid failure, follow these points:
· Understand that risk is a powerful but dangerous tool, so be cautious. Minimize your risk, don't
invest on speculative appreciation
· Build a solid educational foundation before you “pull the trigger”
· Make calculated decisions on empirical data
· Leave yourself comfortable financially
Latest Posts
Contact us
Ryan Gravel
Ryan Gravel is an American real estate broker and developer. He began his career at a young
age working for his family owned construction company.
After graduating college at the University of Central Florida with a degree in business,
Ryan set out to find untapped prolific markets around the world. His search landed him in
Playa del Carmen, Mexico where he founded Virgin Realty Mexico and co-founded the Saatal
Development Group one of the fastest growing development companies in the Riviera Maya.
With extensive market knowledge, professionalism, etiquette, innovation and integrity Ryan
is known as one of the most highly respected real estate advisors in the region.
