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
“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
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
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.
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