No one wants to put their hard-earned money or borrow from the bank to invest, only to watch it crash with no returns and countless sleepless nights.
Real estate investing is crucial—it can make or break you depending on whom you choose to trust. This could be the real estate developer, homeowner, attorney, property manager, or even the tenants.
We asked around and did our research on failed real estate investment stories. Here’s the advice:
Do not invest in a place where you have limited access to a property manager with no personal connection to you
Investing in your home country or a place where you can easily build relationships is essential. Real estate developments are often known by word of mouth, through an agent, or by personal connections.
Remember that property managers are also trying to make a living
If you don’t personally know anyone who has worked with a particular property manager, be extra cautious. Try not to get overcharged with renovations and turnover costs, which could add up to 50% of the expenses.
Hire a separate property manager, realtor, and attorney if necessary
Make sure the people managing your investment are independent and have no personal connection to each other. This provides checks and balances and prevents conflicts of interest.
Understand how much risk you can tolerate
Don’t invest just because someone tells you it will yield a 50% return. Realistically, investment results are a 50/50 chance, but with comprehensive research and trusted partners, the chances of success increase. Always do your due diligence and ensure that, even if the investment goes south, you can handle the outcome.
Document all procedures and sign all agreements
Even if the property manager, real estate developer, or tenant is a friend, family member, or a recommendation from someone you trust, ensure there is a signed agreement to prevent disputes down the line.
Keep your trusted family members informed about the investment
Even if you want to keep your investment private, let one or two trusted family members know. This helps avoid complications should any issues arise.
Real estate investing can be risky if you don’t take the right precautions. After speaking with failed investors, here are six essential lessons to keep in mind for success.
First, avoid investing in areas where you lack access to a reliable property manager. Second, be cautious with property managers, as they are also trying to make a living. Third, hire separate professionals for management, legal, and sales to ensure checks and balances. Fourth, understand your risk tolerance and never invest beyond what you can afford to lose. Fifth, always document every process and sign all agreements, even with trusted individuals.
Lastly, inform at least one or two trusted family members about your investment to prevent any future complications.
Following these steps can safeguard your investment and reduce risks. Or, connect with us to start your real estate journey with a trusted partner by your side.
