Investing in real estate is a fantastic choice to help diversify your portfolio and potentially see meaningful long-term returns on your investment. If done correctly, investing in real estate can become a passive source of income that provides long-term security against inflation and changes in the economy.
As profitable as real estate investing can be, however, there are some common pitfalls inexperienced investors can fall victim to.
Get a peek into the best finance courses online, learn more about the obstacles you may stumble upon on your real estate investment journey, and discover how real estate investing courses can help.
The Top 10 Challenges to Overcome When Investing in Real Estate
Here are 10 of the top challenges new investors face that are addressed in Derek Moneyberg’s online real estate course.
1. Lack of Liquidity
New real estate investors often treat real estate like they do other investments, thinking they can buy and sell as much and as often as they like.
This is a faulty approach because it takes time to liquidate real estate. Plus, the tax rate can skyrocket to as high as 37% if you have owned the property for a year or less.
New investors need to know when and how to best liquidate their investment before they go down that path.
2. Limited Inventory
The market is saturated with investors, and unfortunately, the market supply isn’t meeting that demand. This means there is a high level of competition for each property.
New investors need to learn how to deal with that level of competition and how they can overcome it to ensure they can find and invest in the right properties.
3. Market Volatility
The real estate market can be volatile because of changing property evaluations and fluctuating interest rates. New investors who do not understand the risks involved and the potential for volatility can make poor decisions, hurting their long-term returns.
4. Vacancy Rates
While it’s possible to own property, leave it empty, and then later sell it for a marginal profit, most investors choose real estate for its potential as a continual source of passive revenue.
However, to make the passive income model work, investors need tenants. Any empty property becomes a loss of revenue, so new investors need to learn how to manage their properties to ensure lower vacancy rates.
5. Location Matters
A two-bedroom apartment wedged between a major freeway and train tracks will be worth less than the same apartment in a quiet, well-established neighborhood.
New investors often rush into buying a property without taking the time to assess the location and how the surrounding area either subtracts or adds to the property’s overall value.
6. Change in Demand
Related to location is the shifting market. In the past, the highest-valued properties had the highest demand. It was considered a safer investment to have a property in major cities, because it was easy to get tenants and make a profit.
However, because of the pandemic lockdowns, more companies started to offer remote work options, which allowed employees to live wherever they wanted while still keeping their jobs. This has made some unexpected shifts in the real estate market, with some urban areas falling in demand and smaller cities and rural markets surging in popularity.
New investors often mistakenly assume major metropolitan areas are the best investment and that rural properties provide a lower return. With proper research, investors can find profitable investments in unexpected locations.
7. Maintenance Costs
New investors often neglect the maintenance of their properties, which causes the properties to become dilapidated. When neglected long enough, a property can lose value, resulting in a significant loss on the investment when it’s time to liquidate.
New investors must be aware of the additional maintenance requirements and what a proper maintenance schedule should look like.
8. Appropriate Rent Evaluation
New investors can mistakenly establish their rent or lease agreements based on a ‘gut feeling,’ which can lead to prices that don’t reflect the actual market value.
This could make it difficult to get new tenants. However, the more common issue is under-evaluating the value of their property. This is dangerous because the investor believes they are making a profit, when they are only receiving a fraction of what their property is worth.
9. Problem Tenants
Tenants are essential, but problem tenants can cut into your bottom line. The most common mistake new investors make is to react in an emotional or retaliatory way in response to problem tenants.
This can damage their reputation online as property owners. New investors need to learn how to deal with problem tenants civilly and matter-of-factly.
10. Buying In the Wrong Market
Most have heard the terms “seller’s market” or “buyer’s market,” but new investors make the mistake of not understanding what that means and how that can affect their investment.
Buying or selling in the wrong market can cause investors to short-change their investments, because they’ll end up paying unnecessarily high prices or selling for less than the market estimate.
New investors must understand the ebb and flows of the real estate market and when to best invest in that cycle.
How Real Estate Courses Can Help
90% of millionaires today built their wealth by investing in real estate.
But few of them have done so successfully on their own—they’ve had help. They’ve asked the right people for advice, sought the wisdom of mentors, or enrolled in real estate investing courses online, like the ones offered by Derek Moneyberg.
Real estate courses are helpful because they can set you on the path toward success from the beginning. Sure, you can study the real estate market on your own or Google “best finance courses online” and watch YouTube videos for free.
But you don’t know what you don’t know.
And it’s difficult to seek the right answers when you aren’t even sure you’re asking the right questions.
Real estate training courses provide the framework and foundation for a solid, trustworthy education in real estate investment. They’ll also save you time and money, because you’ll bypass the messy “trial and error” stage and skip straight to launching your real estate career the right way the first time.
As part of Derek Moneyberg’s online real estate investing courses, you’ll get help from an experienced mentor that will teach you:
- The thought processes you’ll need to adopt to invest in real estate
- Wealth-building strategies tailored for the long term
- The fastest ways you could potentially increase your net worth through real estate
- Steps to increase your property values
- The types of properties that work best for your specific goals and situation
- Which real estate investments to avoid
- The little-known secrets of property development
- How to develop an eye for spotting “real estate hidden gems”
- The types of insurance, legal protections, and tax strategies you’ll need to succeed
- And more
Real estate investment will always come with challenges and will never be easy. But if you have a mentor to guide you through the challenges, you’ll be equipped with the knowledge and experience to overcome whatever issue gets thrown your way.
Enroll in Derek Moneyberg’s Online Real Estate Course Today
Derek Moneyberg has two decades of experience as a successful real estate investor and has helped both new and seasoned investors grow their wealth through a series of practical tips and hard-won strategies.
See what other people are saying about the success they’ve had after enrolling in Derek’s courses.
Don’t let inexperience or a lack of information get in the way of your success.
Learn how to overcome common (and not so common) real estate challenges by enrolling in Derek Moneyberg’s online real estate course today.