Epic Real Estate Investing - The Cons of Investing in Real Estate | 464

Episode Date: September 7, 2018

On today's episode of Financial Freedom Friday, Matt shares his thoughts on the cons of investing in real estate. Find out three reasons for not investing in real estate, why you must know how to manage the people in order to be a successful real estate entrepreneur, and why a market fluctuation is not a con. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey Matt here at Epic Real Estate, and today we're going to talk about the cons of real estate investing. You know, we spent the better portion of a decade here talking about the pros of real estate investing, why you should invest in real estate, why you should do it now, and why you should never stop. We've talked about that for, you know, over 10 years. Today we're going to talk about the cons. So welcome to this episode of Financial Freedom Friday. All right, so my opinion,

everybody should invest in real estate we've been talking about that I really don't think most people have a shot at any sort of financial freedom unless they incorporate real estate somewhere into their financial plan all right so they absolutely should but today we're going to talk about maybe three reasons three reasons I came up with of why you should not invest in real estate so here's the cons of real estate one is liquidity so if you've got money inside of a real estate investment and you need that money back out, it could be a minute before you got it out. Your money is not liquid. And if that need coincides with, I don't know, unfavorable market conditions, you might have to wait for that

cycle to rebound and come back before you can actually get your money out. So liquidity. Number two, I would say passive income. But Matt, how could passive income be a con? Well, it's a con because it doesn't exist. A lot of people come in with the misconception of passive income. Like they're going to buy this property, they're going to rent it out, and they're just going to sit at home, wait for those checks to come and flow into their mailbox. And that doesn't work out for a lot of people. In fact, most people, when they have that expectation, and they go running for the hills with the wrong lesson and saying, I'm never going to invest in real estate again. And it wasn't necessarily the real estate that failed. It was really, they came in with a bad expectation of real

estate. So I would look at passive income. Let's define that from now on a little bit more along the lines of, we'll call it managed residual income. Managed residual income. It can certainly produce money while you sleep. Absolutely. The real estate promises that and that's, it keeps its promise. But it's not going to produce that without your involvement. So either you've got to manage the property or you have to manage someone to manage the property for you. All right. So passive income, big con, doesn't exist. And the third thing, this is actually pretty closely related to number two. I'm going to say the people. The people involved. If I look back at the money that I've lost in real estate, it's all directly related.

And not even too many cases indirectly, but it's all directly related to the people that were responsible for making that property to perform, whether it was the contractor, whether it was the property manager, or whether it was the tenant. If you can manage the people, real estate is really, it's really difficult to lose. I mean, all you really need to do is know how to evaluate a property to determine its value, determine what's a good, what the front market value is. and then, you know, what your exist strategy is going to be, and all that can be done with, gosh, pick any book online and get a spreadsheet out, and that part is simple.

But to get it to perform in the real world, that's right here the people. So you've got to do as much due diligence on the people that you work with as you do the real estate itself. You know, you could put people with any investment, right? Because it takes people to make any investment perform. But the difference between here and what's significant about real estate investing is that these are, people that you hire. These are people that you select. And many other investments, it's that all that's done for you. The management of those people is all done for you. Here, it's up to you. So those are my three cons. The lack of liquidity, lack of passive income or the non-existent

passive income, and then the people. I mean, real estate, that's safe. It's the people. It's the people that make it risky. All righty. So those are my three cons of real estate investing. And, how did you think I forgot something? What about the market fluctuations? What if the market crashes? right because that's possible it happens all the time it happens in regular cycles doesn't it well if your real estate investments are determined the success of those investments are determined by the fluctuations in the market i want you to understand that you're not real estate investing you're not investing in real estate you are speculating in real estate that's why that's not up here all right so buy hold forever and watch your wealth build and increase and grow as long as you

buy in a good enough equity position, not even good enough, just a discounted equity position, and the property cash flows, you're going to be just fine. All right? So I'll see you next week on another episode of Financial Freedom Friday. Take care. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.