If you are thinking of becoming a real estate investor, here are some of the most important pros and cons to consider. Of course, investing in real estate is a very lucrative business. For some people, a career in real estate is the best option they could go for. It does not really matter whether they do it part time or full time. You should only keep in mind that everything comes with advantages and disadvantages. So, here are some of the pros and cons of becoming a real estate investor:
Related: 7 Major Benefits of Investing in Real Estate
The pros of becoming a real estate investor
Education
The good thing about becoming a real estate investor is that you do not need to have a degree in either finance or business. All you have to do is to actually invest. Of course, you have to do some research before proceeding with anything. You must also educate yourself on all the matters that are relevant to your real estate investing plans.
You have a choice!
First of all, the real estate business is so diverse. You, as a potential real estate investor, get to choose what to invest in. In other words, you get to choose what investment property and what investment strategy to go with because in real estate there aren’t only different types of properties but also different types of investment strategies. You get to decide what to invest in based on your financial and personal circumstances. You can go with long-term investments such as traditional or Airbnb rentals. Or you could invest in short-term investments such as real estate wholesaling. You can also choose whether to work with residential properties or commercial properties. It is, in fact, very diverse, and you can definitely find an investment strategy that aligns with your goals and circumstances.
Related: Learn About the Best Real Estate Investment Types
Steady income
Becoming a real estate investor is indeed a great way to make money in the real estate market. Investing in real estate provides real estate investors with a steady cash flow. This is especially relevant if you are going to invest in rental properties. Whether you decide to go with long-term investments or even short-term ones, they all have the potential to provide you with a steady income and a positive cash flow. Of course, this is in case of a well managed property.
Flexibility
Getting in the real estate investing business is pretty flexible. In other words, you can choose to either work full time, or you could be a part-time real estate investor. Again, it all depends on your circumstances and goals. If you have your own job or career, becoming a real estate investor part time might be an option for you. After all, the main goal of becoming a real estate investor is making money, so it does not really matter whether you do it part time or full time. Of course, becoming a part-time real estate investor requires some balancing, but it still will bring you great results in terms of finances.
Now after we have talked about the pros of becoming a real estate investor, it is time to talk about the cons of the real estate investing business for you as a potential investor.
The cons of becoming a real estate investor
It is time-consuming
It does not matter what investment strategy you choose to work with. Becoming a real estate investor requires that you devote your time to it. Whether you choose to wholesale real estate properties, fix-and-flip, or even work with rental properties, it all requires some time. Keep in mind that the real estate procedures are not that easy. So you need to have all the time required for that.
Taking risks
Becoming a real estate investor is associated with some risks down the road. First of all, you might need to take on a mortgage to finance your investment property. This alone is a huge commitment that you have to take into consideration. Another thing you should be ready to deal with is the extra expenses and costs. Investing in real estate is associated with all kinds of expenses that come with purchasing an investment property. For example, there are maintenance costs to think of. You might as well face some problems with tenants if you are investing in rental properties. Rental arrears and property damages are possible situations that might need to deal with. This all can cause you to deal with extra expenses on your investments.
Related: 8 Risks of Real Estate Investing for Beginners and How to Avoid Them
Education
You do not really need to have a degree in finance or business in order to become a real estate investor. But you definitely have to educate yourself on the real estate investing business. As we mentioned before, you are expected to know all the risks associated with real estate investing. You must also get acquainted with real estate procedures and regulations. You can most definitely hire professional property management services, but you still need to know what is going on with your business. So, thinking that becoming a real estate investor is all about easily making money is not a good idea.
Connections
The real estate business is all about connections. You, as a potential real estate investor, should be able to build your real estate investing network as fast as possible for your business to work well. You might need to work with real estate brokers, appraisers, banks, and other parties that are associated with the real estate business. This means that if you are new and do not have the ability to make connections fast, you will not be able to make it. Starting real estate investments is not easy, not to mention making connections. If you fail to create your own contact list of all the real estate experts mentioned above and many others, your investment business might not go as well as you want it to. Moreover, failing might mean a huge financial loss for you.
Finally
The real estate business might or might not be as sweet and easy as it seems. It does yield great financial benefits for you and other real estate investors. But you have to consider both the pros and the cons of it before taking any further steps towards becoming a real estate investor. Most importantly, you have to set your investment goals and define your reasons for becoming a real estate investor. Make sure to do some research and study well all the investment strategies that are available for you and be wise with your investment decisions.