5 Reasons Why Real Estate Investors Fail

by | BiggerPockets.com

One of the biggest reasons small businesses fail is because the owners cannot separate themselves from the daily processes to focus on improving, growing and making their business a success.  They are stuck working 12 hours a day handling the daily processes and burn out.  Real estate is similar in many ways.  Here are 5 reasons most real estate investors fail. 

  1. Lack of focus & business plan – Many investors try every strategy possible with 10% the focus they need to have success with one strategy.  Pick one strategy, document it in a business plan and master it before moving on to a 2nd strategy.
  2. Poor or lack of a mentor and support group – It is always good to get advice from a mentor and other experts.  They will point out unnecessary risks, provide solutions and even save deals or save you from a failure.
  3. Wrong strategy – Many investors are followers and do what everyone else is doing or they choose a strategy that just does not work in their market.  Some of the most successful investors do exactly what everyone else is not doing.  Do your homework and choose the right strategy.
  4. Lack of effort and time – This one is obvious. Many new real estate investors get excited and work hard for 2 days then do nothing for 2 months.  You have to write down goals and what it will take to achieve them, put together daily tasks and complete them on a consistent basis.
  5. Lack of knowledge – I have seen my share of messy deals —  from do-it-yourselfers who do everything poorly, to inexperienced investors in way over their head.  You should master your strategy and have the knowledge, systems and team in place to be successful in real estate investing.  And always be thorough in your due diligence.

About Author

Ryan is the founder of Real Return Real Estate™ , a company focused on buying property at extreme discounts, selling and renting with cash flow.


  1. Great List, Ryan. I was going to try and pick the most important one point, but you’ve made it difficult, as each of these bears almost equal importance in my book. I guess if I had to pick any, I’d go with #1, the lack of a plan. Everything else stems from your initial plan, so this is absolutely the first and most important thing any real estate investor needs to get going with.

  2. I see a lot of these reasons holding investors back from success. I have to agree though. If I choose one it would be that they never focus on one strategy to become a master. They get excited about every strategy they see or listen to from speakers and never put forth the necessary effort to have success with that strategy. Basically they spread themselves to thin and everytime the get on the train in the right direction they hop trains after 10% of the necessary effort. I bet if you took a large group of say 200 beginner investors that became successful really fast, almost all of them focused on one strategy and documented their plan into some kind of a business plan. Anyone else agree?

  3. Ryan… great list.

    Most people come at this question from the point of… you have to do these 10 things to succeed.

    You have captured 5 very critical items which cause most real estate investors to fail. If all investors can spend their time making sure they avoid these 5 traps… their chances for success will increase substaintially.

  4. Thanks for the post, all 5 of these things are very important to success in the real estate world. But it can be argued for any business in any market that these are the most important steps, other than having passion for your work.

  5. Great list Ryan and I have to agree with Joshua that #1 is probably the #1 biggest killer. And right behind that is #2, I’ve found that putting together a team and latching onto a couple of good mentors could do more for my business than anything else.

    You can’t do it all by yourself!

  6. Thanks for the posts everyone.

    Peter, I definitely think if beginners avoid these 5 things there chance of success will improve dramatically.

    HMI, it is nice to love what you do. I love real estate, I don’t know about the rest of you. Many get excited after hearing speakers but the motivation stops as soon as they have to do some work.

    Michelle, thanks for the comment, greed definitely can cause serious failure.

    Kris, right you are, thanks for the comment.

    Dick, I couldn’t agree more. Focus on one strategy, become a master and have an awesome mentor and good things are sure to happen.

    Thank you all for the comments!

  7. Thanks Ron, it would be a good reminder. I think it makes great sense to have some favorite material to look through once a week/month/etc. I reread books and material periodically and it is amazing how much I pick up when brushing up again.

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