Let’s talk about the most common roadblocks when it comes to investing in real estate.
Throughout my investment journey, I’ve always hit one of these roadblocks—and then I’ve hit it again and again. It’s just been a never-ending cycle. To be honest with you, to this day, I still don’t feel that I’ve hit that snowball effect where everything is just running smoothly. So, I’m not necessarily going to go into the solutions of all of these roadblocks. I’m just going to share some of them with you.
This blog is more suited for some of the inexperienced investors who are looking to get started in real estate—or even the investors who have started and bought a few properties, and they’re at the beginning of their journey. Ultimately, there are always going to be things that are going to set you back and make you adjust or change direction. But as long as you keep pushing forward, you will eventually get bigger and better, and you will succeed.
So, don’t let these roadblocks bring you down, because there is no such thing as giving up. You have to keep going and moving forward.
Common Roadblocks to Investing in Real Estate
1. Needing Money
Look, the first one that I came across when I first got started in my investment journey is I had a deal but I didn’t have the money. I was very good at finding a lot of properties and negotiating hard, but I had limited amounts of capital. Therefore, I couldn’t buy the properties. And being the non-believer I am when it comes to leverage, I missed out on a lot of opportunities.
But rightly so. I didn’t want to use leverage I wanted to use my money. That was my belief and my stance.
2. Not Finding Deals
Then, later on, I flipped a few properties and made a bit of money. I was busy project managing. I was working with investors. And all of a sudden, I have all this money and no deals. I kind of slowed down all my acquisition efforts, yellow letter campaigns, prospecting on Facebook, and looking at the MLS and auction websites.
Once again, as an entrepreneur and business owner, you’re wearing so many hats and there are so many fires, you’re going from one fire to the other.
3. Not Having Buyers
Another roadblock I have stumbled across many times, especially in the turnkey industry (because I own a turnkey company), is we would have a renovated and tenanted property and no buyers. So, that was another big problem, because now you’re sitting on inventory. And if you sit on inventory for too long, everything is at a standstill.
In a turnkey business, it all starts with the sale. You sell a property, you get revenue. Then, the people can get paid to do the property management, because we have in-house property management, and it funnels downward. Sales, guys, are the livelihood to every single business. Don’t forget that.
It doesn’t matter how many mistakes you make in other departments. If you are selling and selling well, you can absorb those losses. You need the sales so you can cover whatever you need to cover, make good on your promise to investors, and fix the problems that are going on within your business.
I was once told to drive revenue and keep costs at an absolute minimum. That’s the most important thing for a business when it’s in its infancy stage. No thousand-dollar office desks, OK?
4. Missing the Operations
To repeat everything, I had the deals and no money, then I had the money and didn’t have the deals, and then I had the inventory and didn’t have any buyers. Where I find myself now is I have the money, I’ve got the deals, I’ve got the buyers. I’ve got the finished product (as in the inventory), but I’m missing the operations.
So, that’s another key element to your success is to make sure that you have the operations in check. That you have systems, processes, manuals ready and in place. If you’re looking at building a business, all of these things have to be in order. The people that you are employing need to know what they need to do, because if they don’t know what they’re doing, it can end up being an absolute disaster.
Of course, we’re actually talking about growing a business here, but I think it’ll be the same case for a lot of you investors out there. Even if you’re looking to fix and flip three to five properties every year, that still takes an operation.
And I do believe that you will still need some sort of process in place for doing certain things. It could be acquisitions or sending out yellow letters. Do you really want to be doing all the work or would you rather outsource that? I know a lot of wholesalers who send a lot of yellow letter campaigns with a lot of virtual assistants. That systemized that process for them.
Yes, even something like acquisitions can be systemized, so you don’t have to do the work yourself. That can also apply to project management, rehabs, keeping your contractors accountable, etc. Keep in mind, all of these things need to have checks and balances, too.
Ultimately, that’s kind of the icing on the cake in a negative way—the operational side of things. I think that’s the hardest thing to master and takes the longest to master. But there are stages in your investment cycle where you will hit any one of these points multiple times. Sometimes to this day, we still hit a certain one.
I’ll give you an example, we just had a frenzy of investors over the last few weeks and sold out of every property. Now, we’re kind of lacking inventory again. Therefore, we need to acquire more properties to meet the demand.
Look, it’s just the cycle of real estate.
I am personally looking forward to hitting the snowball effect, as I like to call it. This is where it’s just rolling down that hill and getting bigger and bigger, because if you aren’t growing you are dying. Movement is life; stillness is death.
What are some roadblocks that you have come across in your real estate endeavors? What are some roadblocks you’re afraid you may encounter?
Share in the comment section below.