{"id":114293,"date":"2020-11-01T05:00:46","date_gmt":"2020-11-01T12:00:46","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=114293"},"modified":"2023-04-03T06:38:54","modified_gmt":"2023-04-03T12:38:54","slug":"top-3-reasons-never-invest-real-estate","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/top-3-reasons-never-invest-real-estate","title":{"rendered":"Top 3 Reasons You Should Never Invest in Real Estate"},"content":{"rendered":"<p><iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC7025816336&#038;light=true\" width=\"100%\"><\/iframe><\/p>\n<p class=\"p1\">Let&#8217;s talk about the top three reasons why you should never invest in real estate.\u00a0I know all of you out there love my blanket statements. This one is a bit of an oxymoron.<\/p>\n<h2>Why You Should Never Invest in Real Estate<\/h2>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/PQwgbo_t9oY\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h3 class=\"p1\">1. First thing, it\u2019s very hard work.<\/h3>\n<p class=\"p1\">The first one is it\u2019s just too much hard work. I come from a construction background and worked as a laborer on dirty construction sites for five years. That work, which was 10-hour days, six days a week, was much easier than running various real estate companies and <a href=\"\/renewsblog\/2014\/01\/07\/flipping-houses\/\" target=\"_blank\" rel=\"noopener noreferrer\">fixing and flipping<\/a> homes. There\u2019s a lot of hard work that goes into it. Research, acquisitions, rehabs, project management, sales, marketing, finding a real estate agent, negotiating with the buyer, dealing with building inspectors, appraisers, and title companies. If you\u2019re buying and holding, then property management is going to be an important part.<\/p>\n<p class=\"p1\">You\u2019re going to have to evaluate all these people; you\u2019re going to have to make sure that they\u2019re doing a good job. It\u2019s not easy guys. Everyone can do it, but I don\u2019t recommend it to everyone. You\u2019re pretty much going to have a full-time job for a very long time. There are only a few investors out there that can master the art of real estate investing to make it truly passive.<\/p>\n<p class=\"p1\">So if you\u2019re thinking you\u2019re going to start investing in real estate because you got sold on some B.S. <a href=\"\/renewsblog\/2016\/03\/28\/financial-freedom\/\" target=\"_blank\" rel=\"noopener noreferrer\">financial freedom<\/a> crap, it doesn\u2019t work like that. It is hard work. It is excruciating, and it takes years to get to where you need to be. And even then, it\u2019s not passive. You\u2019ll make a ton of money but not enough to be passive. As I said, there are only a few investors that have mastered that art of making it truly passive where they don\u2019t get bothered at all.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-why-new-investors-lose-money\" target=\"_blank\">The No. 1 Reason New Real Estate Investors Lose Money<\/a><\/em><\/p>\n<h3 class=\"p1\">2. Second thing, people in the industry suck.<\/h3>\n<p class=\"p1\">There are a lot of people in the industry who are shady and going to screw you.\u00a0<a href=\"\/renewsblog\/2015\/12\/15\/turnkey-real-estate\/\" target=\"_blank\" rel=\"noopener noreferrer\">Turnkey providers<\/a> are the worst of the worst. Property managers are a freaking joke and nickel and dime you on everything. They make up non-existent maintenance charges just to charge you money. It\u2019s ridiculous. Junk fees, hidden fees, it\u2019s absolutely ridiculous. Let me go back to the turnkey providers\u2014selling you properties for more than they\u2019re worth, selling you properties in crappy C-class areas in war zones, and then passing you on to third-party property management companies that nickel and dime you to death.<\/p>\n<p class=\"p1\">Let\u2019s talk about real estate agents. Do you think they really care about you? No, they don\u2019t. All they care about is their commission. So if the property sells for $100,000 or $190,000, there is only a couple hundred dollar difference in their commission, while it\u2019s a $10,000 difference for you. So they don\u2019t care. They\u2019re going to be in your ear, telling you to take an offer, and you\u2019re going to lose $10,000. They suck.<\/p>\n<p class=\"p1\">Contractors, I don\u2019t even want to get started with these guys. Over the last five years, I\u2019ve lost $2 million to contractors. They took my money to buy meth, they took my money to buy a car, they took my money to take their wife on a holiday, they took my money and used it to buy materials for another job, and they took my money and disappeared. I\u2019ve seen it all and heard it all. Guys, it\u2019s a disaster.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/ripped-off\" target=\"_blank\">The Top 3 People Most Likely to Rip You Off in Real Estate Investing<\/a><\/em><\/p>\n<h3 class=\"p1\">3. Last, but not least, the numbers are always wrong.<\/h3>\n<p class=\"p1\">It\u2019s all smoke and mirrors. Whatever you think it\u2019s going to be, it never really happens like that. If you\u2019re buying a turnkey property everyone pumps up their pro formas, and whatever you\u2019re promised on paper is never achieved in real life. Property managers with their fee structures\u2014that\u2019s all B.S., too. They\u2019ve got so many hidden fees you\u2019re never going to know what they are.<\/p>\n<p class=\"p1\">Another thing, the folks out there who are inexperienced or have the experience, you don\u2019t know how to calculate a return on investment. You all use weird pro formas, weird calculations, weird rules, and I don\u2019t even know what percents you\u2019re using. There\u2019s too much information out there, and it\u2019s confusing. You\u2019re not doing it right. You\u2019re overestimating your income and underestimating your expenses, and the numbers just aren\u2019t what you need them to be. Then, you lose money.<\/p>\n<p class=\"p1\">So those are the three reasons why you should absolutely never invest in real estate. That\u2019s pretty much it. I have nothing more to say.<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/real-estate-investing\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-114265\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/4.jpg\" alt=\"ad-ultimate-beginners-guide\" width=\"706\" height=\"125\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/4.jpg 706w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/4-300x53.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/4-702x125.jpg 702w\" sizes=\"auto, (max-width: 706px) 100vw, 706px\" \/><\/a><\/p>\n<p><em>Still planning to invest? Why or why not?<\/em><\/p>\n<p class=\"p1\"><strong>Please leave your comments below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this post, I\u2019m talking about the top three reasons why you should never invest in real estate. I know all of you out there love my blanket statements. This one is a bit of an oxymoron.<\/p>\n","protected":false},"author":1672,"featured_media":114034,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524,7119],"tags":[],"class_list":["post-114293","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/114293","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1672"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=114293"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/114293\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/114034"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=114293"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=114293"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=114293"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}