I hate seeing this happen, so I’ve been thinking a lot about exactly when most new investors decide that the risk is too high, the benefits aren’t steady enough, or that they just aren’t ready. In my experience, it usually boils down to a few simple situations. Hopefully, reviewing the reasons that others have quit just before they would’ve been successful can help you see the big picture and avoid the same mistake.
Pressure from Friends and Family
When you leave a steady paycheck to pursue a career as a real estate investor, people are going to question you. You might think that you’re prepared for it, but a lot of investors crack under the pressure, especially if they’ve been working toward making their first deal or if they’ve made a few deals but are still working on higher profit margins.
It takes surprisingly little time to start making real money flipping houses. For some would-be real estate investors, though, it’s just long enough that nay-saying friends and family members get to them, and they go running back to a regular job.
Getting Discouraged by a Bad Deal
Bad deals are going to happen. Most of the time, though, you’re likely to break even or only lose a small amount of money. And, if you do your homework and thoroughly research every opportunity that comes your way, you’ll avoid a lot of mistakes that could result in a money-losing house flip deal.
Fear of Debt
Borrowing $100,000 to 200,000 is no joke! However, if you buy a house for $150,000, rehab it for $50,000, and then sell it for $250,000, that’s a $50,000 profit. And the best part is, you won’t be in debt for longer than it takes to rehab and sell the property. In other words, you’re not putting yourself in a mountain of debt that you’re never going to pay off—you’re just borrowing enough to make a big chunk of change in very little time.
Trying to Do Too Much and Burning Out
You don’t necessarily have to have a business partner or an assistant when you first start your real estate investing business, but you do need to understand that this is not a one-person job. From your general contractor to your real estate agent to your attorney and your accountant, if you’re smart, you’ll build a team to help you with every house flip you take on. Doing this will help you avoid burning out by trying to do everything yourself.
These aren’t the only reasons that people quit before they can get ahead in real estate investing, but they’re definitely the most common. Fortunately, they’re also pretty easy to overcome if you have the right mentality and you can see them coming. Be aware of these and keep in mind that flipping houses pays off a lot faster than a lot of other business ventures and investing strategies. Stick with it, and you’ll see profits coming in before you know it!