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The Ups and Downs of Real Estate Investing

Published on Friday - January 17, 2014

For all of the talk about flexibility and limitless income, most investors will attribute their interest in the real estate industry to the degree of fun it provides. Instead of sitting at a desk for eight hours, investors can make deals happen and experience the thrill of rehabbing. Most of the time, things will go according to plan. However, there are times when you will hit the inevitable bump in the road. How you react to adversity is a great indicator as to the direction your success will head. Every investor will experience ups and downs, but how they react to them is what will separate them from their competitors.

No investor ever expects their tenant to stop paying or their contractor to disappear. As extreme as these scenarios may seem, they will happen at some point in most every investor’s career. You can have weeks where you get a few offers accepted, made a few dollars on a closing and were introduced to a few key networking contacts. However, the following week can witness a buyer back out of a deal, find mold you didn’t know about and have to deal with a broken furnace. Finding that balance and dealing with these events takes more than patience and luck.

The best way to combat ups and downs in your business is to have a lot of deals to work on. The more deals you are working on, and ultimately closing, the more room you have for error. You can do everything right for a tenant or on a deal, but that doesn’t guarantee that they will pay or it will close. If you put all your focus and money on one deal and it doesn’t close, it can set you back months. By having other ways to recoup your losses, it will not sting as bad. It is always difficult dealing with these ups and downs, but it doesn’t have to be disastrous if things take a turn for the worst.

When something bad does happen in your business, the best way to deal with it is head on and immediately. You can wait a few days for things to work themselves out, but they rarely will without firm, definitive action. If there is an issue on a deal you have been working months on or your tenant has gone MIA, the longer you wait the worse the problem becomes. You don’t need to make a rash decision, but most times the options are pretty cut and dry. It just comes down to you picking between the least of the bad options available. Get out in front of a problem as soon as you can and instead of wasting time complaining about it, you can get to working on a solution.

There are some days you will feel on top of the world and that real estate is the best business ever. Other days, you will wonder why you ever got involved in the business. This is par for the course and should be expected. Stick with your plan and focus on your goals. You will get through it if you are proactive. If every successful investor gave up once they faced some adversity, there wouldn’t be too many investors left.

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