Have you ever wanted to be a real estate investor? That is buying property and renting it out? Do you ever wonder what real estate investing is like and if it’s something for you? You may have heard about the great things about real estate investing – having someone else pay your mortgage, making money each month, and having an asset that appreciates. Here are downsides to real estate investing.

What you don’t hear about are the challenges with real estate. In my real estate investing post, I wrote that real estate investing wasn’t in my plan. I became one because our plans to move to Atlanta did not happen and we had already purchased a condo.

One of the first challenges of real estate investing is being able to handle multiple mortgages. I have a mortgage on my primary residence. Now I’m adding an additional mortgage that I’m obligated to pay back. With my properties, I had months where my properties were not rented. I had to cover the mortgage out of pocket. The longer you don’t have renters, the more you end up paying and going negative.

Will I actually make money? For many years, I was either barely breaking even or going negative. I had an ARM mortgage and the rate fluctuated each year. Depending on the year, my rent would cover or be negative. HOA fees, mortgage interest, and property taxes have to be factored in. You might not actually make any money depending how the finances work out.

Maintenance and repairs is out of pocket expenses. I’ve had water heaters and HVAC systems replaced and these are not small repairs. These repairs are in the thousands of dollars. Do you have to fix the home between tenants? Did the previous renter damage anything and now you have to fix it up before the next tenant moves in? I’ve had to replace carpet, patch walls, and fix leaky toilets.

Will your renter cause any issues or complaints? You own the property so anything involving your property will involve you. I’ve had a renter who was a smoker and it was not the best idea to rent my home to him. Neighbors complained so much. I also had a renter who had the police called on him and the HOA had to get us involved.

What if the value of my properties go down. I bought my properties at the height of the housing bubble so for the longest time, my properties were valued less than what I paid for. With time, the value rebounded but another risk to watch out for.

Don’t forget late payments. Although we haven’t too much of an issue with this, there were times where rent was late and we were concerned whether or not the tenant was going to pay. Again, if they don’t pay, you are still responsible to pay that mortgage. The eviction process is also another hassle that comes with this.

I would consider real estate investing as a long term investment, however there are downsides to it. Unless you’re in the business of flipping houses, you’re probably looking to get a home that you can afford, rent it out, have someone else pay your mortgage, gain equity, be profitable, and have a steady income. Hopefully, the properties appreciate and when it’s time to sell, you can make a profit. That’s the goal at least. I always say that money doesn’t come easy and neither is real estate investing. Even though I am highlighting the negatives, it doesn’t mean it’s not worth it. If you’re up for the challenge, I think it’s a great investment opportunity if you plan and prepare properly. If you are interested in following my journey, email subscribe to get alerts of latest posts or follow me on Facebook.