Signs Of A Bad Real Estate Investment

August 18, 2022

Signs Of A Bad Real Estate Investment

There’s no doubt that real estate is one of the best investments a person can make, especially in the long run. There are many ways to turn real estate properties into your primary source of income or even a side hustle that provides passive income.

But, just like any other investment strategy, real estate isn’t a for sure bet. There are always some risks involved, and not all real estate properties are a good gamble. While there might be some luck and factors you can’t control involved in purchasing properties, there are ways to protect your money and make a good purchase.

One of the best strategies when approaching real estate investing is to know the signs of a bad deal. Read on to learn what to watch out for to ensure you end up with a good real estate investment.


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Some Major Indicators Of A Bad Investment

Whether you’re looking to buy rental properties or a vacation home for yourself, there are some overall factors to think about. These include high or low pricing, poor location, shady or pushy real estate agents, on the market too long, and extensive repairs.

We will go into detail about each of these points. Remember that if you’re entirely new to real estate investing, you likely need to start researching now to get a good idea of the market where you’re looking to buy. It also doesn’t hurt to reach out to an expert or mentor.

At the Troy Kearns Channel, I know it can be overwhelming to consider all this, but I’ve found immense success in real estate and want to help others with their own financial journey.


Real Estate Investment Warning Signs In Detail

In this section, we’ll look closely at the five main red flags when looking for your next rental property or house. These tips can help you get an idea of when buying a property means you will lose money.

1. Pricing that’s too low or high for the market.

Generally, if something seems too good to be true, it probably is. While most people are hesitant to purchase anything that is overvalued, you should also be cautious about undervalued properties. While they might seem like a great deal, there is likely a reason why the seller is trying to get rid of the place as quickly as possible. There could be structural issues or a shady history to the site. In these cases, do your research. You may need to get the property appraised on your own.

2. The location isn’t ideal.

The most cliche phrase in real estate is “location, location, location,” but there’s a reason it’s so well-known. Even if the potential purchase has everything you’re looking for, the real estate prices might not be worth the cost if it’s a poor location. Potential renters will be harder to find if the place is far away from stores and public transportation. Without renters, you won’t have a positive cash flow.

You’ll also want to consider the neighborhood. If the surrounding properties are poorly maintained, these will lower the real estate values of your investment.

3. You’re dealing with overly pushy agents or brokers.

A real estate agent, their entire job is to sell the property to potential buyers. So, they will try to persuade you to purchase to some extent. However, pay attention to some possible shady behaviors, especially if you’re a new real estate investor. If they won’t leave you alone and are trying to push you to sign fast, consider getting an inspection of the property first. In general, this is a good idea anyway.

4. It’s been on the market for too long.

While every area of the country is different, many places have a hot real estate market where properties are selling quickly. So, if something has been on the market for a long time, it might not be the right investment property. If most properties around you are selling, there’s probably a reason why the one you’re looking at has been sitting there for so long. Do your due diligence to figure out if there’s something weird going on.

5. There are too many repairs.

Some investors enjoy a major fixer-upper. Flipping houses can be a profitable way to make money and lead to significant tax benefits. However, this approach isn’t for everyone. You’ll also need to assess the property value and weigh it against the cost of potential repairs. You need to determine how much time and money you are willing to put into whatever property you buy.


Trust Your Intuition To Avoid The Worst Real Estate Investments

If you’re new to property management and real estate, you might not want to rely solely on your instincts, but this doesn’t mean you should ignore them either. And, the more experience you have in the rental market and housing market in your area, the more attuned your intuition will become. If something doesn’t feel right, it’s best to trust this feeling. You should still do research and run financial calculations, but don’t ignore your gut. Even if there’s nothing particularly wrong with the property, it just might not be the right fit for you.


Let Troy Kearns Help You Buy Properties That Make Sense

Whether you’re completely new to real estate or just looking for a unique investment opportunity, Troy Kearns is here to help. I wasn’t an expert by any means when I turned my debt into a multi-million dollar empire with real estate investing. I am all about helping other people like me find financial freedom through wise investing. Check out my informative videos or reach out for mentoring services.

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