Why You Shouldn’t Invest in Real Estate in 2024
People always talk about how real estate is a great investment and that everyone should be doing it.
They can provide steady passive income, there are tax advantages, and you even get to boost your ego by telling others you own rental property.
But nobody seems to talk about all of the downfalls of investing in real estate.
1 — It’s expensive.
Most banks will require 20–25% down on a property that you won’t be living in.
Even on a $100,000 house ( yeah, right! ) that’s still at least $20,000 that you would have to come up with out of pocket, and that’s not including closing costs.
And I know some people say you can do it with no money down or only 3% or so, but the reality is.. you won’t be able to turn a profit, especially with today’s rates
If you aren’t putting in a decent down payment, then you’re going to end up in a situation where the rent you charge will barely be enough to cover your mortgage.
2 — It’s Time Consuming
Between finding deals that are worth buying, handling tenants, and dealing with repairs/maintenance, you end up having a part-time job.
If you can find a tenant that has their life together and never has anything go wrong, please buy me a lottery ticket cause you are very lucky!
Along with managing tenants, you also have to keep up with inspections, bookkeeping, and administrative duties.
Each of these things on their own may not take up a ton of time, but when combined, it all starts to add up and slowly chip away at the free time that you’re trying to create.
3 — It’s Risky
There are several risks associated with investing in real estate.
If a tenant refuses to pay rent, you have to go through a long eviction process and potentially get lawyers involved if you’ve got a squatter on your hands.
Not to mention, during that waiting period, the tenant may decide to trash your investment.
If that’s the case, then you’ve not only got to pay for repairing the property, but that’s also time that your rental won’t be on the market.
And if it’s not on the market, that means nobody can apply and rent from you.
What to do instead of investing in real estate
I know real estate has a nice sex appeal to it, but if you’re just starting out with investments, there are much easier ways to dip your toe in.
A less risky option is to focus on funding a 401(k) through your employer.
If your employer doesn’t offer a 401(k) plan, read this article.
In case your employer doesn’t offer one, you can always open an IRA through an investing app. Here are some popular ones.
- M1 Finance ( my favorite and the one that i use )
- Webull
- Betterment
There are plenty of others, just try them out and see which one you like the most!
Thank you for reading to the end!
If these topics are up your alley, you might enjoy some of these articles as well:
