Why do Property Investments Fail?

Over the years while analyzing investments and consulting for HNI I’ve come across the question “why do property investments fail?”

The answer is broken into 2 sections.

  1. Lack of Education (Ignorance)
  2. No professional analysis.

LACK OF EDUCATION (IGNORANCE)
Millions of people jump into buying real estate before understanding what real Estate is about or what exactly they are doing.

They simply take the decision that real estate is the path for them as many other people are making money from buying and selling. Then they start acquiring properties.

Anyone can play a game but not everyone can win, those who win are the people who have studied the game and gathered knowledge and experience.

In the real estate industry, you must have heard the word “appreciation”
And the phrase, “real Estate always appreciates in value”
Well the truth is that there is depreciation in real estate.

Only those who know how to use the depreciation gain from it and turn the depreciation to cash flow. When paying Tax, property depreciation is a good friend of real estate investors.

Lots of people have this belief that because they are buying properties, they are going to succeed. Not considering the fact that they might acquire the wrong property in the wrong area with the wrong financing.

The solution to this problem is proper education.

I’m not talking about the “get rich quick,” kind of education. I’m talking about taking the time needed to build an educational foundation that can support your real estate investing future. The mission of Muna Real Estate is the prosperity of anyone who is interested in the real estate industry, through a variety of methods, including our courses, guides, library, tools (see munarealestate.com) and this very blog post you are reading.

NO PROFESSIONAL ANALYSIS

When I ventured into the real estate industry as a regular Nigerian agent, I thought I knew what I was doing.
Funny enough, what I was doing was exactly what millions of people were doing, Brokerage!

I started out in my early days as a broker who will market lots of properties and sell out of luck, pitching sales without adding real value to clients.
Then I used the little money I made to try out investing, then I failed.
I made lots and lots of mistakes because I didn’t do proper analysis.
You see, so many people buy properties without doing the right analysis. As people often say, “he who fails to plan, plans to fail”

It is impossible to know the future but with proper analysis, it becomes much easier to project cash flows.

In proper analysis, here are a list of things taken into account when modeling scenarios.

  • Tax
  • Insurance
  • Vacancy
  • Cash on cash
  • Management buffers
  • IRR and lots of metrics.

Careful first time investors hire analysts, however the ones who are not careful dive into the investment and take the hit or escape luckily depending on the market and variables surrounding the investment in question.

To assist investors in calculating their mortgage payments, we incorporated a mortgage calculator in our website; See our mortgage calculator on the “tools” section on munarealestate.com

If you want to avoid losing out in the real estate industry, pay attention to the following 3 points:

  • Understand that risk is a powerful but dangerous tool, so tread cautiously.
  • Build a solid educational foundation for yourself before getting in too deep.
  • Most importantly, check out the Muna Real Estates REINA ©2020 Course or consult Muna Real Estate for your property analysis.

I hope this article is helpful, let me know in a comment!

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2 thoughts on “Why do Property Investments Fail?”

  • Eze, Chijioke Samuel

    Gr8!!!!
    Inspiring and educational!!!!!!
    The sky is just the beginning!!!!!!!!

    Reply
  • Eze, Chijioke Samuel

    Gr8!!!!
    Inspiring and educational!!!!!!
    The sky is just the beginning!!!!!!!!
    Ride on higher and higher!!!!!!!!

    Reply
  • Ekene

    Pls sir I want you to mentor me on the deeper knowledge of real estate business,both in buying and selling

    Reply
  • Ekene

    Superb

    Reply

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