What are Your Top 5 Top Challenges in Residential Real Estate Investing?

by Moya Carlos
(Barcelona, Spain)

I was hoping to stir up some interesting debate and get an honest feedback from everyone about the challenges faced by a residential real estate investor in the current market.

I will appreciate your input on this regardless of your lenghth of experience.

Answer

The 5 top challenges in residential investing in the current market according to me are:

A. It is exteremely difficult to get bank finance approved.

B. I can not use the equity in my portfolio to fund new purchases because the market value of my portfolio has gone down and the banks have decreased the loan to equity ration to less than 70%. Earlier they were funding upto 90%.

C. It is extremely difficult to find cash flow positive properties due to the rising vacancy rates.

D. Flipping is very difficult in the present market as there are very few buyers.

E. Rent to own is also very difficult as tenants do not have the cash flow to fund the property to buy. 80% of the effort goes into marketing.

On the posive side it is a great time to buy and hold as you can make huge capital gains in next couple of years. The challenge of course is getting the finance.