🚀 Top 3 Reasons NOT to Invest In Real Estate
🌟 Here is why you will never earn money in Short Term Rentals.
Friends, readers, and current & future real-estate-ers… welcome back to How to Make Money in Real Estate, Short & Mid-Term Rentals!
Today, we will jump right into the deep end of the pool and talk about the → Top 3 Reasons You Will NEVER Earn Money In Real Estate!
(Wait… what the heck… ?)
Top 3 Reasons You Will NEVER Earn Money In Real Estate
1. Real Estate is for *rich dudes who already have tons of money*
2. Property prices and interest rates are inaccessible right now, but maybe when things cool down…
3. You don’t have the time/knowledge/skills for this
Hmmm…
So I guess that settles that, right… ?
Wait - before you go!
Reasons 1 and 2 are the TOP concerns of most folks who are on the outside of this industry looking in. You aren’t alone, so let’s dig in! 🚀
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Unless you are currently a high earner with a substantial primary base of income, it can be tough to imagine how you can possibly invest in real estate.
What you might not realize is some of the creative financing options that are available.
Creative Financing
There are many types of creative financing. Today we will only talk about one type, DSCR loans.
DSCR = Debt Service Coverage Ratio
In short, qualification for this type of loan is not based on your personal income, rather, it is based on the specific property’s past or potential-future income.
In other words, to obtain funding with this type of loan you will work with your lender to determine an estimate for how much money you can make renting the property - and as long as it is a sufficient amount to pay of the debt + whatever margin is required by the lender, you may qualify for the loan!
Still, you can’t walk into a DSCR deal with no money. Because the risk is considered slightly higher to the lender, you are generally required to bring 20 - 25 % of the down payment.
For some, this may spark your creativity and open doors to opportunities that you didn’t realize were possible…
For others, the down payment is still a huge barrier… and we haven’t even talked about sky high property prices or rates yet (but we will in another post!)…
OTHER Ways to Make Money in Real Estate
Most people think of popular platforms like Airbnb or VRBO when they think of Short Term Rentals, or STR’s. But Airbnb and VRBO are only platforms to facilitate STR businesses, much like Substack is a platform to facilitate businesses that rely on writing newsletters.
So what is an STR exactly?
An STR is a house, condo, or other style property that has been converted into a fully furnished rental unit. These units are most commonly rented to guests on vacation or business travel, rented at daily rates. Typical stays are one week or less.
Did you know that there are tons of opportunities to earn money within this industry, many of which don’t require you to own any property at all!
**Here is your homework**
Go to Airbnb and just for fun - pull up a property in your own area, or an area you’d love to vacation in.
Open a few listings and study what you see.
What types of services or products can you identify that the STR owner might have used to setup their property? To market their property?
What about the guests, what services or products might they use that are directly related to their stay?
Or, if you’ve stayed in an STR in the past, think back to your experience.
What did you do to prepare for the stay, and how did you feel about your upcoming stay?
What was truly special (or especially crappy) about your stay?
What types of things did you notice in the STR that you don’t have in your own home?
How was the overall experience - including reservations, any issues that came up, your time there etc.?
Let me know what you are able to brainstorm (or other questions!) in the comments! 🤗
***And keep an eye out, because we will discuss ideas for making money in this industry (even if you don’t own property!) in the next newsletter!***
Ohh… pssst. And remember reason number 3 as to why ‘You’ll NEVER Make Money in Real Estate’? “ The bit about how you don’t have the time/knowledge/skills for this?
You’re already here, and already learning. So forget about number 3. That’s hogwash. 💗
The goal of this publication is to provide accessible information regardless of where you are on your journey - we are Newbie-friendly!
Did you know I also have a personal publication related to my memoir-in-progress, diversity in STEM, and my journey in aerospace? Check out Read the Instructions here!
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