Why Are So Many Real Estate Investors Going Bankrupt?

by Brandon

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 Why Are So Many Real Estate Investors Going Bankrupt?

They started investing in real estate 30 years ago… with so much hope for their future.

A rental house here, a duplex there… and soon they had a rental portfolio anyone would be proud of. They actively managed their properties and worked to make sure they were operating at peak efficiency.  Several years ago both the husband and wife retired from their day jobs and eased into retirement – funded by their rental income and social security.

This year they are filing bankruptcy and losing a majority of their properties to foreclosure.

This is not some made-up example… this is the story of one of my best friend’s parents, and they are not alone.  In fact, 95% of the properties I’ve purchased have been foreclosures purchased from landlords who have failed and lost their properties in a foreclosure. Most of them, I would guess, will never again get into real estate investing.  They worked hard for years to build a financial future for themselves, only to see it come tragically crashing down around them – dashing any hopes for lasting wealth creation.

This begs the question: why? 

If real estate is as good of an investment as we all (on BiggerPockets) make it out to be… why do so many real estate investors fail?

Perhaps more importantly: how do I avoid this possibility in my own life?

This is the question that has been swimming around my mind for some time now. Each week on theBiggerPockets Podcast I ask our guest “what is it that sets apart successful investors from those who fail?”  I’m intrigued by this idea and scared that I may end up the same way. After all, as Mark Cuban famously said “everyone is a genius in a bull market.”  Is that what real estate is? Do some people simply get lucky, and others not so? What are some of the trends that lead to this failure… and what are some trends that can minimize this risk?

(Click to read on BiggerPockets…)

About Brandon

has written 199 Awesome posts in this blog.

Brandon Turner (G+) is the BiggerPockets.com Senior Editor and Community Director and owner of RealEstateInYourTwenties.com. He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

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