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The key reasons real estate investors fail—according to two financially free investors

Considering the current market dynamics, today’s real estate landscape isn’t as forgiving as it once was for investors just getting into the game. That’s why it’s more important than ever to understand the pitfalls that trip up so many people, so you can avoid them and stay in the game for the long haul.

That’s why I recently sat down with Casey Franchini from Brick by Brick Wealth, a One Rental at a Time channel regular who hit financial independence with just nine units. We went back and forth, outlining the six painful—yet avoidable—reasons so many real estate investors fail.

1. They chase shiny objects instead of choosing a strategy

Too many investors try to do everything—Airbnb, wholesaling, flipping, out-of-state BRRRRs—because they saw someone on YouTube say it’s fast, easy, and requires no money. But real estate isn’t a get-rich-quick game. Success comes from staying in your lane. Know your risk tolerance, your time availability, and your financial position—then pick a strategy that actually fits your life.

2. They chase the crowd instead of trusting themselves

In 2021 and 2022, everyone wanted to be a wholesaler—even full-time employees who couldn’t answer a seller call during work hours. In 2023, it was syndications. In 2024, it was flipping homes in other states they’d never visited. Stop chasing the crowd. Find your strategy, study it, and stick to it long enough to gain momentum.

3. They obsess over year-one cash flow

Yes, cash flow matters—but chasing high year-one cash flow often leads investors into poor-quality neighborhoods with unreliable tenants and high turnover costs. Appreciation potential, rent growth, and tenant quality matter too. The best investments often pay off over time—not in month one. Don’t sacrifice long-term returns for short-term vanity metrics.

4. They don’t do the work

Real estate investing is a skill. It takes time to learn your buy box, your local market, and what makes a great deal. But too many people gamble. They analyze three deals, write two offers, and think they’ve got a winner. Then they say, “It’s OK if I lose money—it’s my education.” No. Do the work. Learn what average looks like so you know how to spot great opportunities.

5. They underestimate the importance of tenant screening

The most overlooked team member in your business? Your tenant. They live in your property 24/7. They can either protect your asset—or destroy it. Poor screening leads to unpaid rent, trashed units, and endless headaches. Good tenants come from good properties and solid systems. Want a quality resident? Be a quality landlord first.

6. They use bad debt structures

Most investors don’t go bust from bad deals—they go bust from bad debt. Short-term loans, adjustable rates, balloon payments—these are ticking time bombs. I’ve seen this movie before. In the GFC, 50% of mortgages were ARMs, and it ended in disaster. If your deal doesn’t cash flow on a 30-year fixed mortgage, walk away. Leverage should be your ally—not your downfall.

You’re going to make mistakes. That’s part of the game. The goal is to avoid the big ones—the ones that wipe you out. Stick to your strategy, do the work, screen your tenants, and finance conservatively. If you do that consistently over time, real estate will make you wealthy.

ResiClub chart of the week:

This week, ResiClub’s Meghan Malas reported on the long-term rise in homeowner tenure, a trend that’s reshaping the housing supply across the country.

Over the past two decades, the median U.S. homeowner tenure has jumped from 6.5 years in 2005 to 11.8 years in 2024, according to Redfin.

While tenure dipped slightly during the Pandemic Housing Boom, high mortgage rates and limited inventory have since put upward pressure on how long homeowners stay put.

U.S. homeowner tenure increased so much between 2005 and 2020, in part, because so many baby boomers chose to age in place.

“There’s also the fact that older Americans have higher homeownership rates, and over the past few decades, the composition of the U.S. population has shifted older as the giant Baby Boomer generation has aged and birth rates have declined,” Meghan wrote. “That has put upward pressure on homeowner tenure.”

So, what does all of this mean for homebuyers? The increase in average homeowner tenure over the past two decades has subdued turnover, limiting the purchasing opportunities for certain properties and holding back existing home sales.

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