No one starts real estate investing thinking that his or her real estate investment will lose its value. But it happens, and here are a few of the worst contributors.

• Decline in Neighborhoods The community surrounding the rental property simply changes in a variety of ways that adversely affect the location of the real estate income property. This slide can and does cause the owner to face a number of challenges such as increasing vacancy, reduced rents, and as a result, less income meaning reduced maintenance. In this case, the best the owner can hope for is a new economic conversion brought into the area.
• Adverse Effects of Infrastructure The impact of an airport that puts your rental property directly under the glide path of an aircraft landing, for example, can have a negative impact on a property’s ability to attract (or keep) tenants.
• Governmental Controls Regulatory changes to zoning can impact the real estate development industry and, in fact, grind it to a halt. Real estate investors should never purchase real estate based on yesterday’s rules and regulations, otherwise they may find one day that the property’s use no longer meets the investor’s needs.
• Economic Obsolescence All things have a habit of wearing out. Air and heating equipment, driveway surface, electrical wiring, hot water heaters and boilers, roofing structure, plumbing or paint sooner or later require maintenance and/or replacement. Real estate investors should maintain a sinking fund that sets money aside in anticipation for future replacement costs.
• Supply and Demand When new construction of rental property gluts the market can decrease quickly and stay down for a long time.
• Lack of Proper Maintenance A run-down property in the neighborhood is never a good thing. Whether it’s due to an absentee owner, poor management, lack of funds, or some other owner problem, each often results in a deteriorating property that affect the values of properties that adjoin or are nearby it.
• Urgency to Sell Highly motivated sellers may reduce a property to a bargain basement prices. All investors should try to avoid ever reaching the moment when they are forced to sell.

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