I was snooping around over at Dollar Disciple the other day and it rekindled my interest in adding real estate to my investment strategy. Real estate has always been a planned part of my asset allocation strategy, but I decided to put it on the back burner. With the stock market not wanting to play the game on my terms I’m thinking it may be time to reconsider the prospects of real estate.
I know people are as divided about real estate investing as they are about renting vs. owning their own home. For me, real estate represents another form of investing to add to my overall plan. Right now with the housing market still recovering probably makes it the undervalued asset class that some investors find appealing. I’m in a fortunate position to have a some cash I could utilize in making the purchase of a small single family home. Ideally I would like to have a 2-4plex, but for starting out I think a single family property might be the way to go.
My plan is to find a place that is in a decent neighborhood that is in need of some work. Being able to rehab a home that is in need of minor renovation will allow me to make a profit from the price appreciation of the unit as well as from rental income. Living overseas will require me to hire a property management service to handle most of the rental property business. This will be an added expense, but one that will be necessary with my current circumstances. I have a few properties that I am looking at and need to sit down and crunch some numbers to see what is necessary to get the return I want.
I go on my annual leave in May and there is a good possibility that I will come back the owner of an investment property. The rental business is full of potential risks just like investing in the stock market is. Being aware of these risks and making decisions that mitigate the known risks as much as possible is a step towards preventing unwanted losses. Just like stock investing many of the losses we incur are a result of our own behavior guided by emotion and not reason.
What do you think reader, is investing in real estate a good idea or a bad one?