Tuesday afternoon I closed on the property I’ve been talking about over the past three weeks. I’m super excited to get started on this project and will take you guys along for the journey as I tackle my first real estate investment. There are a lot of unknowns to be sure. I’m not so exited that I let my enthusiasm cloud the reality of just how much work lies ahead. The project element of this endeavor is one of the things that makes it so appealing. To some this would be a huge turn off, but for me it’s another positive part of the experience; at least that is how I feel now. Ask me again in a year… Continue reading
Back in November I wrote a post about due diligence when contemplating real estate investing, focusing on how I attempt to mitigate the risks of purchasing a foreclosure. Besides looking at single family residences instead of multi-family ones not much has changed since then. I’ve looked at dozens of additional properties since that time and feel like my skill of evaluating a home for potential purchase has improved. Since my due diligence phase is over, a contract has been signed, and a closing date is just around the corner I thought it would be a good idea to consider the risk of actually purchasing a foreclosure. The risks are real, but just as in stock investing there are ways of limiting those risks. Continue reading
For several years I have been intrigued with real estate as an investment. I can remember watching shows on T.V. (back when I owned one) of people flipping houses that honestly didn’t need much work. It seemed like a way of making decent money and since I had not found my way to stock market investing (not that I had any money even if I had found my way) real estate offered and investment vehicle in which I felt comfortable with and not intimidated by. Sure, there are plenty of ways to lose money in real estate just like there is in stocks and the past few years have exposed the folly of those who overextended themselves and made purchases of properties at exaggerated values only to watch the wealth they believed themselves to be creating vanish. Continue reading
“Chance favors only the prepared mind.” Louis Pasteur
Due diligence is a phrase given considerable weight in the investing community and for good reason. It is probably one of the better ways of mitigating risk when it comes to investing activity. Today I want to focus on why due diligence is an important process when considering real estate as an investment. Continue reading
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?