Comments on: Meandering Into Real Estate Investing

By: Real Estate Investing: Is Now The Time? | Frugal Real Estate

Real Estate Investing: Is Now The Time? | Frugal Real Estate — Wed, 25 Mar 2009 13:41:51 +0000

[...] “Money is made at the buy.” Nothing could be more true when it comes to real estate investing, but getting a deal (or a steal) may mean the house needs work before you can rent it. If you [...]

By: JMickers52

JMickers52 — Fri, 27 Jun 2008 16:51:07 +0000

How are REITs different than Mortgage Investment Corporation investments (MICs)? They both are secured by real estate, they both pay annual dividends, depending on the type of real estate and region the rate of return is quite good. Other than REITs being traded on the market they are pretty much the same aren’t they?

By: Terry

Terry — Sun, 06 Apr 2008 18:57:02 +0000

Everyone I know that has started in SFR’s (Single Family Residences) has graduated to commercial real estate as soon as they had the equity. It is just too much of a pain in the butt for the money. I would wait till I could afford a decent NNN to try my hand at real estate. A quick look at http://www.loopnet.com will show you what is out there. You can stil find NNN deals at a 6% to 7% cap rates. Leveraged you could be looking at a 8% return with just a little bit work compared to the SFR’s.

By: Llama Money

Llama Money — Tue, 25 Mar 2008 22:17:13 +0000

I’m totally against the property in this scenario. Even *if* you could pull a $100 per month profit from this scenario, it’s a terrible use of your money. $100 per month for 12 months is $1,200 per year.

You put down $120,000. Invested very very conservatively, at an annual return of just 6%, you would earn $7200 per year. And realistically, *anyone* can pull off a 6% return with very very little risk. So you have a choice – earn $7200 per year with miniscule risk, or earn $1,200 per year. In the house scenario, you’re stuck with maintenance and repair costs as well. It’s not hard for these costs to eat away your $1200 per year profit in a hurry.

With that much money down, I don’t like real estate investing at all.

By: Prime Time Money: Happy Easter Roundup | Prime Time Money

Prime Time Money: Happy Easter Roundup | Prime Time Money — Mon, 24 Mar 2008 15:48:10 +0000

[...] Moolanomy talks about getting into real estate investing. [...]

By: Carnival of Personal Finance # 145: Baby Education Edition | Million Dollar Journey

Mon, 24 Mar 2008 13:14:16 +0000

[...] Pinyo from Moolanomy writes about Meandering Into Real Estate Investing. [...]

By: Jonathan

Jonathan — Sat, 22 Mar 2008 11:35:01 +0000

“Aside from the two reasons above, I guess the ultimate roadblock for me is finding a property that can generate positive cash flow. ”

Exactly. I’ll wait patiently until owning a home becomes less popular (or easy creditwise). The numbers just don’t add up right now in my neck of the woods.

By: Tim

Tim — Thu, 20 Mar 2008 21:11:27 +0000

I agree that the leverage COULD make real estate investing worthwhile, however, being highly leveraged also makes it VERY hard to find a property which produces a positive cash flow (especially in the areas that will appreciate or where you will attract quality tenants). You may be able to pick up cheap properties in undesirable areas, be highly leveraged, and make a good positive cashflow. However, these are also the properties that are not in the best neighborhoods (why you got them cheap in the first place) and dont really appreciate.

By: FourPillars

FourPillars — Thu, 20 Mar 2008 17:52:29 +0000

5% sounds pretty high.

One of the big advantages of real estate investing is the huge amount of leverage that you use. Even a small annual appreciation will probably make it worthwhile, unless of course the value goes down in which case you lose big time.

The funny thing is that if I tell people I borrow money ($50k) to buy stocks they think I’m some kind of nut. If I were to say I borrowed $450k to buy a rental unit, they would call me a genius…

Mike

By: MoneyBlogga

MoneyBlogga — Thu, 20 Mar 2008 01:30:38 +0000

Pinyo – As one who has been in the trenches and is actually still there, it is definitely the smart thing to do all the research you can. I really didn’t do any at all and bought a multi unit apartment building to boot. I invested a total of $250K and climbing. I have high interest rate mortgage loans due to poor credit BUT I have absolutely no intention of walking away. Now that I am somewhat smarter, I know what I need to do to make this property a “going” proposition, though whether or not I can do it remains to be seen. There are the obvious positives in owning real estate, but the downers can really kill it for you if you don’t have the landlord mentality (and many people don’t).

First and foremost, your tenants can and will make or break your investment – tenants who don’t pay their rent or who start using or dealing drugs are a nightmare. Finding good tenants is the most important thing, but oftentimes the neighborhoods don’t support that and you end up having to rent to just about anyone in order to make the mortgage payment. In California, this is a real problem.

Maintenance can be another money drain. I just had to replace a water heater and a gas range in the same month – not unusual.

However,if you have a landlord mindset, it will roll off your back and you will find a way to make it work.