2006-08-24 09:11:20 · 9 answers · asked by Paul M 1 in Business & Finance ➔ Renting & Real Estate
1) No diversification. The real estate market tanks (like now) and you're hosed.
2) Most people who do it get too strongly leveraged. Leverage is great, it makes your money work harder. But you've got to do some heavy thinking about how much you're going to do.
3) Real Estate is not liquid. You can't just call your stockbroker and get cash in seven days. You have to find the right buyer to get a decent price. If you need money in a hurry, this can force you to sell property for less than it's worth.
4) Landlord issues. The more properties you have rented out, the more likely one of your tenants is going to do something to one of your properties which requires a lot of money in a hurry.
If they're not rented out, of course, you're flushing cash every month.
Don't get me wrong. Property is a great way to make money. But you've got to have some money somewhere else.
2006-08-24 09:50:29 · answer #1 · answered by Searchlight Crusade 5 · 1⤊ 0⤋
The common answer is to diversify, however
there is really no good, better best way, only in hind sight can one determine which way was the right way.
As a realtor I belief actuallly, I am convinced that if you buy the right real estate ( the kind that pays for itself, good market or bad) is the best way to go when you want to invest, as you have the best of all worlds
Positive cashflow, capital appreciation, tax benefits and write offs as well as other people are paying for your investments, how cool.
others will say, yes but what about market crashes, or liquidity, well the market may crash, but if you did not sell the market crash did not mean anything to you, actually that would be the time to buy some more.
What about liquidity, well keep the real estate and if more cash is needed you have the equity in your investments that should be able to raise funds for you when you need them. So selling is not really what you want to be thinking off
one of the best series of books about this topic is the rich dad poor dad series from robert kiyosaki where he explains everthing about having money work for you rather than working for money
Good Luck
2006-08-24 16:49:08 · answer #2 · answered by peterpfann 3 · 0⤊ 0⤋
Yeah, the problem is no diversification. And also liquitidy of your assets.
It's much easier to sell stocks if you need cash, than to sell real estate.
If the real estate market crashes, you're in trouble, at least for a while.
2006-08-24 16:17:15 · answer #3 · answered by ? 5 · 0⤊ 0⤋
Yes!
Keep in mind...........
Times and markets are changing!
In California with average homes selling well over $500,000, a 20% decline is $100,000! In any market 'timing is everything'! So, could you afford a loss of 25% of your investment all because of poor timing???
This last up cycle was 10 years in many parts of the country. The downcycle now started in CA, Wash DC, NYC, Vegas and other hot areas of the past are all soft and getting softer.
From 1990 to 1996, the average home in San Diego lost 20% of its' value! The cycle we are now enterng looks like it could well exceed that on the downside!
With all the 100% financing, interest only loans, EZ qualifing etc...even a slight decline will cause many to be unable to sell for the amount due on their loans!
For some great 'insider' articles on the San Diego real estate market, which I believe will apply to any of the hot real estate markets of the past five years.....visit:
http://www.brokerforyou.com/brokerforyou/
http://www.san-diego-for-sale-by-owner.com/
http://www.downtown-san-diego-real-estate.com/
http://www.palermo-homes.com/
http://www.poway-real-estate.info/poway-real-estate-brokers.htm
http://www.los-angeles-real-estate-brokers.com/
http://www.orange-county-real-estate-brokers.com/
http://www.san-francisco-real-estate-brokers.com/
http://www.san-jose-real-estate-brokers.com/
http://www.brokerforyou.com
2006-08-26 23:11:31 · answer #4 · answered by Anonymous · 0⤊ 0⤋
good to have any assets ,but what will happen if you need cash like right now? you can't sell house in 1 day.
to feel safe i will prefer to have at least 4 mts of cash reserves to cover all my living expenses.
2006-08-24 19:15:24 · answer #5 · answered by bianca 4 · 0⤊ 0⤋
Asking serious question in answer.yahoo.com is a problem. There are way better forum than this.
2006-08-24 16:13:15 · answer #6 · answered by Anonymous · 0⤊ 0⤋
I can't offer you any words of wisdom, except to say I'll comiserate with you anytime....You're not alone!
2006-08-24 20:20:20 · answer #7 · answered by clueless 3 · 0⤊ 0⤋
yes, but not with gold.
2006-08-25 10:51:46 · answer #8 · answered by Piffle 4 · 0⤊ 0⤋
You should diversify.
2006-08-24 16:13:21 · answer #9 · answered by Great Master TK 2 · 0⤊ 0⤋