This article is for educational purposes only, I’m not offering any type of advise, Please seek a professional.:
So, let me explain why I think Real Estate can be a tough investment, And by all means I’m not saying don’t get into Real Estate. What I like to say it’s not the end all of be all of investing. Just be careful, remember, we are relying on people, Jobs and the economy.
The Real Story
Of course if the economy is thriving, the stock market is rising, people are investing, and hopefully shopping. We see this as a good thing, we have the so called 1% and average people investing in assets like Real Estate, precious metals, & Oil and Gas etc.
Most of the real estate guru’s won’t tell you this, they paint a great picture of this industry that things can’t go wrong, well, have you heard of Tenants, Termites, Taxes, People and the Economy.
Now, what if the economy collapses? we saw this in 2008, when the housing market crashed. because of these mortgages that couldn’t be paid, and most real estate investors went bankrupt, mom and pop too. Fast forward 2020… boom…now it’s Covid-19 and it happeing again.
Jobs were lost, people got sick, hospitals full with sick patients, and on and on., what I’m saying is that as much as some Real Estate Investors bash the stock market, it’s controlled by Wall Street as they say.
Real Estate is much as a risk as the stock market, we are relying on multiple factors, but the main factor is people, we rely on them for paying the rents on time and keeping a house or apartment well maintained, and don’t forget there are what are called the “Professional Tenant” A professional tenant is someone who understands legalities of loopholes and technicalities in order to take advantage of the system. They know how to withhold rent due to repairs, they understand how to drag an eviction process out and how to get it eradicated from their record.
If landlords don’t get paid, well it’s coming from our pockets to keep up with Principal, Interest payments, Taxes and insurance. It’s imperative to have reserves for these emergencies that will come up from time to time, usually six months worth of savings in the bank.
Please, like I said at the beginning of this article, I’m not discouraging you not to invest, just be aware that things can go wrong. I have a couple of properties and a couple of real estate stocks and I have to pay attention what is happening in the market everyday, and make sure I have reserves for that “rainy day”
After all, we are running a business and we need to keep an eye for what’s happening in the real estate world today, because of the internet the news is available 24 hours a day.
So hopefully I didn’t discourage you about investing in Real Estate it can be a great asset to be involved in.