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The Pros and Cons of Real Estate Investing

Kris Krohn here with REITV Today, we’re talking about the cons of investing in real estate. Are there downsides? Real estate done wrong can become your next and new nightmare. And, you know what? that keeps a lot of people out of the game but it is so easy to do things right when you have the right kind of knowledge. Here’s a couple things you want to watch out for. The first one is insufficient funds for a down payment.

You know if the markets go up and down sometimes the bank’s say “you must put thirty percent down” and at other crazy times they say “you must put nothing down” Me, when I buy an investment property I am always putting twenty percent down even if they’ll let me go 15, 10, or 5. Why? because if I bought the property with a twenty percent or fifteen percent margin and I have another twenty percent down payment on top of that that property’s almost half paid off. What does that do to my cash flow? What does that do to my equity position? Bumps them up and produces a lot of safety. So you gotta watch out for making sure you’re not getting into programs where the goal isn’t put down as little as possible. Another thing that really gets in people’s way is timing. Right? we draw these graphs some of our other videos about the market going up and the market going down and the smart people get in at the trough at the bottom and the consumers often get in at the top. I’m always entering the market at all times because I know what I’m doing. One of the things that you want to watch out for is if the market is getting hotter and hotter and hotter and prices are going up and up and up that’s when most people in that buyers market are going to actually pay top dollar. Top dollar at the top of the market equals you super unhappy so don’t get you super unhappy by paying top dollar at the top of the market. So I personally experience that real estate can be a huge blessing but real estate can also be a super big disappointment and it really comes down to whether you bought the property right out the gate you never buy something hoping that in time that will make up for itself and become something great. No, no, no. You want to know that walking into the deal. So, we talked about the disappointments in the cons of real estate well here’s the first one, Buy a home without equity. Super disappointing. Why? Because if something happens in your life and you need to unload a property if you don’t have enough margin to unload think of selling costs you have to pay often 6% realtor fees, 3% to the buyer’s agent, and 3% to the sellers agent, one and a half percent closing costs, seven and a half percent on a one-hundred-thousand-dollar properties, seven grand on a two hundred thousand on properties is fifteen thousand dollars. So if you don’t have equity, you’re going to lose when you sell that property. And, even though none of us ever wants to be in a position where we are forced to sell, having no equity doesn’t really even give you the option, The second one is a like a cash flow.

Right? you buy a property that’s cash flowing $32 a month now all that needs to happen is a condominium go up but you know maybe a block over and all of a sudden the prices on house rents drop a little bit and now you’re negative. So secure your equity, secure your cash flow, and that’s what will keep you from making some of the biggest mistakes in real estate. of course there are cons of investing in real estate but you know what? there are pros too and you are in the driver’s seat of making sure you know the difference so that you can successfully and smartly maneuver yourself into the success that is easily available in real estate. Do yourself a favor, get the right team if you have fears about real estate consider leveraging my team. There is no charge for using my team up front and they’ll never keep even a penny of the profits to help you invest in real estate the best real estate around the country. Experts finding the deals with the best margins. Expert managing a cash flow, and experts letting you know the best times to sell so that you can maximize your advantage every step of the way. That’s how I do it I’m just passing it on you. See you next week.